What is the relevance of the Minimum Performance Requirements to the Crawlspace Medic franchise agreement?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
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| of Agreement | | | | | |
The revenue that goes into your minimum performance requirements must come from within your protected territory. If you fail to meet the minimum performance requirements, it is considered a default under the franchise agreement. We have the right to reduce the size of your territory or terminate your franchise agreement. Gross Revenues are 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 Revenues does not include sales tax that is collected from customers and actually transmitted to the appropriate taxing authorities.
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- We require you to contribute up to two percent of your Gross Revenues to the Brand Development Fund ("Brand Fund Contribution"). Brand Fund Contributions will be paid directly to the Brand Fund and not to us. Brand Fund Contributions are not income to us. We will have the right to expend the funds accumulated in the Brand Fund in our sole discretion.
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- You will pay a monthly fee of one-half percent of Gross Revenue per unit for our technology which is currently Vonigo, Gmail and Ring Central and a one-time implementation fee of $2,500. We have the right to increase this cost and to substitute or add different approved technologies, which you must use.
Source: Item 6 — OTHER FEES (FDD pages 10–16)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, the Minimum Performance Requirements are directly tied to the franchise agreement. Specifically, failure to meet these requirements constitutes a default under the agreement. The revenue used to calculate whether a franchisee is meeting the minimum performance requirements must come from within the franchisee's protected territory.
If a Crawlspace Medic franchisee fails to meet the minimum performance requirements, the franchisor has the right to reduce the size of the franchisee's territory or even terminate the franchise agreement altogether. This underscores the importance of achieving the specified revenue targets to maintain the full benefits and security of the franchise agreement.
The minimum performance requirements for revenue per year of the agreement are as follows: $225,000 in Year 1, $350,000 in Year 2, $600,000 in Year 3, $750,000 in Year 4, and $900,000 in Year 5. These figures represent the minimum gross revenue a franchisee must generate each year to remain in good standing with Crawlspace Medic.