factual

For Crawl Space Ninja, what is the minimum revenue performance requirement in Year 1 of the agreement?

Crawl_Space_Ninja Franchise · 2024 FDD

Answer from 2024 FDD Document

e per year of agreement follow:

Year 1 Year 2 Year 3 Year 4 Year 5+
Minimum $400,000 $650,000 $900,000 $1,150,000 $1,400,000
Performance
Requirement
(Revenue

Per Year of Agreement) If you fail to meet the minimum performance requirements, we may terminate your franchise agreement. Gross Revenue is defined in the Franchise Agreement to include all income of any type or nature and from any source that you derive or receive directly or indirectly from, through, by or on account of the operation of the Franchised Business at any time after the signing of your Franchise Agreement, in whatever form and from whatever source, including but not limited to cash, services, in kind from barter and/or exchange, as well as business interruption insurance proceeds, all without deduction for expenses including marketing expenses and taxes. However, the definition of Gross Revenue does not include sales tax that is collected from customers and transmitted to the appropriate taxing authorities.

If your Franchised Business generates $3,000,000 or more in Gross Revenue in any one (1) Territory (each a "Qualifying Territory") during the Term, as determined by calculating the total Gross Revenue as of the applicable anniversary date of the opening date of your Franchised Business, then we will reduce your Royalty for the Qualifying Territory to six percent (6%) of Gross Revenue for the subsequent twelve (12) month period for the Qualifying Territory.

    1. We require you to contribute one percent (1%) of your weekly Gross Revenue to the Brand Development Fund ("Brand Fund Contribution"). We reserve the right to increase to 2% with proper notice. We will have the right to expend the funds accumulated in the Brand Fund in our sole discretion.
    1. You are required to pay a one-time fee of $2,000 to install performance tracking software within thirty (30) days of signing the Franchise Agreement. Additionally, we require you to use our approved software. You must pay to us all fees for each required license subscription, which are subject to change by their respective third-party vendors. You will typically start with two users for each software program. Weekly payments will begin upon date of signed agreement. We reserve the right to substitute or add different approved technologies, which you must use and which may increase the weekly technology fee.
    1. You are required to spend a minimum of 10% of your annual minimum performance requirements on local marketing expenditures. You may be required to allocate all or part of your monthly local advertising spending to advertising via Google Ads, Facebook Ads, or approved local billboards. We reserve the right to increase the minimum expenditure requirement, in our sole discretion. The minimum spend requirements are based on one territory.

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

What This Means (2024 FDD)

According to the 2024 Crawl Space Ninja FDD, franchisees must meet specific minimum revenue performance requirements, or the franchise agreement may be terminated. The minimum performance requirement for a Crawl Space Ninja franchise in the first year of operation is $400,000 in gross revenue.

Crawl Space Ninja defines Gross Revenue as all income of any type or nature and from any source that you derive or receive directly or indirectly from, through, by or on account of the operation of the Franchised Business. This includes cash, services, in kind from barter and/or exchange, as well as business interruption insurance proceeds, all without deduction for expenses including marketing expenses and taxes. Gross Revenue does not include sales tax that is collected from customers and transmitted to the appropriate taxing authorities.

Additionally, franchisees are required to spend a minimum of 10% of their annual minimum performance requirements on local marketing expenditures. For Year 1, this would equate to a minimum local marketing spend of $40,000 (10% of $400,000). The FDD states that Crawl Space Ninja reserves the right to increase the minimum expenditure requirement at their sole discretion. Franchisees must submit a list of all local marketing completed for each month no later than the 15th day of the following month.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.