UFOC
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample UFOC
ccuDiagnostvcs
SAME DAY DRUG ALCOHOL & CLINICAL SCREENING
FRANCHISE OFFERING CIRCULAR
ACCUDIAGNOSTICS FRANCHISE GROUP, LLC
355 Woodruff Road, Suite 302
Greenville, South Carolina 29607
(864)609-5015
accudiagnostics.comAs a franchisee, you will operate a business providing affordable, full-service drug and alcohol screening and testing, plus sample collection for DNA and other tests, for a wide variety of clients, including businesses. schools, government and private individuals.
We offer two franchise programs:
1. A single AccuDiagnostics Business. The initial franchise fee is $35,000. The estimated initial investment, including the franchise fee, ranges from $85,200 to $136,883.
2. Multiple AccuDiagnostics Businesses within a defined geographic area. The initial franchise fee for the first AccuDiagnostics Business is $35,000. The developmeni fee is equal to $12,500 multiplied by the number of additional AccuDiagnostics Businesses you agree to develop. For example- assuming you agree to develop five AccuDiagnostics Businesses: your initial investment will include a franchise fee of $35,000 for the first business and a development fee of $50,000 based on the remaining 4 businesses to be developed in the future. The estimated initial investment to operate as a Developer varies depending on the number of AccuDiagnostics Businesses you agree to develop. If, for example, you agree to develop 5 AccuDiagnostics Businesses, your estimated initial investment to establish the first AccuDiagnostics Business, including the franchise fee and development fee, ranges from $135,200 to $186,883.
RISK FACTORS:
1. THE FRANCHISE AGREEMENT AND MULTIPLE UNIT DEVELOPMENT AGREEMENT REQUIRE DISAGREEMENTS BE SUBMITTED TO ARBITRATION OR LITIGATION IN SOUTH CAROLINA. OUT OF STATE ARBITRATION OR LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE OR LITIGATE WITH US IN SOUTH CAROLINA THAN FN YOUR HOME STATE.
2. THE FRANCHISE AGREEMENT AND MULTIPLE UNIT DEVELOPMENT AGREEMENT STATE THAT SOUTH CAROLINA LAW GOVERNS THE AGREEMENTS, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS YOUR STATE'S LAW. YOU MAY WANT TO COMPARE THESE LAWS. SOME STATE FRANCHISE LAWS VOID OR SUPERSEDED CHOICE OF LAW PROVISIONS. YOU SHOULD CONSIDER INVESTIGATING WHETHER YOUR STATES FRANCHISE LAWS PROTECT YOU. YOU SHOULD REVIEW THE STATE-SPECIFIC ADDENDA ATTACHED TO THIS OFFERING CIRCULAR AND THE FRANCHISE AGREEMENT FOR CHANGES APPLICABLE IN YOUR STATE.
3. WE HAVE ONLY RECENTLY BEGUN OFFERING FRANCHISES AND WE HAVE NO HISTORY OF FRANCHISE OPERATIONS.
4. BY NOT HAVING A PRINCIPAL REGISTER FEDERAL TRADEMARK REGISTRATION, WE DO NOT HAVE CERTAIN PRESUMPTIVE LEGAL RIGHTS WITH RESPECT TO OUR TRADEMARK THAT WOULD BE GRANTED BY A REGISTRATION.
5. MANY STATES REGULATE THE ABILITY OF EMPLOYERS AND OTHERS TO ADMINISTER DRUG OR ALCOHOL TESTS TO INDIVIDUALS. IN ADDITION TO STATE STATUTES AND REGULATIONS, SOME STATES' COURTS HAVE RENDERED DECISIONS THAT COULD ALSO RESTRICT THE ADMINISTERING OF SUCH TESTS IN THOSE STATES. THESE STATUTES, REGULATIONS, AND COURT DECISIONS VARY FROM STATE TO STATE, AND WE CANNOT ADVISE YOU ON THE LAWS OF THE STATE IN WHICH YOU INTEND TO OPERATE YOUR FRANCHISED BUSINESS. YOU WILL HAVE TO DISCUSS SUCH LAWS WITH YOUR OWN ATTORNEY. BECAUSE AN ACCUDIAGNOSTICS FRANCHISE IS BASED ON THE PREMISE OF PROVIDING FULL-SERVICE ON-SITE SCREENINGS FOR ALCOHOL AND A NUMBER OF DRUGS AND OTHER SUBSTANCES. IN ADDITION TO PROVIDING COLLECTION SERVICES FOR OFF-SITE DRUG, ALCOHOL. DNA, AND SIMILAR TESTS, A PARTICULAR STATE'S LAWS COULD HAVE A MATERIAL ADVERSE EFFECT ON THE OPERATION OF YOUR BUSINESS, AND, DEPENDING ON THE SEVERITY OF A PARTICULAR STATE'S RESTRICTIONS, COULD PREVENT YOUR FRANCHISE FROM EVER BECOMING PROFITABLE. IN SUCH EVENT, YOU COULD LOSE SOME OR ALL OF YOUR INVESTMENT. BY PURCHASING AN ACCUDIAGNOSTICS FRANCHISE. YOU ARE ACKNOWLEDGING YOUR NEED TO DISCUSS WHH AN ATTORNEY HOW YOUR STATE'S STATUTES, REGULATIONS- AND COURT CASES, AND THOSE THAT MAY ARISE IN THE FUTURE, MAY IMPACT YOUR ACCUDIAGNOSTICS FRANCHISE. AND THAT YOU ARE ASSUMING ALL RISKS WHICH RESULT. OR COULD RESULT. FROM THE IMPACT YOUR STATE'S LAWS HAVE, OR COULD HAVE, ON THE OPERATION OF AN ACCUDIAGNOSTICS BUSINESS.
6. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
PLEASE SEE EXHIBIT G FOR ADDITIONAL RISK FACTORS.
Information comparing AccuDiagnostics Franchise Group. LLC with other franchisors is available. Call the state administrators listed in Exhibit A or your public library for sources of information.
Registration of this franchise with the state does not mean that the slate recommends it or has verified the information in this Offering Circular. If you learn that anything in (his Offering Circular is untrue, contact the Federal Trade Commission and the state administrators listed in Exhibit A.
The Effective Date for this Offering Circular is_____________or as listed in Exhibit J to this Offering
Circular.
[The remainder of this page is intentionally left blank.]
TABLE OF CONTENTS
ITEM PAGE
1. THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES.................................................1
2. BUSINESS EXPERIENCE..............................................................................................................2
3. LITIGATION...................................................................................................................................3
4. BANKRUPTCY................................................................................................................................3
5. INITIAL FRANCHISE FEE.............................................................................................................3
6. OTHER FEES...................................................................................................................................5
7. INITIAL INVESTMENT..................................................................................................................7
8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES..........................................10
9. FRANCHISEES OBLIGATIONS.................................................................................................II
10. FINANCING...................................................................................................................................13
11. FRANCHISOR'S OBLIGATIONS................................................................................................13
12. TERRITORY..................................................................................................................................18
13. TRADEMARKS.............................................................................................................................19
14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION..........................................21
15. OBLIGATION TO PARTICIPATE IN THE ACTUAL
OPERATION OF THE FRANCHISED BUSINESS.................................................................21
16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELI...................................................22
17. RENEWAL. TERMINATION. TRANSFER
AND DISPUTE RESOLUTION................................................................................................22
18. PUBLIC FIGURES.........................................................................................................................30
19. EARNINGS CLAIM.......................................................................................................................30
20. LIST OF OUTLETS.......................................................................................................................30
21. FINANCIAL STATEMENTS........................................................................................................31
22. CONTRACTS.................................................................................................................................31
23. RECEIPT.......................................................................................................................LAST PAGE
EXHIBITS
A. LIST OF STATE ADMINISTRATORS
B. LIST OF STATE AGENTS FOR SERVICE OF PROCESS.
C. FRANCHISE AGREEMENT
D. TABLE OF CONTENTS OF CONFIDENTIAL OPERATIONS MANUAL
E. MULTIPLE UNIT DEVELOPMENT AGREEMENT
F. FINANCIAL STATEMENTS
G. ADDITIONAL RISK FACTORS
H. LIST OF TERMINATED FRANCHISEES
I. FRANCHISEE DISCLOSURE QUESTIONNAIRE
J. MULTI-STATE ADDENDA
ITEM 1. THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES
To simplify (he language in this Offering Circular the words "we," "us" and "our" refer to AccuDiagnostics Franchise Group, LLC, the franchisor of this business. The words "you" and "your" refer to the person lo whom we grant a franchise, whether you arc a corporation, limited liability company or other business entity. If you are a corporation, limited liability company or other business entity, certain provisions of our Franchise Agreement also apply to your owners and will be noted.
The Franchisor and its Busjness Activities
We were organized in the State of South Carolina on February 11, 2005 for the sole purpose of offering AccuDiagnostics franchises. Our principal business address is 355 Woodruff Road, Suite 302, Greenville, South Carolina 29607. and we do business only under our corporate name.
