What is the basis for increases to the Chem Dry yearly minimum purchase amount?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
License Fee.
ITEM 6 OTHER FEES
| Name of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Monthly Franchise Fee | The then current fee, which is presently $466.011 | 10th day of month | Generally, begins four months after you complete New Buyer Training, or if you are an existing Franchisee, the 4th month following the signing of the Franchise Agreement. If you are a transferring Franchisee, the month following the signing of the Franchise Agreement. Subject to CPI increase each year on April 1 and not more than once per calendar year. This fee must be paid via electronic funds transfer. The CPI increase for 2024 is 3%. |
| Yearly Minimum Purchase Amount | The then current fee, which is presently $3,244.501 | Annually | You must purchase a minimum of $3,244.50 (increased not more than once each calendar year to reflect increases in the CPI) of proprietary products from CDI each calendar year for each franchise you own. |
| Customer Service | Our then current fee which is presently $100 - $500 per month, | Due Monthly | You are required to use our web-based Customer Management System in the operation of the Business. |
Source: Item 6 — OTHER FEES (FDD pages 19–26)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the yearly minimum purchase amount is subject to increases based on the Consumer Price Index (CPI). Specifically, the franchisee must purchase a minimum of $3,244.50 of proprietary products from CDI each calendar year for each franchise owned. This amount can be increased, but not more than once per calendar year, to reflect increases in the CPI.
The CPI adjustments are implemented after Chem Dry provides notice to franchisees, typically on an annual basis, and are subject to Chem Dry's discretion. The FDD specifies that fees subject to adjustment for CPI increases refer to changes in the Consumer Price Index for All Urban Consumers, All Cities Average (1982-84=100), or another official index Chem Dry deems appropriate. As an example, the CPI increase for 2023 was 3%.
For a prospective Chem Dry franchisee, this means the initial minimum purchase amount of $3,244.50 could rise over time due to inflation. It is important to note that while the CPI adjustment is typically annual, Chem Dry retains discretion over whether to implement the increase. Franchisees should factor in potential increases to this minimum purchase requirement when forecasting their operating expenses and product sourcing strategy.