What is considered an 'Improvement' according to the Bumble Roofing franchise agreement?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
8.5 Franchisee will not be required to offer or sell new Services or Products as set out in Section 8.2(e) if Franchisee demonstrates to Franchisor's reasonable satisfaction that:
(a) A substantial capital improvement not contemplated by this Agreement or in the Manual is required, thereby resulting in a material hardship to a majority of BUMBLE ROOFING® franchisees; or
(b) A material reduction in a majority of BUMBLE ROOFING® franchisees' sales or profitability would result therefrom.
For the purposes of this Section 8.5(b), a 33% decrease in sales from the average sales in the prior 12 months would be considered a material reduction in sales (subject to seasonal factors that may be applicable to the Territory), and a 20% reduction in profitability from the average profitability during the previous 12 months (subject to seasonal factors that may be applicable to the Territory) would be considered a material reduction in profitability based on a forecast developed by Franchisee in good faith and approved by Franchisor in its sole discretion.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to the 2025 Bumble Roofing Franchise Disclosure Document, a 'substantial capital improvement' is defined within the context of new services or products that Bumble Roofing may introduce. Specifically, a franchisee will not be required to offer or sell new services or products if a substantial capital improvement, not already outlined in the franchise agreement or manual, is required. This requirement must also result in a material hardship for the majority of Bumble Roofing franchisees.
This provision protects franchisees from being forced to invest heavily in upgrades or new equipment to offer new services if those investments were not initially anticipated. It ensures that Bumble Roofing cannot unilaterally impose significant financial burdens on its franchisees without considering the potential impact. The FDD also specifies that a franchisee can be exempt if a material reduction in sales or profitability would result, defining a material reduction as a 33% decrease in sales or a 20% reduction in profitability from the average of the prior 12 months, accounting for seasonal factors.
For a prospective Bumble Roofing franchisee, this clause offers a degree of financial security. It means that the franchisee can push back against mandates from Bumble Roofing to adopt new offerings that necessitate major, unforeseen capital expenditures. However, the franchisee would need to demonstrate that such an investment would create a material hardship for most franchisees. This may require the franchisee to engage with other franchisees to gather data and build a case against the new requirement.
It's important to note that the determination of whether a capital improvement is 'substantial' and whether it causes a 'material hardship' is subject to interpretation and negotiation between the franchisee and Bumble Roofing. The franchisee should seek clarity on what constitutes a 'substantial capital improvement' during the due diligence process and understand how Bumble Roofing typically assesses 'material hardship' among its franchisees.