We grant franchises for the operation of businesses in conjunction with the service mark "AccuDiagnostics*" and certain associated trade names, trademarks, service marks and logos that we refer to as the "Marks'".* We refer to these businesses as "AccuDiagnostics Businesses" and we refer to the AccuDiagnostics Business you will operate as the "Franchised Business." In addition to granting franchises for single AccuDiagnostics Businesses, we also allow certain franchisees who meet our criteria to become "Developers" by agreeing to open a predetermined number of AccuDiagnostics Businesses in a specified area called a "Development Territory."
AccuDiagnostics Businesses provide affordable, full-service on-site screening for alcohol and a number of drugs and other substances, in addition to providing collection services for off-site drug, alcohol, DNA and similar tests. AccuDiagnostics Businesses also sell drug and alcohol screening kits to clients and provide training and certification for the clients" specimen collectors, technicians and supervisors. The typical AccuDiagnostics Business requires between 750 to 2.000 square feet of space for a waiting room, a reception area, screening stations and bathrooms. The facility should be located in a large business park near employers, governmental offices, schools and other potential clients.
We have offered franchises for AccuDiagnostics Businesses since the effective date of this Offering Circular. We do not offer and have not previously offered franchises in any other line of business and we are not engaged in any other line of business. We do not currently own or operate a business of the type being franchised, but our affiliate owns and operates an AccuDiagnostics Business in Greenville, South Carolina.
Our Affiliate
We have no predecessors. Our Affiliate, Occupational Drug Screening. Inc., was incorporated in South Carolina on March 30, 1998 and is located at 355 Woodruff Road. Suite 302, Greenville, South Carolina 29607. Our Affiliate has owned and operated one AccuDiagnostics Business in Greenville, South Carolina since 1998. Our Affiliate does not offer and has not previously offered franchises in this or in any other line of business.
Market and Competition
AccuDiagnostics Businesses provide services and products to private individuals and a wide variety of organizations including businesses, schools and government. Among other things, services are provided in connection with Drug Free Workplace Programs and other work-related testing needs, court-ordered drug testing,
Capitalized terms not otherwise defined have the same meaning as in the Franchise Agreement attached as Exhibit C to this Offering Circular.
student and athlete mandatory drug testing and Department of Transportation required testing. We believe the market for drug and alcohol screening and testing is expanding and will continue to expand as long as the target market remains focused on the effects of drug and alcohol use. This market, however, may be affected by local, regional and national economic conditions. Additionally, new technology may have an effect on the market as instant drug testing products are refined and developed.
You will likely compete with other franchised or national drug and alcohol screening businesses and with local healthcare facilities and providers. You may also compete with pharmacies, medical supply businesses and Intemet-based businesses in the sale of screening kits.
lndustrv Specific Regulations
Certain federal government agencies and many stales have laws, rules and regulations that may apply to the products and services you will offer through the Franchised Business. Some states may require you to obtain a state certification before being allowed to administer "instant" drug screens or tests. Some states prohibit the use of "instant" drug screens. Some states may require you to employ the services of a medical review officer in cases where a screen or test gives a positive result. You should investigate whether these or other laws will apply to the Franchised Business, and you should consider the cost and effect of complying with these laws in the operation of the Franchised Business. Please sec the state specific addenda in Exhibit J for any state specific rules and regulations.
Also, you must comply with all laws, rules and regulations governing the operation of the Franchised Business and obtain all permits and licenses necessary to operate the Franchised Business. Most states and local jurisdictions have enacted laws, rules, regulations and ordinances that may apply to the operation of your Franchised Business, including those that: (a) establish general standards, specifications and requirements for the construction, design and maintenance of the business site and premises: (b> regulate matters affecting the health, safety and welfare of your customers, such as general health and sanitation requirements, restrictions on smoking, availability of and requirements for public accommodations, including restroom facilities and public access; (c) set standards pertaining to employee health and safety; (d) set standards and requirements for fire safety and general emergency preparedness; and (e) regulate the proper use, storage and disposal of waste or other hazardous materials.
Agents for Service of Process
Our agents for service of process are listed in Exhibit B to this Offering Circular.
ITEM 2. BUSINESS EXPERIENCE
Our Officers and Directors and all other persons who will have management responsibilities for our franchise program are as follows:
President and CEO: Felix Mirando
Mr. Mirando is our President and CEO and has been since our organization in February 2005. He is also President of our Affiliate. Occupational Drug Screening, located in Greenville, South Carolina, and has been since its incorporation in March 1998. Additionally, since September 1994, Mr. Mirando has also been the President of Fitness Solutions, Inc.. which operates retail stores in Greenville and Columbia, South Carolina. He is also a co-founder of Coastal Carolina Beverage, a distribution company in Hilton Head, South Carolina, since May 1990. Previously, from May 1986 until March 2004. Mr. Mirando was President of Blakely Enterprises. Inc.. which owned and operated
-2-
Heavenly Ham franchises in Greenville, Columbia (2), Greenwood, Easley and Anderson, South Carolina. He also served on the Heavenly Ham National Advisory Board in Atlanta, Georgia for 9 years.
