During the term of the Cinch I.T. franchise agreement and thereafter, what is the franchisee required to pay?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
ndirect interest in any business that (i) specializes, in whole or in part, in offering to the public substantially similar products and/or services to those products and/or services offered by a CINCH I.T. franchised business prior to the termination or expiration of this Agreement (a "Competitive Business") or (ii) grants franchises or licenses to others to operate a Competitive Business.
- 11.2 You covenant that, except as otherwise approved in writing by Us, You shall not, for a continuous uninterrupted period commencing upon the expiration or termination of this Agreement, regardless of the cause for termination, and continuing for two (2) years thereafter, either directly or indirectly, for Yourself or through, on behalf of or in conjunction with any person, persons, partnership or corporation, own, maintain, engage in, be employed by, advise, assist, invest in, franchise, make loans to, or have any interest in any business which is the same as or substantially similar to a CINCH I.T. franchised business and which is located within a radius of twenty-five (25) miles of each Designated Territory described in the Development Area hereunder or within twenty-five (25) miles of the location of any Franchisor-owned, franchisee-owned or affiliate-owned CINCH I.T. Business under the System which is in existence on the date of expiration or termination of this Agreement.
- 11.3 Sections 11.1 and 11.2 shall not apply to ownership by You of less than a five percent (5%) beneficial interest in the outstanding equity securities of any publicly-held corporation provided that You have no management responsibility or advisory responsibility with such publicly-traded company.
- 11.4 The Parties agree that each of the foregoing covenants shall be construed as independent of any other covenant or provision of this Agreement. If any or all portions of the covenants in this Section 11 are held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which Franchisor is a party, You expressly
agree to be bound by any lesser covenant subsumed within the terms of this covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Section 11.
- 11.5 You understand and acknowledge that We shall have the right, in Our sole discretion, to reduce the scope of any covenant set forth in Sections 11.1 and 11.2 in this Agreement, or any portion thereof, without Your consent, effective immediately upon receipt by You of written notice thereof, and You agree that You shall forthwith comply with any covenant as so modified, which shall be fully enforceable.
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, franchisees are subject to several payments during the term of the franchise agreement and even after termination under certain conditions. Specifically, franchisees must adhere to non-compete obligations, which, unless otherwise approved in writing by Cinch I.T., prevent them from engaging in similar businesses within a 25-mile radius of their Designated Territory or any existing Cinch I.T. Business for two years following the agreement's expiration or termination.
During the franchise term, franchisees are obligated to purchase and sell products and services bearing Cinch I.T.'s trade name and logo. They must also adhere to Cinch I.T.'s standards of quality and uniformity, selling products and services on a retail basis only, unless a separate agreement is made for resale rights. Cinch I.T. retains the right to set minimum and maximum prices for products and services, which franchisees must follow, and can modify these prices at their discretion. Franchisees are also required to buy certain services, equipment, and operating supplies from approved suppliers.
Furthermore, franchisees are required to spend a minimum of $1,000 per month on franchisor-directed local advertising and marketing programs after the Cinch I.T. Franchised Business has been in operation for one month. They must also conduct a Grand Opening Marketing and Promotional Program, spending at least $4,000, utilizing approved marketing materials, and providing a summary of expenditures within 60 days of opening. These ongoing financial obligations and operational restrictions highlight the importance of understanding the full scope of the franchise agreement before investing in a Cinch I.T. franchise.