Does 360 Painting have any right or duty to operate the franchisee's business?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
m Franchisor, and shall be painted in accordance with, and equipped with inventory, tools and supplies complying with, Franchisor's then current specifications, all at Franchisee's sole cost and expense. Franchisee may utilize a personal vehicle when launching Franchisee's business, so long as such personal vehicles meets the requirements set forth in the Brand Standards Manual or other directives from Franchisor. Franchisee shall, at its own cost and expense, maintain the Vehicles in good order and repair, and make the Vehicles available for inspection by Franchisor at any place within the Protected Territory as the parties may reasonably agree.
- 9.19 Customers Outside of Protected Territory. If a potential client outside the Protected Territory requests the services of Franchisee, Franchisee shall promptly refer such potential client to Franchisor or the 360 Painting franchisee that operates in the territory where such potential client's principal place of business is geographically located. If no 360 Painting franchisee operates in such territory, Franchisee must promptly refer such potential client to Franchisor. Following such referral, if Franchisor determines that no 360 Painting franchisee operates in the geographic area where such client's principal place of business is geographically located, Franchisor may (but is not obligated to) by written notice to Franchisee allow Franchisee to perform the requested services for such potential client. Franchisor's permission, if granted, for Franchisee to provide service to any potential client outside of the Protected Territory shall not be deemed to grant Franchisee any rights to provide service such potential client, or any other clients located outside of the Protected Territory, on an on-going basis.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting maintains a contact center for centralized customer service and scheduling, which franchisees must use exclusively. Franchisees must comply with the rules and regulations set by 360 Painting for the contact center and pay the associated fees as described in Section 4.6. This indicates that 360 Painting has a role in managing customer interactions and scheduling, which directly impacts the operation of the franchisee's business.
Furthermore, if a potential client outside the franchisee's protected territory requests services, the franchisee must refer them to 360 Painting or the franchisee operating in that territory. If no franchisee operates in that territory, the franchisee must refer the client to 360 Painting. 360 Painting may then allow the original franchisee to perform the services, but this permission does not grant ongoing rights to service clients outside the protected territory. 360 Painting retains the right to grant other franchises the right to service these clients, even if the original franchisee has previously provided services to them.
360 Painting also retains significant rights regarding National Accounts, allowing them to negotiate and enter into agreements to provide services to these accounts, even within a franchisee's protected territory. Additionally, 360 Painting can designate approved suppliers, including themselves, and franchisees must adhere to their standards when purchasing products, supplies, vehicles, equipment, and tools. These provisions collectively demonstrate that while franchisees operate their businesses, 360 Painting retains considerable control and influence over key aspects of the business, including customer acquisition, service provision outside the protected territory, supplier selection, and relationships with National Accounts.