Vice President: D. Scott Jenkins
Mr. Jenkins is our Vice President in our Greenville, South Carolina, office and has been since our organization. He is also the Vice President of our Affiliate, Occupational Drug Screening, located in Greenville, South Carolina, and has been since February 2001. From October 1999 to January 2001, Mr. Jenkins was in corporate sales for Blakely Enterprises located in Greenville, South Carolina. Mr. Jenkins is a certified instructor, Substance Abuse Collection Professional in compliance with the Federal Aviation Administration, Department of Transportation. Department of Health and Human Services and Nuclear Regulatory Commission Regulations. He is a certified instructor for breath alcohol technicians and DNA collections. He is a certified trainer in alternative testing.
Director of Franchisin2: Tony L. Waters
Mr. Waters has been working in the field of drug and alcohol testing for 16 years. He was President of Corporate Choice Drug Screening TPA in Greenville, South Carolina, from April 1992 to June 2004 when Occupational Drug Screening acquired his company. He is currently Director of Franchising at our office in Greenville. South Carolina. Before that. Mr. Waters worked for Roche/LabCorp in Greenville, South Carolina, from August 1986 to March 1992. Mr. Waters has served as a witness in Federal Drug Court Cases and regularly serves as a records expert witness for the Department of Social Services and Family Court. Mr. Waters is an active speaker on the subjects of Third Party Administration Drug Programs and Alternate Method Drug Testing; presenting to Public and Private Agencies. Law Enforcement and Athletes. He is certified as BAT Breath Alcohol technician and in DOT (Department of Transportation) Collections.
ITEM 3. LITIGATION
No litigation is required to be disclosed in this Offering Circular. Please see the State Specific Addenda in Exhibit J for additional information.
ITEM 4. BANKRUPTCY
No person previously identified in ITEMS 1 or 2 of this Offering Circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed in this HEM.
ITEM 5. INITIAL FRANCHISE FEE
Franchise Agreement
You must pay an initial Franchise Fee of $35,000 when you sign the Franchise Agreement. The Franchise Fee is payment, in part, for expenses incurred by us in furnishing assistance and services to you as set forth in the Franchise Agreement and for costs incurred by us, including general sales and marketing expenses, training, legal, accounting and other professional fees.
If you purchase additional AccuDiagnostics franchises, we will reduce the Franchise Fee for each of these additional businesses to $25,000. Otherwise, the Franchise Fee is uniform for all franchisees.
We will refund 50% of the Franchise Fee if we, in our discretion, determine that you are unable to satisfactorily complete the training program described in ITEM 11 of this Offering Circular and if we terminate the Franchise Agreement as a result of making that determination.
Development Agreement
You must pay a Development Fee if and when you sign a Development Agreement. The Development Fee is equal to 50% of the sum of the discounted Franchise Fees for each additional AccuDiagnoslics Business you agree to develop after the first one. The number of AccuDiagnostics Businesses you will open will be determined before you sign the Development Agreement. For example, if you sign a Development Agreement to open 5 AccuDiagnostics Businesses, you will sign a Franchise Agreement and pay a Franchise Fee of $35,000 for ihe first Franchised Business and you will pay a Development Fee of $50,000 equal to 50% of the sum of the discounted Franchise Fees for the 4 additional AccuDiagnostics Businesses you will open (i.e., 50% of $25,000 +■ $25,000 + $25,000 + $25,000 = $50,000). Each time you sign a Franchise Agreement for one of the additional AccuDiagnostics Businesses, you must pay us the discounted Franchise Fee for that Franchised Business: however, we will credit the Development Fee against each discounted Franchise Fee at the rate of $12,500 per Franchised Business, so the amount owed upon signing each additional Franchise Agreement will only be $ 12,500.
The Development Fee is calculated uniformly for all Developers, but the amount of the actual fee will vary based on the number of AccuDiagnostics Businesses you agree to develop.
The Development Fee, but it will be credited against additional Franchises Fees as described above.
[The remainderof this page is intentionally left blank.]
