Crawl_Space_Ninja 2024 Franchise FAQ - FDD Ninja

Question 1

What was the total number of Crawl Space Ninja franchises operating at the end of 2023?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2021 | 7 | 17 | +10 |
|  | 2022 | 17 | 21 | +4 |
|  | 2023 | 21 | 18 | -3 |
| Company – | 2

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 49–51)

Question 2

What was the total number of Crawl Space Ninja franchises that transferred during 2023?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
| Total | 2021 | 0 |
|  | 2022 | 0 |
|  | 2023 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 49–51)

Question 3

In what ways does the Crawl Space Ninja Affiliate-Owned Outlet differ from typical System franchisees?

Accepted Answer

erators; in this Item 19, we refer to these nine (9) outlets as "Reporting Multi-Territory Franchised Outlets."

As of the issuance date of this disclosure document, we also have one (1) outlet that is owned and operated by our affiliate, in Knoxville, Tennessee (the "Affiliate-Owned Outlet"). Our Affiliate-Owned Outlet opened in January 2006 and operates in a substantially similar manner to our System franchisees; however, our Affiliate-Owned Outlet is a mature outlet that services a substantially larger territory than those typically granted to our System franchisees and does not operate under certain territorial restrictions as do our System franchisees.

Part I of this Item 19 discloses (i) the total Gross Revenue, as well as Total Adjusted Gross Revenue and certain Disclosed Operating Expenses for our single-territory Reporting Franchised Outlets during the Measurement Period (Table 1A); (ii) the total Gross Revenue, as well as Total Adjusted Gross Revenue and certain Disclosed Operating Expenses for our Reporting Multi-Territory Franchised Outlets during the Measurement Period (Table 1B); (iii) certain other data from all Reporting Franchised Outlets, including the Total Number of Jobs Sold, Average Number of Jobs Sold Per Outlet, Average Ticket Price, and Average Weekly Revenue, including the lows, highs, medians, and the percentage of Outlets that met or exceed the averages during the Measurement Period (Table 1C);

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 4

According to the Virginia addendum, what happens if a ground for default or termination stated in the Crawl Space Ninja franchise agreement does not constitute 'reasonable cause'?

Accepted Answer

Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any ground for default or termination stated in the franchise agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.

Source: Item 23 — RECEIPT (FDD pages 51–176)

Question 5

Does the Crawl Space Ninja agreement specify any conditions under which the laws of a state other than Tennessee would apply?

Accepted Answer

# **INDIANA ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT, FRANCHISE AGREEMENT, AND RELATED AGREEMENTS**

Neither Crawlspace Ninja Franchising, LLC, its Affiliate(s), nor any person identified in Item 2 has any material arbitration proceeding pending, or has during the ten (10) year period immediately preceding the date of this Disclosure Document been a party to concluded material arbitration proceedings.

The Franchise Agreement contains a covenant not to compete which extends beyond the termination of the franchise. These provisions may not be enforceable under Indiana law.

Indiana law makes unilateral termination of a franchise unlawful unless there is a material violation of the Franchise Agreement and the termination is not done in bad faith.

Indiana law prohibits a prospective general release of claims subject to the Indiana Deceptive Franchise Practices Law.

No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

Section 19.8 of the Franchise Agreement is hereby modified to provide that Franchisor is entitled to seek (rather than obtain) restraining orders or injunctive relief in accordance with the terms of this Section without the necessity of posting a bond.

Section 17 of the Franchise Agreement is hereby modified by adding the following subsection after the last subsection thereof:

Indiana Law. The conditions under which this Agreement can be terminated may be affected by Indiana law [IC Stat. Sec. 23-2-2.5 and 23-2-2.7] which provides Franchisee with certain termination rights.

Section 20.2 of the Franchise Agreement is hereby modified such that Franchisor agrees to select as the place for mediation a location within the State of Indiana and the laws of the State of Indiana shall apply to the mediation proceedings.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 6

What is the fee for a Crawl Space Ninja owner who does not attend the annual training conference?

Accepted Answer

|                                                      | Amount                                                                                                                                                              | Due Date                                                      | Remarks                                                                                                                                                                                                                                                                                                       |
|------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Annual Training Conference | Currently

Source: Item 6 — OTHER FEES (FDD pages 10–17)

Question 7

Is a Crawl Space Ninja franchisee required to service regional or national accounts established by the franchisor?

Accepted Answer

We reserve the right to establish regional or national accounts with other companies that want to conduct business with us across multiple franchised or company owned territories.

If we establish such accounts, you are required to service them on the terms negotiated.

If you cannot or are unwilling to do so, we reserve the right to service those accounts or designate another Franchisee to do so (Franchise Agreement, Section 12.5).

With the exception of National and Regional accounts, Franchisee shall have the right to provide products and services at any price that Franchisee may determine.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 8

Does the Crawl Space Ninja agreement specify any criteria for determining whether the Covenantor's other skills, experience, and education are 'considerable' enough to avoid undue hardship?

Accepted Answer

- **g.** Covenantor acknowledges and agrees that each of the covenants contained herein will not impose any undue hardship on Covenantor since Covenantor has other considerable skills, experience and education which affords Covenantor the opportunity to derive income from other endeavors.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 9

According to the Crawl Space Ninja agreement, who is responsible for ensuring the Covenantor acts as required?

Accepted Answer

**a.** Franchisee shall take full responsibility for ensuring that Covenantor acts as required by this Agreement.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 10

According to the auditor, what level of assurance is provided regarding the accuracy of Crawl Space Ninja's financial statements?

Accepted Answer

as a going concern within one year from the date the financial statements are issued.

### *Auditor's Responsibilities for the Audit of the Financial Statements*

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.

![](_page_135_Picture_0.jpeg)

In performing an audit in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness Crawlspace Ninja Franchising LLC's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used, and the reasonableness of, significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Crawlspace Ninja Franchising LLC 's ability to continue as a going concern for a reasonable period of time.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 11

According to the auditor, what makes a misstatement 'material' in Crawl Space Ninja's financial statements?

