Crdn 2025 Franchise FAQ - FDD Ninja

Question 1

Where will arbitration or mediation take place for a Crdn franchise purchased in Washington?

Accepted Answer

In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.

Source: Item 22 — CONTRACTS (FDD page 78)

Question 2

What are the auditors' objectives in auditing Crdn's financial statements?

Accepted Answer

atements, management is re quired to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

## **Auditors' 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 fr aud or error, and to issue an audit ors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee than an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is

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higher than for one resulting from error, as fraud may involve co llusion, forgery, intentional omissions, misrepresentations, or t he override of internal control. Misstatements, including o missions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards, 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 an d 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 in order to design audit procedures that are appropriate in the circumstances, but no t for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of a ccounting policies used and the reasonablen ess of sign ificant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

Source: Item 23 — RECEIPTS (FDD pages 78–268)

Question 3

Are Crdn franchisees obligated to comply with all applicable laws, licenses, permits, and taxes?

Accepted Answer

- 5.11 Compliance with Law.

Franchisee shall obtain and maintain in effect all required licenses, permits and certificates related to the operation of the Franchised Business and shall operate the Franchised Business in full compliance with all applicable federal, state and local laws, ordinances, by-laws and regulations, including without limitation all government regulations related to: (1) licensing and certification; (2) occupational hazards and health; (3) handling, storage, and disposal of chemicals and other materials of a similar nature; (4) privacy and electronic commercial messaging; (5) environmental matters; (6) workers' compensation; (7) insurance; (8) employment insurance and withholding; and (9) payment of federal and state income taxes, Social Security taxes, and sales taxes and other required withholdings and remittances.

Additionally, Franchisee must comply with all state and federal labor and employment laws, including, but not limited to, the Fair Labor Standards Act, Family and Medical Leave Act, Occupational Safety and Health Act, Employee Retirement Income Security Act, Title VII, Age Discrimination in Employment Act, and the Affordable Care Act.

Source: Item 23 — RECEIPTS (FDD pages 78–268)

Question 4

Can Crdn modify or supplement the System Standards during the Initial Term or Successor Term of the Crdn franchise agreement?

Accepted Answer

greement.

#### **ARTICLE 11: SYSTEM STANDARDS**

- 11.1 Compliance with System Standards. You acknowledge and agree that the operation and maintenance of your Franchised Business according to certain system standards (the "System Standards" or singularly, "System Standard"), including mandatory and suggested specifications, standards, operating procedures, and rules, is essential to preserve the goodwill for the Marks, the Franchise System, and all CRDN franchises. Therefore, at all times during the Initial Term the Successor Term of this Agreement, you promise to operate and maintain your Franchised Business according to each and every System Standard, as we periodically modify and supplement them during the Initial Term and the Successor Term of this Agreement, even if you believe that a System Standard, as originally issued or subsequently modified or supplemented, is not in the Franchise System's or your Franchised Business' best interests. System Standards do not include any required personnel policies or procedures and CRDN does not dictate your day to day operations through the System Standards or otherwise. System Standards, as specified and periodically amended in the Operations Manual, may regulate one or more of the following for your franchise:
  - (a) Use and display of the Marks;
  - (b) CRDN services and products which we authorize you to sell;
  - (c) The use of environmentally and employee safe supplies and equipment;
  - (d) Uniforms, during business hours, for your CRDN marketing, sales, and service representatives from an approved vendor;

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- (e) Business forms and stationery;
- (f) Types and amounts of insurance coverage (see Article 11.3 herein for the current requirements);
- (g) Marketing, advertising, and promotional material prepared by you and approved by us;
- (h) Public figures you choose in connection with local promotions;
- (i) Your obligations related to compliance with applicable laws including obtaining required licenses and permits, payment of all taxes, assessments, fees, fines, and penalties arising out of the operation of the Franchised Business as well as your sole obligation to comply with all employment related laws of any kind;

Source: Item 23 — RECEIPTS (FDD pages 78–268)

Question 5

Does Crdn require franchisees to use specific telephone numbers and call center services?

Accepted Answer

s related to Customer solicitation and maintenance.

As part of your Local Marketing Requirement, and part of the Pre-Activation Requirements (as defined in Article 5.1 of this Agreement), you must acquire and maintain a telephone number that is dedicated to your CRDN business and separate and apart from any existing dry-cleaning operation telephone number ("CRDN Telephone Number"), which cannot be a home phone or personal cell phone number.

You must also utilize the call center/answering service then currently approved of by CRDN to receive jobs/loss assignment notices (the "Call Center"). You must abide by the thencurrent Call Center guidelines and requirements as set forth in the Operations Manual, including but not limited to: submission to us and/or the Call Center of your CRDN Telephone Number or such other required phone numbers, including a number to receive text messages, and such other information as requested from time to time; response timing and methods regarding job loss assignments; and the establishment and payment of such fees as are then currently assessable with respect to the Call Center (each a "Job Referral Fee" and collectively, the "Job Referral Fees"). Modifications to the Call Center guidelines including, by way of example only, the type and amount of the Job Referral Fees, may be made from time to time at CRDN's discretion, and shall be implemented through amendments or revisions to CRDN's Operations Manual.

The current Job Referral Fees and certain other Call Center requirements are set forth below but are subject to change. Jobs will initially be referred to you via a text message from CRDN ("CRDN Text Referral"). You may accept a job by replying to a CRDN Job Referral Text within the then-current required response time and by complying with any other content or related requirements (a compliant response shall be referred to as the "Job Acceptance Text"). In the event you fail to provide a Job Acceptance Text, the Call Center will contact CRDN and CRDN will then distribute the assignment accordingly. You agree to pay the following Job Referral Fees on account of the services rendered by the Call Center and/or CRDN: (1) a fee per CRDN Text Referral sent (the "CRDN Text Referral Fee"); (2) a weekly fee for maintenance of the Call Center including your assigned local Call Center related phone number; (3) a CRDN contact fee (the "CRDN Contact Fee") per each assignment for which you fail to provide a Job Acceptance Text; (4) a per second call fee (the "Per Second Call Fee") assessable upon each second of any call the Call Center makes to you or CRDN in connection with any jobs referred to you; and (5) a minimum minute usage requirement fee ("Minimum Usage Fee"). The "Minimum Monthly Minutes Requirement" is the then-current minimum number of monthly minutes you are required by the Call Center to use each month (currently 29). The current amount of each Job Referral Fee is set forth in the Operations Manual. The Job Referral FEEs shall be paid via EFT on a weekly basis in the same manner as the Royalty and other fees described in this Agreement, as applicable.

The Call Center is currently a third party vendor. Provided, however, that CRDN reserves the right to: perform some or all functions of the Call Center; add services to be performed by the Call Center;

Source: Item 23 — RECEIPTS (FDD pages 78–268)

Question 6

What standards were the Crdn audits conducted in accordance with?

Accepted Answer

With respect to the Franchised Business and any other business operated in connection with or in support of the Franchised Business, CRDN has the right at any time during business hours, to inspect and audit, or cause to be inspected and audited, any and all financial statements, reports, ledgers, income tax records, sales tax records, payroll records, software databases, Internal Revenue Service Form 1099s and/or other tax forms from all Customers and other records.

Source: Item 23 — RECEIPTS (FDD pages 78–268)

Question 7

In Washington, is Crdn allowed to restrict a franchisee from soliciting or hiring employees of the franchisor?

Accepted Answer

RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor. As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.

Source: Item 22 — CONTRACTS (FDD page 78)

Crdn 2025 FDD FAQ