ITEM 6. OTHER FEES
Below is a detailed description of other recurring or isolated fees or payments that you must pay to us or that we impose or collect for a third party under the terms of the Franchise Agreement.
|
Name of Fee |
Amount |
Due Date |
Remarks |
|
Royalty Fee |
5% of Gross Sales |
Monthly |
See definition of Gross Sales.' (Section 0) |
|
Marketing Fund Contribution |
2% of Gross Sales |
Monthly |
There is a 2% Marketing Fund Contribution for the purpose of developing marketing materials. (Section 0) We may require Marketing Fund Contributions u> be used in cooperative advertising. (Section 0) |
|
Local Advertising |
Not less than 2% of Gross Sales |
Monthly |
You pay directly to suppliers of advertising services, subject to our approval. (Section 11.I.I) We may require Local Advertising expenditures to be used in cooperative advertising. (Section 0) |
|
Telephone Directory Advertising |
Depends on area and type of listing |
As arranged |
You are required to list and advertise in the "white pages" and "yellow pages'" of the telephone directory in your market area. (Section 0) |
|
Audit Expenses |
Cost ofaudit |
Upon demand |
Audit costs payable only if the audit shows an understatement in amounts due ol at least 3%. (Seclion 0) |
|
Late Fees |
18%perycarorthehighest rate allowed by law (whichever is less), plus collection costs |
Upon demand |
Applies to all overdue Royally Fees, Marketing Fund Comributions and other amounts due to us. (Section 0) Also applies lo any understatement in amounts due revealed by an audit. (Section 0) |
|
Supplier or Product Approval |
AH reasonable expenses of evaluation |
Time of evaluation |
Applies to new suppliers or products you wish to use or purchase thai we have not previously approved. (Seclion 0) |
|
Insurance Policies |
Amount of unpaid premiums plus our expenses in obtaining coverage for you |
Upon demand |
Payable only if you fail to maintain requiied insurance coverage and w c elect (o obiain coverage for you. (Seclion 0i |
|
Transfer Fee |
S5.000 |
Time of transfer |
Does not apply to an assignment under Section 0 of the Franchise Agreement (Section 18.1.7) |
|
Relocation Assistance |
Costs of providing relocation assistance |
Time of assistance |
We will charge you for relocation assistance if you request it and we agree to provide it. (Section 0) |
|
Customer Service |
All costs incurred in assisting your customers |
Upon demand |
You must reimburse us if we determine it is necessary lo service your customers. (Seclion 0) |
|
Additional Training |
Rates as published in the Manual; currently, SI 50 per day. plus our expenses and your expenses as well as your employees" expenses in |
Time of service |
We conduct an initial (mining program for you and one additional person at no charge. You pay for additional training if you request it and we agree lo provide it. or if wedclennine that your Designated Manager turnover is excessive. |
AH citations of Seclion numbers throughout this Offering Circular refer to the Franchise Agreement, which is attached as Exhibit C.
|
Name of Fee |
Amount |
Due Date |
Remarks |
|
attending |
(SectionsOandO) |
||
|
Additional Operation Assistance |
Rates as published in the Manual. currently, $ 150 per day, plus our expenses |
Time of service |
We pivvide one of our representatives to assist you for approximately 5 days at the beginning of youroperalions. You pay for additional assistance if you request it. (Section 0) |
|
Ongoing Training |
Your and your employees' expenses in attending these programs |
Time of program |
We do not charge for ongoing training programs. but you must pay your own expenses in attending. (Section 0) |
|
System Modifications |
An amount not unreasonably disproportionate to your initial investment |
As required |
11" we decide to modify the System by requiring new equipment, fixtures, software, trademarks, etc., you must make the modifications at your expense. (Section 0) |
|
Cost of Enforcement |
All costs including attorneys" Ices |
Upon demand |
You must reimburse us for all costs in enforcing obligations under the Franchise Agreement if we prevail. (Section 0) |
|
Indemnification |
All costs including attorneys" lees |
Upon demand |
You must defend lawsuits at your cost and hold us harmless against lawsuits arising from your operation of the Franchised Business. (Section 0) |
No other fees or payments are to be paid to us. and we do not impose or collect any other fees or payments for any other third party. All fees are generally nonrefundable.