Accepted Answer

Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 12

According to the basis for opinion, what auditing standards were used for the Crawl Space Ninja audit?

Accepted Answer

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Crawlspace Ninja Franchising LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 13

According to the Collateral Assignment of Lease Agreement, who is referred to as the 'Tenant' in relation to Crawl Space Ninja?

Accepted Answer

|                             |                                          | THIS COLLATERAL ASSIGNMENT                                                                        | OF | LEASE AGREEMENT (this or the |              |
|-----------------------------|------------------------------------------|---------------------------------------------------------------------------------------------------|----|------------------------------|--------------|
| "Agreement") made this |  | day of |  |  | , 20 |
| by and between | (hereinafter referred to as "Landlord"), |  |  |  |  |
| (hereinafter referred to as |  | "Tenant"); and Crawlspace Ninja Franchising LLC, a Tennessee |  |  | limited |
| liability company |  | (hereinafter referred to as "Franchisor"). Landlord has leased to Tenant certain premises known as terms of a Lease executed concurrently herewith, (the "Lease"), for Tenant's use of the same as a |
| CrawlSpace Ninja location | franchisee (the "Franchise Agreement"). | pursuant to a franchise agreement between Franchisor and Tenant, as |  |  |  |

Source: Item 22 — CONTRACTS (FDD page 51)

Question 14

According to Crawl Space Ninja, who has discretion and control over safety and security matters at the Franchised Business location?

Accepted Answer

Safety and Security of Premises.

Franchisee is solely responsible for the safety

![](_page_73_Picture_0.jpeg)

- and security of the Franchised Business location and vehicle(s), Franchisee's personnel, customers, agents and the general public.

All matters of safety and security are within Franchisee's discretion and control, and Franchisee's indemnification obligations set forth in Section 15.6 hereof shall apply to any claims made against Franchisor regarding safety or security.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 15

According to the Crawl Space Ninja FDD, who reports the 'Marketing' costs to the franchisor?

Accepted Answer

- (v) "Marketing" means the reported costs associated with marketing and promotion that were expended by the indicated Reporting Outlet during the Measurement Period, as reported to us by the indicated Reporting Outlet.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 16

According to the Crawl Space Ninja FDD, who reports the 'Payroll Tax' costs to the franchisor?

Accepted Answer

- (viii) "Payroll Tax" means the reported cost of payroll taxes expended by the indicated Reporting Outlet during the Measurement Period, as reported to us by the indicated Reporting Outlet.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 17

According to the Crawl Space Ninja FDD, who reports the 'Total Labor (Production, Sales)' to the franchisor?

Accepted Answer

- (ii) "Total Labor (Production, Sales)" means the wages paid to certain personnel of the Reporting Outlet, including for their performance of the Approved Services and for sales made by the Reporting Outlet during the Measurement Period, as reported to us by the indicated Reporting Outlet.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 18

According to Crawl Space Ninja's financial statements, what was the basis for management's conclusion that there was no significant doubt about the company's ability to continue as a going concern as of December 31, 2023?

Accepted Answer

Management has evaluated our ability to continue as a going concern as of December 31, 2023. Due to the positive net income for the year ended December 31, 2023 and the liquidity position of the Company at December 31, 2023, we have concluded that there is not significant doubt about our ability to continue as a going concern.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 19

According to the Crawl Space Ninja Franchise Agreement, what is the franchisee granted a license to operate?

Accepted Answer

NOW, THEREFORE, the parties, in consideration of the promises, undertakings and commitments of each party to the other set forth herein, and intending to be legally bound hereby, mutually agree as follows:

- **1. RECITATIONS**. The Recitations set out above form part of this Agreement.
- **2. GRANT OF FRANCHISE.** Franchisor hereby grants to Franchisee and Franchisee accepts, upon the terms and conditions contained in this Agreement, the license to operate a Crawl Space Ninja franchise (the "Franchised Business"), using only the Marks licensed hereunder, in strict conformity with the System, which may be changed, improved, and further developed by Franchisor from time to time. This grant applies only to a single location within a territory that is designated in Exhibit "B" attached hereto and incorporated herein (the "Territory").

Source: Item 22 — CONTRACTS (FDD page 51)

Question 20

According to the Crawl Space Ninja Franchise Agreement, what is the franchisee's obligation regarding the advertising?

Accepted Answer

ween Crawlspace Ninja Franchising LLC, a Tennessee limited liability company (the "Franchisor"), and |  |
| , a(n) |  | , with its principal place of business |
| located at | and | 's |
| principal(s) | , an individual residing at |  |
| and | , an individual residing at |  |
| ("Principal(s)"). | and Principal(s) shall be collectively referred |  |
| to in this Agreement as the "Franchisee". |  |  |
**WHEREAS**, Franchisee desires to enter into a franchise agreement with Franchisor for a Crawl Space Ninja business ("Franchise Agreement") which will allow Franchisee to conduct internet-based advertising, maintain social media and software accounts, and use telephone listings linked to the Crawl Space Ninja brand.

**WHEREAS**, Franchisor would not enter into the Franchise Agreement without Franchisee's agreement to enter into, comply with, and be bound by all the terms and provisions of this Agreement;

**NOW, THEREFORE**, for and in consideration of the foregoing and the mutual promises and covenants contained herein, and in further consideration of the Franchise Agreement and the mutual promises and covenants contained therein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

# 1. **Definitions**

All terms used but not otherwise defined in this Agreement shall have the meanings set forth in the Franchise Agreement. "Termination" of the Franchise Agreement shall include, but shall not be limited to, the voluntary termination, involuntary termination, or natural expiration thereof.

# 2. **Internet Advertising and Telephone Accounts**

2.1 Interest in Websites, Social Media and Software Accounts and Other Electronic Listings. Franchisee may acquire (whether in accordance with or in violation of the Franchise Agreement) during the term of Franchise Agreement, certain right, title, or interest in and to certain domain names, social media accounts, software accounts, hypertext markup language, uniform resource locator addresses, access to corresponding internet websites, and the right to hyperlink to certain websites and listings on various internet search engines (collectively, "Electronic Advertising") related to the Franchised Business or the Marks.

