What paragraph describes the territory for the Amerispec Inspection Services franchise?
Amerispec_Inspection_Services Franchise · 2025 FDDAnswer from 2025 FDD Document
e used by the Franchisee during the two (2) year period prior to the termination or expiration of this Agreement, or the assignment of this Agreement or of the Franchised Business.
3. GRANT OF FRANCHISE AND RENEWAL OF FRANCHISE
3.1 Protected Territory Appointment. The Company hereby grants to the Franchisee, and the Franchisee undertakes the obligation, upon the terms and conditions contained in this Agreement, a protected right and a license to operate a business offering the System of Operation (the "Franchised Business "), and to use solely in connection with the Franchised Business the Company's System of Operation, and to use the Names and Marks of the Company in the conduct of a variety of single family and multifamily commercial building inspection services, as those services may be changed, improved, and further developed from time to time, within the territory described in Exhibit A (the "Designated Territory" or "Territory"). "Protected" means that the Company will not enter into a Franchise Agreement licensing another Franchisee inside the
Designated Territory; except as provided for in Paragraph 3.1.1, Paragraph 3.1.2 and Paragraph 3.1.6 of this Agreement. The Franchisee may retain "protected" status of its Designated Territory upon meeting the performance and other criteria set forth in Paragraph 3.1.1 and Paragraph 3.1.2 below. Notwithstanding the foregoing, the provisions of Paragraph 3.1.1 and Paragraph 3.1.2 shall not be enforced during any 12-month period if the Franchisee, its principal manager, or its majority shareholder, member, or partner dies during such 12-month period.
- 3.1.1 For new Territory, Franchisee must have achieved (a) revenue growth over the trailing 3 years; (b) at least 3% market share and either (c) a revenue percentage increase from Year 2 to Year 3 that is equal to or greater than the percentage increase of Real Estate Transactions ("RETs") in Franchisee's assigned Designated Territory for this Agreement or (d) a revenue percentage increase from Year 2 to Year 3 that is equal to or less than the percentage decrease of RETs in Franchisee's Designated Territory for this Agreement, as well as maintained good standing as a brand ambassador by timely payment of monthly fees, proper use of Company trade names, trademarks and system of operations, support of National Account Programs, and compliance with all other obligations of the Franchise Agreement.
- 3.1.2 For existing Territory, Franchisee must have achieved: (a) at least 3% market share, and (b) a revenue percentage increase over a 5-year period that is equal to or greater than the 5-year average increase in the RETs in the assigned Designated Territory for this Agreement or (c) a revenue percentage increase over a 5-year period that is equal to or less than the 5-year average decrease of RETs in Franchisee's Designated Territory for this Agreement, as well as maintained good standing as a brand ambassador by timely payment of monthly fees, proper use of Company tradenames, trademarks and system of operations, support of National Account Programs, and compliance with all other obligations of the Franchise Agreement.
- 3.1.3 For purposes of this Agreement, market share will be calculated by multiplying the number RETs in the Territory for a 12-month period by the average percentage of RETs that obtain home inspections as determined by ASHI (American Society of Home Inspectors) and dividing that number by the number of home inspections performed by Franchisee during that same period. For clarification, the 12 month period will be immediately prior to the period that the Company performs its review of the Franchised Business.
Market Share Example: 6,500 RETs x 70% = 4,550 inspections; 4,550 inspections ÷ 137 inspections performed by the Franchisee = 3% market share.
- 3.1.4 The Franchisee may perform services for a customer outside the Designated Territory only if an agent and/or customer initiates the request. The Franchisee may market and solicit customers within the Designated Territory for the license.
Source: Item 23 — Receipts (FDD pages 47–172)
What This Means (2025 FDD)
According to the 2025 Amerispec Inspection Services FDD, paragraph 3.1 outlines the details of the protected territory granted to the franchisee. Amerispec Inspection Services grants the franchisee a protected right and license to operate an inspection business using their system within a specific area described in Exhibit A, referred to as the "Designated Territory" or "Territory". This protection means Amerispec Inspection Services will not license another franchisee within that territory, with exceptions noted in paragraphs 3.1.1, 3.1.2, and 3.1.6 of the agreement.
The franchisee's ability to maintain this protected status depends on meeting performance and other criteria detailed in paragraphs 3.1.1 and 3.1.2. However, these performance requirements are waived for a 12-month period if the franchisee, their principal manager, or their majority shareholder, member, or partner dies.
Paragraph 3.1.4 states that a franchisee may perform services outside their designated territory only if the customer initiates the request. However, the franchisee is prohibited from directing marketing or solicitation activities to agents or customers outside of their designated territory. Paragraph 3.1.5 requires the franchisee to operate the business from an office location within the territory, as specified on Page 1 of the agreement, and any relocation requires written approval from Amerispec Inspection Services, with a 30-day prior written notice. Paragraph 3.1.6 clarifies that Amerispec Inspection Services retains the right to operate similar businesses or grant rights to other franchisees outside the designated territory, even if they compete for customers within the franchisee's territory. If the franchisee fails to meet the criteria to maintain protected status, Amerispec Inspection Services can operate or franchise similar businesses within the franchisee's designated territory.