NOTES
"■Gross Sales'" means the aggregate of all revenue from the sale of services and products from all sources in connection with the Franchised Business whether or not you collect it and whether for check, cash, credit or otherwise. including all proceeds from any business interruption insurance, but excluding (a) all refunds made in good faith, (b) any sales and equivalent taxes that you collect for or on behalf of and pay to any governmental taxing authority, (c) and the value of any allowance issued or granted to any customer of the Franchised Business that you credit in full or partial satisfaction of the price of any services and products offered in connection with the Franchised Business. (Section 1)
ITEM 7. INITIAL INVESTMENT
We anticipate that you will incur the following estimated initial expenditures in the establishment of your Franchised Business. We do not offer direct or indirect financing for any of these expenditures.
|
Names of Expenditures |
Actual or Estimated Amounts for You |
Method of Payment |
When Due |
To Whom Payment Is To Be Made |
|
Franchise Fee |
$ 35:000 |
Cashier's Check |
Upon Signing Franchise Agreement |
Us |
|
Real Estate/Rent2 |
1.000 8.333 |
As Arranged |
Before Beginning Operations |
Lessor |
|
Utility Deposits3 |
0 500 |
As Arranged |
Before Beginning Operations |
Utilities |
|
Leasehold Improvements |
0 5.000 |
As Arranged |
Before Beginning Operations |
Third Parties |
|
Furniture, Fixtures & Improvements* |
5.000 15.000 |
As Arranged |
Before Beginning Operations |
Third Parties |
|
Initial Inventory0 |
3.000 5.000 |
As Arranged |
Before Beginning Operations |
Approved Supplier |
|
Insurance |
500 3.500 |
As Arranged |
Before Beginning Operations |
Third Parties |
|
Signage8 |
100 2.000 |
As Arranged |
Before Beginning Operations |
Third Parties |
|
Drug Pak Software |
2.000 4.000 |
As Arranged |
Before Beginning Operations |
Approved Suppliers |
|
Office Equipment & Supplies10 |
1.500 2.500 |
As Arranged |
Before Beginning Operations |
Third Parties |
|
Grand Opening Advertising' |
3.000 7.000 |
As Arranged |
First 3 Months Of Operation |
Third Parties |
|
Training1" |
2.500 5.000 |
As Arranged |
Before Beginning Business |
Third Parties |
|
Licenses & Permits |
0 250 |
As Arranged . |
Before Beginning Business |
Licensing Authority |
|
Legal & Accounting |
1.500 3.500 |
As Arranged |
Before Beginning Business |
Attorney/Accountant |
|
Dues & Subscriptions1' |
100 300 |
As Arranged |
Before Beginning Business |
Third Parties |
|
Additional Funds10 (3 months) |
30.000 40.000 |
As Arranged |
As Necessary |
You Determine |
|
TOTAL17 |
$ 85.200 S 136.883 |
NOTES
1 Franchise Fee. The Franchise Fee is described in greater detail in ITEM 5 of this Offering Circular.
2 Real Estate/Rent. You must lease or otherwise provide a suitable facility for the operation of the Franchised Business. A typical AccuDiagnostics Business has between 750 to 2,000 square feet of space for a waiting room, a reception area, testing stations and bathrooms. It is difficult to estimate lease acquisition costs because of the wide variation in these costs between different locations. Lease costs will vary based upon square footage, cost per square foot, required maintenance costs and the local rental real estate market. We assume that you will have to pay the first month's rent and a one month security deposit in advance. The rent you pay is typically not refundable, but your security deposit may be under certain circumstances.
J Utility Deposits. If you are a new customer of your local utilities, you will generally have to pay deposits to local utilities for services such as electric, telephone, gas and water. The amount of the deposit will vary depending upon the policies of the local utilities.
4 Leasehold Improvements. To convert the existing facility into an AccuDiagnostics Business, it must be renovated according to our standards and specifications. The cost of leasehold improvements will vary based upon size, condition and location of the premises, local wage rates and material costs. The low estimate assumes that your landlord will provide a partial build-out allowance.
5 Furniture. Fixtures & Equipment. You will be required to purchase (or lease) furniture for the office area and reception area, and other fixtures and equipment necessary for providing the services offered by AccuDiagnostics Businesses. Although some of these items may be leased, the range shown represents the actual purchase price.
f' Initial Inventory. You will be required to purchase an initial inventory of products such as drug screening lest kits. Although it is possible to purchase initial inventory on open account, the range shown represents the full cost of purchase.
7 Insurance. You must purchase and maintain in effect during the term of the Franchise Agreement the type and amount of insurance specified in Section 15 of the Franchise Agreement in addition to any other insurance that may be required by applicable law. any lender or lessor. Your insurance policies must name us as an additional insured and^'or loss payee. Factors that may affect your cost of insurance include the location of the Franchised Business, the value of the leasehold improvements, the amount of inventory you carry, your number of employees and other factors.
s Signage. This range includes the cost of all signage used in the Franchised Business. The costs will vary based upon the size and location of the Franchised Business, local wage rates and other factors.
9 Drug Pak Software. Your must purchase ihe DrugPak Software Suite. The price will vary based on the software modules you purchase. This software is described in more detail in ITEM 11.