![](_page_121_Picture_0.jpeg)

- 2.2 Interest in Telephone Numbers and Listings. Franchisee has or will acquire during the term of the Franchise Agreement, certain right, title, and interest in and to those certain telephone numbers and regular, classified, internet page, and other telephone directory listings (collectively, the "Telephone Listings") related to the Franchised Business or the Marks.
- 2.3 Transfer. On Termination of the Franchise Agreement, or on periodic request of Franchisor, Franchisee will immediately:
- 2.3.1 direct all internet service providers, domain name registries, internet search engines, social media and software companies, and other listing agencies (collectively, the "Internet Companies") with which Franchisee has Electronic Advertising: (i) to transfer all of Franchisee's interest in such Electronic Advertising to Franchisor; and (ii) to execute such documents and take such actions as may be necessary to effectuate such transfer.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 21

According to the Crawl Space Ninja Franchise Agreement, what is included in Exhibit B?

Accepted Answer

Copies of all proposed agreements regarding the franchise offering are included in Exhibit B and Exhibit C. These include our Franchise Agreement and all amendments to it (Marks, Territory Description, General Release, Statement of Ownership Interests in Franchisee, Lease Addendum, Spousal Guaranty, and Confidentiality and Non-Compete Agreement), as well as our Multi-Territory Addendum.

# **EXHIBIT B**

# **FRANCHISE AGREEMENT**

Source: Item 22 — CONTRACTS (FDD page 51)

Question 22

According to the Crawl Space Ninja franchise agreement, what do the recitations set out above form a part of?

Accepted Answer

- **1. RECITATIONS**. The Recitations set out above form part of this Agreement.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 23

According to the table, how many Crawl Space Ninja locations were open at the start of 2022?

Accepted Answer

| Year | Start of Year | Opened | Other reasons                    | End of Year |
|------|---------------|--------|----------------------------------|-------------|
| 2021 | 7             | 11     | 1                                | 17          |
| 2022 | 17            | 4      | 0                                | 21          |
| 2023 | 21            | 3      | 6                                | 18          |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 24

What action must Crawl Space Ninja take upon taking possession of a leased property regarding the Tenant's rights and obligations?

Accepted Answer

4.1. Franchisor, upon taking possession, shall execute and deliver to Landlord its assumption of the Tenant's rights and obligations under the Lease effective as of the date of such possession. Franchisor shall cure any non-monetary d

Source: Item 22 — CONTRACTS (FDD page 51)

Question 25

How is 'Adjusted Gross Revenue' defined for a Crawl Space Ninja franchise?

Accepted Answer

- (i) "Total Revenue" means the total reported revenues and receipts from the sale of all products and services sold through the Reporting Franchised Outlets, the Reporting Multi-

![](_page_46_Picture_0.jpeg)

Territory Franchised Outlets, and Affiliate-Owned Outlet (each a "Reporting Outlet" and collectively, the "Reporting Outlets"), respectively. Total Revenue does not include sales tax, nor does it include the value of any gift cards or other rebates. In Table 1(C) above, "Average Weekly Revenue" means Total Revenue as defined above divided by seven (7).

- (ii) "Total Labor (Production, Sales)" means the wages paid to certain personnel of the Reporting Outlet, including for their performance of the Approved Services and for sales made by the Reporting Outlet during the Measurement Period, as reported to us by the indicated Reporting Outlet.

- (iii) "Total Materials" means the reported cost of job materials used in connection with the operation of the Reporting Outlet during the Measurement Period, as reported to us by the indicated Reporting Outlet.

- (iv) "Adjusted Gross Revenue" means "Total Revenue" minus "Total Labor (Production, Sales)" and "Total Materials."

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 26

Who administers the Crawl Space Ninja Brand Fund?

Accepted Answer

Our accounting and marketing personnel administer the Brand Fund. We may use Brand Fund contributions to pay any and all costs for the development, production and placement of advertising, marketing, promotional and public relations materials and programs. We may also use Brand Fund contributions to pay any and all costs of marketing seminars and training programs, market research, services of advertising and/or public relations agencies, and website development and maintenance. We may further use Brand Fund contributions to pay our costs (including salaries of our staff engaged in consumer marketing and other administrative costs) for advertising that is administered by us or prepared by us, as well as for administration and direction of the Brand Fund.

The Brand Fund will not be used to defray any of our other general operating expenses. Brand Fund contributions will not be used to solicit new franchise sales; provided however, we reserve the right to include "Franchises Available" or similar language and contact information in advertising produced with Brand Fund contributions.

The Brand Fund collects and expends the Brand Fund contributions for the benefit of the System as a whole. We reserve the right to use the Brand Fund contributions to place advertising in national, regional or local media (including broadcast, print, or other media) and to conduct marketing campaigns through any channel, in our discretion, including but not limited to, Internet and direct-mail campaigns. We have no obligation, however, to place advertising or conduct marketing campaigns in any particular area, including the Territory where your Franchised Business is located. The Brand Fund and its earnings shall not otherwise inure to our benefit except that any resulting technology and intellectual property shall be deemed our property.

We have no obligation to make expenditures that are equivalent or proportionate to your Brand Fund contribution or to ensure that you benefit directly or pro rata from the production or placement of advertising from the Brand Fund

An annual unaudited financial statement of the Brand Fund is available to any franchisee upon written request.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 27

Does the Crawl Space Ninja agreement specify that the parties acknowledge the receipt and sufficiency of mutual consideration for the agreement regarding applicable state law and forum?

Accepted Answer

NOW, THEREFORE, the parties, in consideration of the promises, undertakings and commitments of each party to the other set forth herein, and intending to be legally bound hereby, mutually agree as follows:

**WHEREAS**, Franchisee desires to enter into a franchise agreement with Franchisor for a Crawl Space Ninja business ("Franchise Agreement") which will allow Franchisee to conduct internet-based advertising, maintain social media and software accounts, and use telephone listings linked to the Crawl Space Ninja brand.

