In the Crawlspace Medic franchise agreement, what is the franchisee's obligation regarding operating the Franchised Business?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
single location within a territory that is designated in Attachment 2 attached hereto and incorporated herein (the "Territory").
3. TERRITORY
- 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 Crawlspace Medic 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 Crawlspace Medic 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. By way of example only, Franchisor reserves the rights to offer (i) other products or services not offered under the Marks, (ii) other crawlspace or basement care 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 Crawlspace Medic 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. Franchisor also reserves the right to acquire, be acquired by or merge with another company. Franchisee agrees that such implementation of Franchisor's rights pursuant to this Section 3.2 is deemed not to impair or injure Franchisee's rights pursuant to Section 2 hereof.
- 3.3 Minimum Performance Requirements. In order to maintain the Territory, franchisee understands and agrees that they must maintain the following Minimum Performance Requirements for Revenue Per Year of Agreement:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Minimum | $225,000 | $350,000 | $600,000 | $750,000 | $900,000 |
| Performance | |||||
| Requirement |
Revenue for the Minimum Performance Requirement must come from within the Franchisee's protected territory. If franchisee fails to meet the Minimum Revenue Quota, it is considered a default of the Franchise Agreement and the Franchisor has the right to reduce the size of the Territory or terminate your franchise agreement.
- 4. TERM. Unless terminated earlier in accordance with the terms set forth in this Agreement, this Agreement and the Franchise granted hereunder shall commence upon the Effective Date set forth above, and terminate on the date that is five (5) years following the Opening Date, as defined in Section 8 hereof (the "Term").
- 5. SUCCESSOR OPTIONS. Subject to the terms and conditions of this Agreement, Franchisee shall have the right, following the expiration of the Term hereof, to enter into a successor agreement and other agreements then customarily employed by Franchisor and in the form then generally being offered to prospective franchisees in the state in which the Territory is located (the "Successor Franchise Agreement") for up to three (3) additional terms equal to 5 (5) years.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, franchisees are granted the right to operate their franchised business at a single, specific location within a designated territory. Crawlspace Medic will not allow other franchisees to operate within that territory using the same trademarks, provided the franchisee remains in compliance with the agreement. Franchisees are expected to sell products and services from their designated location and provide services to customers within that territory. Alternative distribution channels for sales and customer solicitation are restricted as detailed in the agreement.
Crawlspace Medic retains rights to other business opportunities, including offering different products or services, other crawlspace or basement care concepts under different trademarks, and sales through alternative channels like the Internet. Franchisees will not receive compensation for sales made by Crawlspace Medic through these alternative channels within their territory. Crawlspace Medic also reserves the right to merge with or be acquired by another company.
To maintain their territory, Crawlspace Medic franchisees must meet minimum performance requirements for revenue per year. Franchisees are also required to secure a warehouse site within their territory that provides secure vehicle and equipment storage, with approximately 1,000 square feet for warehouse and office space. The franchisee is responsible for equipping and outfitting their Crawlspace Medic location and vehicle as outlined in the Operations Manual. Franchisees must open their business within 90 days of signing the Franchise Agreement, unless a written extension is granted by Crawlspace Medic. Before opening, franchisees must complete all location and vehicle modifications, complete the initial training program, hire and train staff if needed, and obtain all required licenses.