10 Office Equipment and Supplies. You must purchase general office supplies and office equipment, including a computer system. Factors that may affect your cost of office equipment and supplies include local market conditions, the size of the Franchised Business, competition among suppliers and other factors.
" Grand Opening. You will be required to spend a minimum of $3,000 on Grand Opening Advertising during the first 3 months of operation. You may choose to spend more. Factors that may affect your decision on the actual amount to spend include local media cost and customer demographics in the surrounding area.
~ Twining, The cost of ihe initial training program itself is included in the Franchise Fee, but you are responsible for transportation, food and lodging expenses while attending training. The total cost will vary depending on the number of people attending, how far you travel and the type of accommodations you choose.
1 Licenses & Permits. Local government agencies typically charge fees for such things as construction permits and operaling licenses. Your actual costs may vary from the estimates based on the requirements of local government agencies.
14 Legal & Accounting. You will need to employ an attorney, an accountant and other consultants 10 assist you in establishing your Franchised Business. These fees may vary from location to location depending upon the prevailing rate of attorneys', accountants7 and consultants' fees.
15 Dues & Subscriptions. You must join the Drug and Alcohol Testing Industry Association and your local Chamber of Commerce.
"" Additional Funds. We recommend that you have a minimum amount of money available to cover operating expenses, including employees' salaries, for the first 3 months that the Franchised Business is open. However, we cannot guarantee thai our recommendation will be sufficient. Additional working capital may be required if sales are low or operating costs are high.
Total. In compiling this chart, we relied on our and our Affiliate's combined industry experience and 8 years of experience in operating a similar business. The amounts shown are estimates only and may vary for many reasons including the size of your Franchised Business, the capabilities of your management learn, where you locate your Franchised Business and your business experience and acumen. You should review these estimates carefully with an accountant or other business advisor before making any decision lo buy a franchise. These figures are estimates only and we cannol guarantee that you will not have additional expenses in starting the Franchised Business.
Development Agreement
We anticipate lhat you will incur the following estimated initial expenditures in the establishment of your Franchised Business if you sign a Development Agreement for the development of 5 AccuDiagnostics Businesses.
|
Names of Expenditures |
Actual or Estimated Amounts For You |
Method of Payment |
When Due |
To Whom Payment Is To Be Made |
|
Development Fee |
$ 50,000 |
Cashier's Check |
Upon Signing Development Agreement |
Us |
|
Franchise Fee |
35,000 |
Cashier's Check |
Upon Signing the lM Franchise Agreement |
Us |
|
Other Expenditures" for Is1 business TOTAL |
50,200 101.883 |
As Disclosed in Preceding Table |
As Disclosed in Preceding Table |
As Disclosed in Preceding Table |
|
$ 135.200 $ 186,883 |
The Development Fees is described in greater detail in ITEM 5 of this Offering Circular.
The balance of your initial investment for the first Franchised Business is as stated in the preceding table. Your costs to develop the second and each additional Franchised Business may be affected by factors such as inflation, local labor costs, materials cost and other factors not within our control.
ITEM 8, RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Except as indicated below, you are not required to purchase or lease products or services from us or our Affiliate or from suppliers approved by us or under our specifications.
Specifications
You must remodel, furnish and equip the Franchised Business according to our standards and specifications. Many of the products, supplies and services needed in connection with establishing your Franchised Business, such as screening kits and other testing supplies, fixtures, furniture, computer systems and software and signs, must meet our specifications for appearance, quality, performance and functionality, among other things. Additionally, some of the products, supplies and services needed in connection with the ongoing operation of your Franchised Business, such as your off-site sample testing services, medical review officer services, advertising materials. stationery, business cards, employee uniforms and business insurance, must meet our specifications for appearance, quality, performance and functionality, among other things. We list the specifications for these items and services in the Manual or in other written or electronic communications provided to you. We formulate and modify our specifications for products, supplies and services based upon our and our Affiliate's industry knowledge and our Affiliate's experience in operating an AccuDiagnostics Business since 1998.
Approved Suppliers
Many of the products, supplies and services discussed above may only be purchased from Approved Suppliers. We will provide you with a list of these items and services and their Approved Suppliers, which may include or be limited to us or an Affiliate. We are an Approved Supplier of the drug screening kits and alcohol monitoring system equipment you will use in or sell from the Franchised Business. If you want to use any item or service in establishing or operating the Franchised Business that we have not approved (for items or services thai require supplier approval), you must first send us sufficient information, specifications or samples for us to determine whether the item or service complies with our standards and specifications or whether the supplier meets our Approved Supplier criteria. You must reimburse us for all of our reasonable expenses in connection with determining whether we will approve an item, service or supplier. We will decide within a reasonable time (usually 30 days) after receiving the required information whether you may purchase or lease the items or services or if you may purchase from the supplier. Our approval process generally focuses on the supplier's dependability, general reputation and ability to provide sufficient quantity of product or services, and the products" or services" prices and quality.