**WHEREAS**, Franchisor would not enter into the Franchise Agreement without Franchisee's agreement to enter into, comply with, and be bound by all the terms and provisions of this Agreement;

**NOW, THEREFORE**, for and in consideration of the foregoing and the mutual promises and covenants contained herein, and in further consideration of the Franchise Agreement and the mutual promises and covenants contained therein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Source: Item 22 — CONTRACTS (FDD page 51)

Question 28

Does the Crawl Space Ninja agreement specify that the waiver of certain damages extends to the Franchisor's affiliates, officers, directors, shareholders, partners, agents, representatives, independent contractors, servants and employees?

Accepted Answer

TO THE FULLEST EXTENT PERMITTED BY LAW, FRANCHISEE AGREES TO EXONERATE AND INDEMNIFY AND HOLD HARMLESS CRAWLSPACE NINJA FRANCHISING LLC, CRAWLSPACE NINJA HOLDING, LLC, AND ANY OF EITHER'S PARENT COMPANY, SUBSIDIARIES, DIVISIONS, AFFILIATES, SUCCESSORS, ASSIGNS AND DESIGNEES (COLLECTIVELY REFERRED TO AS THE

![](_page_82_Picture_0.jpeg)

"CRAWLSPACE NINJA INDEMNITEES") AS WELL AS THE CRAWL SPACE NINJA INDEMNITEES' DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SHAREHOLDERS, SUCCESSORS, DESIGNEES AND REPRESENTATIVES, FROM ALL CLAIMS BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATED TO THE OPERATION, CONDITION, OR ANY PART OF FRANCHISEE'S CRAWL SPACE NINJA FRANCHISE, THE FRANCHISED BUSINESS, THE PRODUCTS, THE PREMISES, OR ANY ASPECT OF THE REAL ESTATE CONNECTED TO FRANCHISEE'S FRANCHISED BUSINESS, WHETHER CAUSED BY FRANCHISEE, FRANCHISEE'S AGENTS OR EMPLOYEES, OR ARISING FROM FRANCHISEE'S ADVERTISING OR BUSINESS PRACTICES, REGARDLESS OF WHETHER THE ALLEGED INJURY OR LIABILITY IS CAUSED IN WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF THE CRAWLSPACE NINJA INDEMNITEES. FRANCHISEE AGREES TO PAY FOR ALL THE CRAWLSPACE NINJA INDEMNITEES' LOSSES, EXPENSES (INCLUDING, BUT NOT LIMITED TO ATTORNEYS' FEES) OR CONCURRENT OR CONTRIBUTING LIABILITY INCURRED IN CONNECTION WITH ANY ACTION, SUIT, PROCEEDING, INQUIRY (REGARDLESS OF WHETHER THE SAME IS REDUCED TO JUDGMENT OR DETERMINATION), OR ANY SETTLEMENT THEREOF FOR THE INDEMNIFICATION GRANTED BY FRANCHISEE HEREUNDER. THE CRAWLSPACE NINJA INDEMNITEES SHALL HAVE THE RIGHT TO SELECT AND APPOINT INDEPENDENT COUNSEL TO REPRESENT ANY OF THE CRAWLSPACE NINJA INDEMNITEES IN ANY ACTION OR PROCEEDING COVERED BY THIS INDEMNITY. FRANCHISEE AGREES THAT TO HOLD THE CRAWLSPACE NINJA INDEMNITEES HARMLESS, FRANCHSIEE WILL REIMBURSE THE CRAWLSPACE NINJA INDEMNITEES AS THE COSTS AND EXPENSES ARE INCURRED BY THE CRAWLSPACE NINJA INDEMNITEES.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 29

Is Crawl Space Ninja allowed to use Brand Fund contributions to solicit new franchise sales?

Accepted Answer

Our accounting and marketing personnel administer the Brand Fund. We may use Brand Fund contributions to pay any and all costs for the development, production and placement of advertising, marketing, promotional and public relations materials and programs. We may also use Brand Fund contributions to pay any and all costs of marketing seminars and training programs, market research, services of advertising and/or public relations agencies, and website development and maintenance. We may further use Brand Fund contributions to pay our costs (including salaries of our staff engaged in consumer marketing and other administrative costs) for advertising that is administered by us or prepared by us, as well as for administration and direction of the Brand Fund.

The Brand Fund will not be used to defray any of our other general operating expenses. Brand Fund contributions will not be used to solicit new franchise sales; provided however, we reserve the right to include "Franchises Available" or similar language and contact information in advertising produced with Brand Fund contributions.

The Brand Fund collects and expends the Brand Fund contributions for the benefit of the System as a whole. We reserve the right to use the Brand Fund contributions to place advertising in national, regional or local media (including broadcast, print, or other media) and to conduct marketing campaigns through any channel, in our discretion, including but not limited to, Internet and direct-mail campaigns. We have no obligation, however, to place advertising or conduct marketing campaigns in any particular area, including the Territory where your Franchised Business is located. The Brand Fund and its earnings shall not otherwise inure to our benefit except that any resulting technology and intellectual property shall be deemed our property.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 30

What are the Approved Products and Approved Services offered by Crawl Space Ninja franchisees?

Accepted Answer

ancial performance representation will be made available to the prospective franchisee upon reasonable request.

As of the issuance date of this disclosure document, we have franchisees operating in eighteen (18) Territories throughout the United States (our "Franchised Outlets"), each of which operates under our Principal Marks and offers our Approved Products and Approved

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Services. Of these Franchised Outlets, we have excluded from the Item 19 the financial performance of two (2) of our Franchised Outlets that opened and began operating during the 2023 calendar year, and therefore were not open for the duration of the Measurement Period.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 31

Is attendance at additional training programs mandatory for Crawl Space Ninja franchisees?

Accepted Answer

training. The on-site training will be for three (3) days at no additional cost to you.

