What are the potential consequences of not meeting the obligations outlined in Item 9 for a Spray Net franchisee, considering the restrictions described in Item 8?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]
Except as provided above, neither we nor our affiliates are the designated or Approved Supplier for any item or service you are required to purchase or lease in connection with the establishment and/or ongoing operation of your Franchised Business. Carmelo Marsala and David Garofano own interests in Groupe Spray-Net and, through its subsidiaries, including SN Distribution, will indirectly derive revenue from required franchisee purchases. Except as stated above, none of our officers owns an interest in any of our Approved Suppliers.
Non-Approved Product/Service and Alternative Supplier Approval
We may, but are not obligated to, grant your request to: (i) offer any products or services in connection with your Franchised Business other than the Approved Services (which includes the Proprietary Products); or (ii) purchase any item or service we require you to purchase from an Approved Supplier from an alternative supplier.
If you wish to undertake either of these actions, you must request and obtain our approval in writing before: (i) using or offering the non-approved product or service in connection with your Franchised Business; or (ii) purchasing from a non-approved supplier. We may ask you to submit samples or information so that we can make an informed decision whether the goods, equipment, supplies or supplier meet our specifications and quality standards. In evaluating a supplier that you propose to us, we consider not only the quality of the particular product at issue, but also the supplier's production and delivery capability, overall business reputation and financial condition. We may provide any alternate supplier you propose with a copy of our then-current specifications for any product(s) you wish the supplier to supply, provided the supplier enters into a confidentiality and non-disclosure agreement in the form we specify. We may also inspect a proposed supplier's facilities and test its products, and request that you reimburse our actual costs associated with the testing/inspection.
[Item 9: FRANCHISEE'S OBLIGATIONS]
| Section in the Franchise | Item Number in this Disclosure | |
|---|---|---|
| Obligation | Agreement | Document |
| a. Site selection and | Sections 2(B), 2(C), 5(E), and | Items 11 and 12 |
| acquisition/lease | 6(A) and Exhibit A | |
| b. Pre-opening purchases/leases | Sections 6(B), 6(G), 6(I) and 6(J) | Items 7 and 8 |
| c. Site development and other | Sections 6(C), 6(D) and 6(E) | Items 6, 7 and 11 |
| pre-opening requirements | ||
| d. Initial and ongoing training | Sections 5(A), 5(B), 5(C) and 5(G) | Items 6, 7 and 11 |
| e. Opening | Section 6(C) | Items 7 and 11 |
| f. Fees | Section 4(A) | Items 5 and 6 |
| g. Compliance with standards | Sections 5(D), 6 and 8 | Items 8 and 16 |
| and policies/Operating | ||
| Manual | ||
| h. Trademarks and proprietary | Section 7 | Items 13 and 14 |
| information | ||
| i. Restrictions on | Sections 6(F), 6(J), | Items 8 and 16 |
| products/services offered | 6(K), 6(L) and 6(S) | |
| j. Warranty and customer | Section 6(T) | Item 16 |
| service requirements | ||
| k. Territorial development and | Sections 2(C) and 6(Z) | Item 12 |
| sales quotas | ||
| l. Ongoing product/service | Sections 6(G), 6(H), | Items 8 and 11 |
| purchases | 6(K), 6(I) and 6(J) | |
| m. Maintenance, appearance and | Sections 3(B)(7) and 6(G) | Items 6 and 17 |
| remodeling requirements | ||
| n. Insurance | Section 11 | Items 6, 7 and 8 |
| o. Advertising | Sections 5(F), 5(H) and 9 | Items 6, 7 and 11 |
| p. Indemnification | Sections 7(P) and 12(B) | Item 6 |
| q. Owner's participation/ | Sections 6(V) and 6(Y) | Item 15 |
| management/ staffing | ||
| r. Records and reports | Sections 4(D) and 10 | Item 11 |
| s. Inspections and audits | Sections 5(L), 6(C), 6(K) 6(R), 6(U), 10(b) and 10(G) | Items 6, 11 and 13 |
| t. Transfer | Section 13 | Item 17 |
| u. Renewal | Section 3(B) | Item 17 |
| v. Post-termination obligations | Sections 14(B) and 16 | Item 17 |
| w. Non-competition covenants | Section 14 | Item 17 |
| x. Dispute resolution | Section 21 | Item 17 |
[Item 23: RECEIPTS]
For avoidance of doubt, the applicable annual Minimum Gross Sales will be based on the number of Territories Franchisee has purchased and the length of time that Franchisee has operated the Franchised Business.
These liquidated damages are in addition to all remedies that Franchisor may have against Franchisee for breach of the restrictive covenants found in Section 14 of this Agreement or extracontractual claims such as fraud or unfair and deceptive trade practices.
- K. Reimbursement for Touch-up Work.
If, after the termination or expiration of this Agreement, Franchisor, an affiliate of Franchisor, or another Spray-Net franchisee provides touch-up work for customers to whom Franchisee provided Approved Services, Franchisee shall reimburse Franchisor, Franchisor's affiliate(s), or another Spray-Net franchisee the actual costs of providing such touch-up work upon demand.
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, Item 9 outlines a Spray Net franchisee's obligations, while Item 8 details restrictions on approved suppliers. Item 9 lists numerous obligations, such as site selection, pre-opening purchases, compliance with standards, and adherence to advertising guidelines. Failure to meet these obligations can lead to various repercussions, including breach of the franchise agreement. Item 8 indicates that Spray Net may require franchisees to purchase from approved suppliers, and failure to comply with these restrictions could also result in penalties or termination of the franchise agreement.
Specifically, Item 8 states that franchisees must obtain written approval before offering non-approved products/services or purchasing required items from non-approved suppliers. Spray Net may evaluate alternative suppliers based on product quality, production capability, business reputation, and financial condition. If a franchisee violates these restrictions by using unauthorized products or suppliers, they risk violating the franchise agreement, which could lead to consequences detailed elsewhere in the FDD, such as default notices, financial penalties, or termination of the franchise.
Item 23 provides further context, noting that franchisees must adhere to minimum gross sales based on the number of territories purchased and the time in operation. Failure to meet these sales quotas, which falls under the obligations listed in Item 9, can result in liquidated damages. Additionally, if Spray Net or another franchisee has to perform touch-up work for a customer due to the original franchisee's work, the original franchisee is responsible for reimbursing the costs. These examples highlight the financial consequences of not meeting the obligations outlined in the franchise agreement.
In summary, a Spray Net franchisee must carefully review Items 8 and 9 in conjunction with the full franchise agreement to understand their obligations and the potential ramifications of non-compliance. These ramifications can range from financial penalties and required reimbursements to potential termination of the franchise agreement, emphasizing the importance of adhering to Spray Net's standards and approved suppliers.