What constitutes a material reduction in profitability for a Bumble Roofing franchisee, allowing them to avoid offering new services or products?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
th Franchisor's rights under this Section 8.4; provided that Franchisor's exercise of these rights shall not unreasonably interfere with Franchisee's conduct of the Business.
- 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.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, a franchisee may be excused from offering new services or products if it can demonstrate to Bumble Roofing's satisfaction that doing so would result in a material reduction in profitability for a majority of Bumble Roofing franchisees.
The FDD specifies that a 20% reduction in profitability from the average profitability during the previous 12 months would be considered a material reduction. This determination is based on a forecast developed by the franchisee in good faith, but it must be approved by Bumble Roofing in its sole discretion. Seasonal factors that may affect the franchisee's territory are also taken into consideration.
This clause provides a degree of protection for franchisees against being forced to adopt changes that could significantly harm their business's financial performance. However, the franchisee bears the responsibility of developing a forecast to demonstrate the potential reduction in profitability, and Bumble Roofing ultimately has the final say in approving that forecast. This highlights the importance of a strong working relationship between the franchisee and franchisor, as well as the franchisee's ability to accurately project financial outcomes.