We may conduct mandatory or optional additional training programs, including an annual conference or national business meeting. If we require it, you must attend mandatory training programs that we offer for up to five (5) days each year, and an annual conference or national business meeting for a minimum two (2) days each year, at a location we designate. Failure to attend mandatory training, including an annual conference or business meeting is a default under the Franchise Agreement. The current fee for the annual conference is five hundred dollars (\$500). We reserve the right to modify the fees for tuition and/or attendance for all additional training programs, including the annual business meeting or conference. You must also pay your transportation, lodging, meals and other expenses to attend any mandatory training program. If you fail to attend any mandatory training program, you are required to obtain the training at a location we designate, at your sole cost, which includes tuition

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 32

What does the auditing firm believe regarding the audit evidence obtained during the Crawl Space Ninja audit?

Accepted Answer

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Crawlspace Ninja Franchising LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 33

When auditing Crawl Space Ninja Franchising LLC's financial statements, what type of judgment and skepticism should be exercised?

Accepted Answer

In performing an audit in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness Crawlspace Ninja Franchising LLC's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used, and the reasonableness of, significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Crawlspace Ninja Franchising LLC 's ability to continue as a going concern for a reasonable period of time.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 34

What is the auditor required to conclude regarding Crawl Space Ninja Franchising LLC's ability to continue as a going concern?

Accepted Answer

In performing an audit in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness Crawlspace Ninja Franchising LLC's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used, and the reasonableness of, significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Crawlspace Ninja Franchising LLC 's ability to continue as a going concern for a reasonable period of time.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 35

What is the auditor's responsibility regarding fraud detection in Crawl Space Ninja's financial statements?

Accepted Answer

as a going concern within one year from the date the financial statements are issued.

### *Auditor's Responsibilities for the Audit of the Financial Statements*

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.

![](_page_135_Picture_0.jpeg)

In performing an audit in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness Crawlspace Ninja Franchising LLC's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used, and the reasonableness of, significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Crawlspace Ninja Franchising LLC 's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 36

How is 'Average Weekly Revenue' calculated for Crawl Space Ninja?

Accepted Answer

- C. Definitions:
- (i) "Total Revenue" means the total reported revenues and receipts from the sale of all products and services sold through the Reporting Franchised Outlets, the Reporting Multi-

![](_page_46_Picture_0.jpeg)

Territory Franchised Outlets, and Affiliate-Owned Outlet (each a "Reporting Outlet" and collectively, the "Reporting Outlets"), respectively. Total Revenue does not include sales tax, nor does it include the value of any gift cards or other rebates. In Table 1(C) above, "Average Weekly Revenue" means Total Revenue as defined above divided by seven (7).

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 37

What is the basis of the Crawl Space Ninja pre-opening training program?

Accepted Answer

The Operations Manual is the basis of our pre-opening training program in addition to hands on training in "classroom" and field settings.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 38

In case of a dispute, which version of the Crawl Space Ninja manual controls?

Accepted Answer

Through the expenditure of considerable time, effort and money, Franchisor has developed and established a unique and distinctive crawl space encapsulation business, which features, among other things crawl space waterproofing, dehumidification, ventilation, insulation, mold removal and prevention, air sealing, and door installation using Franchisor's designs, and using Franchisor's confidential operations manual ("Manual") of business practices and policies, and Franchisor's distinctive trade dress, operations methods, sales techniques, inventory, procedures for management control and training, assistance, advertising, and promotional programs, all of which may be changed, improved or further developed by Franchisor at any time (taken together herein the "System"). Training will occur at Franchisor's headquarters and/or other affiliated outlet currently located in Knoxville, Tennessee, and will be provided consistent with Franchisor's training manuals.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 39

Can Crawl Space Ninja change the tuition or attendance fees for training programs?

Accepted Answer

training. The on-site training will be for three (3) days at no additional cost to you.

We may conduct mandatory or optional additional training programs, including an annual conference or national business meeting. If we require it, you must attend mandatory training programs that we offer for up to five (5) days each year, and an annual conference or national business meeting for a minimum two (2) days each year, at a location we designate. Failure to attend mandatory training, including an annual conference or business meeting is a default under the Franchise Agreement. The current fee for the annual conference is five hundred dollars (\$500). We reserve the right to modify the fees for tuition and/or attendance for all additional training programs, including the annual business meeting or conference. You must also pay your transportation, lodging, meals and other expenses to attend any mandatory training program. If you fail to attend any mandatory training program, you are required to obtain the training at a location we designate, at your sole cost, which includes tuition

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 40

What is the consequence if a Crawl Space Ninja franchisee fails to attend mandatory additional training or the annual business meeting?

Accepted Answer

training. The on-site training will be for three (3) days at no additional cost to you.

We may conduct mandatory or optional additional training programs, including an annual conference or national business meeting. If we require it, you must attend mandatory training programs that we offer for up to five (5) days each year, and an annual conference or national business meeting for a minimum two (2) days each year, at a location we designate. Failure to attend mandatory training, including an annual conference or business meeting is a default under the Franchise Agreement. The current fee for the annual conference is five hundred dollars (\$500). We reserve the right to modify the fees for tuition and/or attendance for all additional training programs, including the annual business meeting or conference. You must also pay your transportation, lodging, meals and other expenses to attend any mandatory training program. If you fail to attend any mandatory training program, you are required to obtain the training at a location we designate, at your sole cost, which includes tuition

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 41

What constitutes a default under the Crawl Space Ninja Franchise Agreement?

Accepted Answer

pace; complete vehicle modifications, and complete required training. If you have not opened your Franchised Business within either (i) ninety (90) days after you sign the Franchise Agreement, or (ii) sixty (60) days after you satisfactorily complete the Initial Management Training Program, you must obtain our consent to extend the time to open, which we may or may not grant, at our discretion. Failure to open your Franchised Business within the original time as extended, is a default of the Franchise Agreement. (Franchise Agreement, Sections 8.1, 8.3)

![](_page_25_Picture_0.jpeg)

# 4. **Obligations After Opening**

During the operation of your franchise, we will:

- a. offer from time to time, in our discretion, mandatory or optional additional training programs. If we require it, you must attend mandatory additional training offered by us for up to five (5) days each year at a location we designate and attend an annual business meeting or franchisee conference for up to three (3) days each year at a location we designate. Failure to attend mandatory additional training or an annual business meeting or conference is a default of the Franchise Agreement.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 42

Does the Crawl Space Ninja Covenantor acknowledge that the covenants impose undue hardship on them?

