What is the Spray Net revenue threshold for the first year of operation with 2 designated territories?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
applicable Minimum Gross Sales below.
| | Minimum Gross Sales | | | | | |------------------------------|---------------------------|-----------------------------|-----------------------------|--|--| | Period(s) | 1 Designated Territory | 2 Designated Territories | 3 Designated Territories | | | | First Year of Operation | $300,000 | $350,000 | $375,000 | | | | Second Year of Operation | $431,250 | $475,000 | $575,000 | | | | Third Year of Operation | $506,250 | $600,000 | $725,000 | | | | Fourth Year of Operation | $531,563 | $700,000 | $800,000 | | | | Fifth Year of Operation | $558,141 | $735,000 | $860,000 | | | | Sixth | $586,048 | $771,750 | $924,500 | | | | Year of Operation | | | | | | | Seventh | $615,350 | $810,338 | $993,838 | | | | Year of Operation | | | | | | | Eighth | $646,118 | $850,854 | $1,068,375 | | | | Year of Operation | | | | | | | Ninth | $678,423 | $893,397 | $1,148,503 | | | | Year of Operation | | | | | | | Tenth | $712,345 | $938,067 | $1,234,641 | | | | Year of Operation | | | | | | 3. Marketing Expenses (Local Advertising Requirement, Digital Marketing Spend, Production Fee, and Brand Fund Contribution). You must spend a minimum annual amount on local advertising for your Franchised Business ("Local Advertising Requirement"). You are required to spend 75% of your Local Advertising Requirement on digital marketing ("Digital Marketing Spend" or "DMS") on a monthly basis. We are currently the only Approved Supplier for digital marketing, and we may either perform the digital marketing services or contract with another supplier to provide them. Whether we provide the digital marketing services or engage another supplier to provide them, you are required to pay us our then-current fee for managing such digital marketing services (the
"Production Fee"), which covers the administrative cost of placing the digital advertising and is subject to a cap or maximum amount. You must also pay us a Brand Fund Contribution each month. The Local Advertising Requirement, Digital Marketing Spend, Production Fee, and Brand Fund Contribution are reflected in the charts below, based on the number of Designated Territories you purchase.
Source: Item 6 — > **ITEM 6 OTHER FEES (FDD pages 15–29)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, a franchisee operating with two designated territories must achieve a minimum gross sales of $350,000 during their first year of operation. This threshold is relevant because the franchisee's royalty fee is subject to a minimum equal to 7% of this minimum gross sales figure.
Spray Net uses the 'Minimum Gross Sales' to calculate the minimum royalty fee. Even if a franchisee's actual gross sales are lower than the specified minimum, they are still obligated to pay a royalty fee equivalent to 7% of the minimum gross sales amount. This policy ensures that Spray Net receives a baseline royalty payment, regardless of the franchisee's initial performance.
This requirement has significant financial implications for new Spray Net franchisees. It sets a high bar for early performance and necessitates careful planning and execution to meet or exceed the minimum sales threshold. Franchisees should factor this minimum royalty payment into their financial projections and ensure they have sufficient capital to cover potential shortfalls in the initial year. It is important to note that this minimum gross sales amount may be subject to increase due to inflation as measured by the United States Consumer Price Index.