Accepted Answer

- **c.** The parties acknowledge and agree that each of the covenants contained herein are reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Franchisor.

- **d.** If the period of time or the geographic scope specified Section 2.b. above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable.

In addition, Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Agreement or any portion thereof, without Covenantor's or Franchisee's consent, effective immediately upon receipt by Covenantor of written notice thereof, and Covenantor agrees to forthwith comply with any covenant as so modified.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 43

What is the current fee for the Crawl Space Ninja annual training conference per person, excluding expenses?

Accepted Answer

| Type of Fee 1 | Amount | Due Date | Remarks |
|---|---|---|---|
| Annual Training Conference | Currently $500 per person plus expenses incurred. There is a fee of $2,500 per territory owned for any owner who doesn’t attend the conference. | As incurred | If we require it, you must attend an annual business meeting or franchisee conference for up to three (3) days each year at a location we designate. If applicable, it is recommended that your general manager attend the conference. |

Source: Item 6 — OTHER FEES (FDD pages 10–17)

Question 44

What other data is included in Part I of Item 19 from all Crawl Space Ninja Reporting Franchised Outlets?

Accepted Answer

Part I of this Item 19 discloses (i) the total Gross Revenue, as well as Total Adjusted Gross Revenue and certain Disclosed Operating Expenses for our single-territory Reporting Franchised Outlets during the Measurement Period (Table 1A); (ii) the total Gross Revenue, as well as Total Adjusted Gross Revenue and certain Disclosed Operating Expenses for our Reporting Multi-Territory Franchised Outlets during the Measurement Period (Table 1B); (iii) certain other data from all Reporting Franchised Outlets, including the Total Number of Jobs Sold, Average Number of Jobs Sold Per Outlet, Average Ticket Price, and Average Weekly Revenue, including the lows, highs, medians, and the percentage of Outlets that met or exceed the averages during the Measurement Period (Table 1C); and (iv) certain consolidated information about our top-, middle-, and lower-performing Reporting Franchised Outlets during the Measurement Period (Table 1D).

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 45

What is the date of the auditor's report for Crawl Space Ninja?

Accepted Answer

**Dallas Office** 2425 N Central Expy. **Suite 200** Richardson, TX 75080 Phone 972 238 5900 Fax 972 692 5357

**www.agllp-cpa.com**

## **Independent Auditor's Report**

To the Member Crawlspace Ninja Franchising LLC Knoxville, Tennessee

### **Report on the Financial Statements**

### *Opinion*

We have audited the financial statements of Crawlspace Ninja Franchising LLC (a Tennessee limited liability company), which comprise the balance sheets as of December 31, 2023 and 2022, and the related statements of operations, changes in member's equity (deficit) and cash flows for the years ended December 31, 2023, 2022 and 2021, and related notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations, changes in member's equity (deficit) and cash flows for the years ended December 31, 2023, 2022 and 2021 in conformity with accounting principles generally accepted in the United States of America.

### *Basis for Opinion*

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Crawlspace Ninja Franchising LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

### *Responsibilities of Management for the Financial Statements*

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Crawlspace Ninja Franchising LLC ability to continue as a going concern within one year from the date the financial statements are issued.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 46

As of what date is the Crawl Space Ninja balance sheet?

Accepted Answer

![](_page_150_Picture_0.jpeg)

# Crawlspace Ninja Franchising LLC Balance Sheet

As of April 30, 2024

---

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 47

Who determines if a Crawl Space Ninja franchisee's General Manager can engage in other business activities?

Accepted Answer

11.4.3. Franchisee's General Manager, agents, employees and third-party business affiliates shall further:

- 11.4.3.1.

Meet all Franchisor's standards and criteria for such individual(s), as set forth in the Manual.

- 11.4.3.2.

Not engage in any other business activity without the Franchisor's consent, which may be withheld in Franchisor's sole discretion.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 48

Who determines whether I satisfactorily complete the initial training for a Crawl Space Ninja franchise?

Accepted Answer

d. provide you and up to two other individuals with initial training at our headquarters in Knoxville, TN or another location we designate. We will determine, in our sole discretion, whether you satisfactorily complete the initial training. (Franchise Agreement, Sections 7.1, 7.2).

Prior to opening your Crawl Space Ninja business, you and up to two of your employees need to successfully complete our training program, which is conducted at our headquarters in Knoxville, Tennessee, or at another location we designate based on our discretion. The Crawl Space Ninja pre-opening training program lasts for approximately 15 days at our headquarters or virtually. The franchise owner(s) must attend and there is no charge for training a total of up to two additional people as part of your initial fee. You are responsible for costs and expenses associated with travel to Knoxville, Tennessee, as well as any onsite travel for our trainers.

The Operations Manual is the basis of our pre-opening training program in addition to hands on training in "classroom" and field settings.

We provide our training on an "as-needed" basis, approximately 4 to 6 times per year, typically every 8 to 12 weeks. We may change our training program at any time at our discretion. Our training program is conducted by and under the supervision of Brit Roberts, who has at least one (1) year of experience in the subjects taught in our initial training program and has been with us or our affiliates for one (1) year. Training will include standards for operations, management and marketing.

If you do not complete our Pre-Opening Training Program to our satisfaction, we reserve the right to terminate the Franchise Agreement.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 49

During employment with a Crawl Space Ninja franchisee, can a Covenantor participate in a similar crawl space business?

Accepted Answer

- **a.** In order to protect the goodwill and unique qualities of the System, and in consideration for the disclosure to Covenantor of the Confidential Information, Covenantor further agrees and covenants that during Covenantor's employment or association with Franchisee, Covenantor shall not, for Covenantor or through, on behalf of or in conjunction with any person or entity:

- (i) divert, or attempt to divert, any business or customer of the Crawl Space Ninja system or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise,

- (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any crawl space or basement service business substantially similar to the System, or

Source: Item 22 — CONTRACTS (FDD page 51)

Question 50

What is the estimated range for the initial inventory and tools package fee for a Crawl Space Ninja franchise?

Accepted Answer

Initial Inventory Package Fee

You must pay us \$20,000 to \$30,000 for the initial inventory and tools needed for your Franchised Business to encapsulate up to four crawl spaces or basements depending on t

Source: Item 5 — INITIAL FEES (FDD pages 9–10)

Question 51

What ethical requirements are the auditors of Crawl Space Ninja Franchising LLC required to meet?

Accepted Answer

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Crawlspace Ninja Franchising LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 52

What does Crawl Space Ninja expressly disclaim regarding the business venture?

Accepted Answer

5. Franchisor expressly disclaims the making of, and Franchisee acknowledges that it has not received or relied upon, any warranty or guarantee, express or implied, as to the potential volume, profits or success of the business venture contemplated by the Franchise Agreement.

6. Franchisee acknowledges that Franchisor's approval or acceptance of Franchisee's Business location does not constitute a warranty, recommendation or endorsement of the location for the Franchised Business, nor any assurance by Franchisor that the operation of the Franchised Business at the premises will be successful or profitable.

Source: Item 23 — RECEIPT (FDD pages 51–176)

Question 53

What external factors may affect a Crawl Space Ninja business?

Accepted Answer

The market for your Crawl Space Ninja Franchised Business is made up of residential and commercial property owners.

The market for crawl space/basement repair and encapsulation services is mature and competitive. You will compete with businesses, including national, regional and local businesses, offering services similar to those offered by your Crawl Space Ninja Franchised Business. There are other basement and crawl space repair franchises, as well as independent businesses throughout the United States, that may offer similar products and services. Your business may also be affected by economic conditions.

### **Industry Specific Regulations:**

You must comply with all local, state and federal laws and regulations that apply to the operation of your Crawl Space Ninja Franchised Business, including, among others, business operations, land use, insurance, discrimination, employment and workplace safety laws. Your advertising of the Franchised Business is regulated by the Federal Trade Commission. Depending upon the state in which you operate your franchise, you may require a contractor's license and/or a mold remediation certification. There may be federal, state and local laws which affect your Franchised Business in addition to those listed here.

You are solely responsible for investigating whether there are any state or local regulations or requirements that may apply in the geographic area in which you intend to conduct business. You should consider both their effect on your business and the cost of compliance. You are responsible for obtaining all licenses and permits which may be required for your business.

Source: Item 1 — THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 6–8)

Question 54

What factors can affect the time it takes to open a Crawl Space Ninja franchise?

Accepted Answer

We estimate the typical length of time between the signing of the Franchise Agreement and the time you open your Crawl Space Ninja franchised business is 30 to 90 days. Factors that may affect this time period include your ability to acquire financing or permits; secure storage space; complete vehicle modifications, and complete required training. If you have not opened your Franchised Business within either (i) ninety (90) days after you sign the Franchise Agreement, or (ii) sixty (60) days after you satisfactorily complete the Initial Management Training Program, you must obtain our consent to extend the time to open, which we may or may not grant, at our discretion. Failure to open your Franchised Business within the original time as extended, is a default of the Franchise Agreement. (Franchise Agreement, Sections 8.1, 8.3)

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Question 55

Are the fees and expenses described in Item 6 of the Crawl Space Ninja FDD refundable?

Accepted Answer

### Notes:

- 1) The table above provides recurring or isolated fees or payments that you must pay to us or our affiliates or that we or our affiliates impose or collect in whole or in part on behalf of a third party or that you are required to spend pursuant to] the Franchise Agreement. All fees and expenses described in this Item 6 are nonrefundable. Except as otherwise indicated in the chart above, we uniformly impose all fees and expenses listed and they are payable to us and are fully earned upon receipt by us.
- 2) Royalty payments are due and payable each Wednesday for the previous week. The Minimum Performance Requirements for revenue per year of agreement follow:

Source: Item 6 — OTHER FEES (FDD pages 10–17)

Question 56

What financial information is disclosed in Part I of Item 19 for Crawl Space Ninja single-territory Reporting Franchised Outlets?

Accepted Answer

Part I of this Item 19 discloses (i) the total Gross Revenue, as well as Total Adjusted Gross Revenue and certain Disclosed Operating Expenses for our single-territory Reporting Franchised Outlets during the Measurement Period (Table 1A); (ii) the total Gross Revenue, as well as Total Adjusted Gross Revenue and certain Disclosed Operating Expenses for our Reporting Multi-Territory Franchised Outlets during the Measurement Period (Table 1B); (iii) certain other data from all Reporting Franchised Outlets, including the Total Number of Jobs Sold, Average Number of Jobs Sold Per Outlet, Average Ticket Price, and Average Weekly Revenue, including the lows, highs, medians, and the percentage of Outlets that met or exceed the averages during the Measurement Period (Table 1C); and (iv) certain consolidated information about our top-, middle-, and lower-performing Reporting Franchised Outlets during the Measurement Period (Table 1D).

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–49)

Question 57

Does the Crawl Space Ninja financial statement include a statement of operations?

Accepted Answer

We have audited the financial statements of Crawlspace Ninja Franchising LLC (a Tennessee limited liability company), which comprise the balance sheets as of December 31, 2023 and 2022, and the related statements of operations, changes in member's equity (deficit) and cash flows for the years ended December 31, 2023, 2022 and 2021, and related notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations, changes in member's equity (deficit) and cash flows for the years ended December 31, 2023, 2022 and 2021 in conformity with accounting principles generally accepted in the United States of America.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 58

Where can I find the audited financial statements for Crawl Space Ninja?

Accepted Answer

Our audited financial statements dated December 31, 2023, December 31, 2022, and December 31, 2021, are included in Exhibit C. Our fiscal year end is December 31.

# **EXHIBIT D**

# **FINANCIAL STATEMENTS**

![](_page_132_Picture_0.jpeg)

# **Crawlspace Ninja Franchising LLC**

Financial Statements *As of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021*

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 51)

Question 59

Where can I find the specific description of my Crawl Space Ninja territory?

Accepted Answer

Under the Franchise Agreement, you have the right to establish and operate one (1) Crawl Space Ninja outlet within a territory (the "Territory"). You are required to establish an office space located within your territory. The Territory will be based on a particular area surrounding your Crawl Space Ninja office. Your Territory is located in all or a portion of a listed town, city, or county, and is defined based on geographic boundaries, streets, zip codes, or other criteria we deem appropriate in our sole discretion. The Territory is determined on an individual basis, taking into account minimum numbers of households, average home prices, and household incomes, based on the most recent available U.S. Census data at the time the Territory is designated. The Territory will be described in Exhibit

![](_page_31_Picture_0.jpeg)

"B" to the Franchise Agreement prior to the purchase of a franchise, or in some cases, prior to the execution of a lease agreement.

Source: Item 12 — TERRITORY (FDD pages 31–34)

Question 60

Does the Crawl Space Ninja franchise agreement require mediation for disputes regarding a franchisee's payment obligations?

Accepted Answer

Notwithstanding the foregoing, The parties will not be required to first attempt to mediate a controversy, dispute, or claim through mediation as set forth in this Section 20.2 if such controversy, dispute, or claim concerns an allegation that a party has violated (or threatens to violate, or poses an imminent risk of violating): (i) any federally protected intellectual property rights in the Marks, the System, or in any confidential information; (ii) any of the restrictive covenants contained in this Agreement; and (iii) any of Franchisee's payment obligations under this Agreement.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 61

In the Crawl Space Ninja franchise agreement, what state is Crawlspace Ninja Franchising LLC a limited liability company in?

Accepted Answer

gns.

IN WITNESS WHEREOF, Guarantor has signed this Guaranty as of the date set forth above.

| GUARANTOR - SPOUSE OF FRANCHISEE'S PRINCIPAL: |             |  |
|-----------------------------------------------|-------------|--|
| Witness Name:                                 | Print Name: |  |

![](_page_116_Picture_0.jpeg)

# **Attachment 7**

# **CONFIDENTIALITY AND NON-COMPETE AGREEMENT**

| into this | day of | , 20 |
|-----------|------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | , by |
|           |                                    | , a(n)                                                                                                                                                                               |
|           |                                    | ("Franchisee"), a franchisee of Crawlspace                                                                                                                                           |
|           | Ninja Franchising LLC, a Tennessee | Limited Liability Company ("Franchisor"), and                                                                                                                                        |
|           |                                    | , an individual ("Covenantor") in connection with an Franchise Agreement                                                                                                             |
| dated.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 62

Is a Crawl Space Ninja franchisee allowed to sell and solicit customers through alternative distribution channels?

Accepted Answer

- 3.1 Territory. This Agreement grants Franchisee the right to operate the Franchised Business at a single location within the Territory. Franchisor agrees that Franchisor will not, and Franchisor will not permit any other of our franchisees, to operate a franchised Crawl Space Ninja location in the Territory using the same Marks as licensed to Franchisee in this Agreement so long as Franchisee is not in default under this Agreement or this Agreement has not expired or been terminated. Except as otherwise specified in this Agreement, Franchisor reserves the right to open, operate or franchise Crawl Space Ninja franchises around, bordering and adjacent to the Territory. Franchisee will be selling its products and services from a location within the territory, and will provide services to customers within that territory. Franchisee is prohibited from selling and soliciting customers through alternative distribution channels as more fully specified herein.
- 3.2 Reservation of Rights. Franchisee understands and agrees that all rights to any businesses, other than as specified in this Agreement, are fully reserved to Franchisor within or outside of the Territory. Franchisor reserves the right, without limitation, to offer (i) other products or services not offered under the Marks, (ii) other crawl space, basement, and repair concepts under the Marks or other trademarks, including licensing Franchisor's designs for use in other formats and (iii) products or services through any channel in the Territory other than a dedicated Crawl Space Ninja location, such as the Internet ("Alternate Distribution Channels"). Franchisee will receive no compensation for Franchisor's sales through Alternate Distribution Channels made within the Territory.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 63

How must a Crawl Space Ninja franchisee notify the franchisor of any apparent infringement of the Intellectual Property?

Accepted Answer

Franchisee shall notify Franchisor immediately via both email and telephone, of any apparent infringement of or challenge to Franchisee's use of any Intellectual Property and of any claim by any person of any rights in any Intellectual Property.

Franchisee shall not communicate with any person other than Franchisor or any designated affiliate thereof, their counsel and Franchisee's counsel in connection with any such infringement, challenge or claim.

Franchisor shall have complete discretion to take such action as it deems appropriate in connection with the foregoing, and the right to control exclusively, or to delegate control to any of its affiliates of, any settlement, litigation or other proceeding arising out of any such alleged infringement, challenge or claim or otherwise relating to any Intellectual Property.

Franchisee agrees to execute any and all instruments and documents, render such assistance, and do such acts or things as may, in the opinion of Franchisor, reasonably be necessary or advisable to protect and maintain the interests of Franchisor or any other person or entity in any litigation or other proceeding or to otherwise protect and maintain the interests of Franchisor or any other interested party in the Intellectual Property.

Franchisor will indemnify and defend Franchisee against and reimburse Franchisee for actual damages (including settlement amounts) for which Franchisee is held liable in any proceeding arising out of Franchisee's use of any of the Intellectual Property

Source: Item 22 — CONTRACTS (FDD page 51)

Question 64

How can a Crawl Space Ninja franchisee obtain an annual financial statement of the Brand Fund?

Accepted Answer

An annual unaudited financial statement of the Brand Fund is available to any franchisee upon written request.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)

Crawl_Space_Ninja 2024 FDD FAQ