We may revoke prior supplier approval if the approved supplier fails to meet our standards, specifications and Approved Supplier criteria. If we should revoke the approval we will inform you in the Manual or in other written or electronic communications provided to you.
Miscellaneous
We may negotiate group rates, including price terms, for the purchase of equipment and supplies necessary for the operation of the Franchised Business. Presently, there are no such purchase or supply agreements in effect and there are no purchasing or distribution cooperatives that you are required to join, although as of the date of this
- 10-
Offering Circular we are negotiating with certain suppliers for quantity discounts that will be passed through to you and our other franchisees in whole or in part. As of the date of this Offering Circular, we have not earned any revenue from the sale of items for which we are the only Approved Supplier, but we expect to include a reasonable markup in the prices of these items as we begin selling franchises. We do not receive revenue or other material consideration from third-party suppliers as a result of purchase made by you or any other franchisee. We do however, in the future expect to receive discounts or rebates from third-party suppliers based on your and other franchisees' future purchases of certain items for which we are not the only Approved Supplier.
We may establish National Accounts that you will have an opportunity to provide services 10. If we do, wc expect to retain 25% of the revenue received from National Accounts to compensate us for our sales, administration and billing efforts.
We estimate that approximately 55% to 65% of your expenditures for leases and purchases in establishing your Franchised Business will be for goods and services that must be purchased either from us, our Affiliate or an Approved Supplier, or in accordance with our standards and specifications. We estimate that approximately 40% to 50% of your expenditures on an ongoing basis will be for goods and services that must be purchased from either us, our Affiliate, an Approved Supplier or in accordance with our standards and specifications.
We do not provide or withhold material benefits to you (such as renewal rights or the right to open additional Franchised Businesses) based on whether or not you purchase through the sources we designate or approve; however, purchases of unapproved products or from unapproved suppliers in violation of the Franchise Agreement will entitle us, among other things, to terminate the Franchise Agreement.
Development Agreement
We have no required specifications or Approved Suppliers for goods, services or real estate relating to the Development Agreement and we receive no revenue, rebates or discounts as a result of your purchases or leases in connection with a Development Agreement.
ITEM 9. FRANCHISEE'S OBLIGATIONS
This table lists your principal obligations under the Franchise Agreement and other agreements. It will help you find more detailed information about your obligations in these agreements and in other ITEMS of this Offering Circular.
|
Obligation |
Section in the Franchise Agreement (FA) and Development Agreement (DA) |
ITEM in the Offering Circular |
|
a. Site selection and acquisition/lease |
FA: Section 5 DA: None |
ITEMS 11 and 12 |
|
b. Pre-opening purchases/leases |
FA: Sections 5, 12 and 15 DA: None |
ITEMS 7 and 8 |
|
c. Site development and other pre-opening requirements |
FA: Sections 5, 8, 12 and 15 DA: None |
ITEMS 6, 7 and II |
|
Obligation |
Section in the Franchise Agreement (FA) and Development Agreement (DA) |
ITEM in the Offering Circular |
|
d. Initial and ongoing training |
FA: Section 8 DA: None |
ITEMS 6, 7 and 11 |
|
e. Opening |
FA: Sections 5 and 11 DA: Section 4 |
ITEMS 7 and 11 |
|
f. Fees |
FA: Sections 3, 5, 8, 10, 11, 12, 13, 14, 15, 17. 18, 20 and 22 DA: Sections 3 and 7 |
ITEMS 5, 6 and 7 |
|
g. Compliance with standards and policies/Operating Manual |
FA: Sections 6, 7, 9. 10 and 13 DA: None |
ITEMS 8 and 16 |
|
h. Trademarks and proprietary information |
FA: Sections 67 7 and 9 DA: Section 6 |
ITEMS 13 and 14 |
|
i. Restrictions on products'services offered |
FA: Sections 5, 6? 10 and 13 DA: None |
ITEMS 8 and 16 |
|
j. Warranty and customer service requirements |
FA: Section 13 DA: None |
ITEM 16 |
|
k. Territorial development and sales quotas |
FA: None DA: Section 4 and Exhibit A |
ITEM 12 |
|
1. Ongoing product/service purchases |
FA: Section 13 DA: None |
ITEMS 8 and 11 |
|
m. Maintenance, appearance and remodeling requirements |
FA: Sections 5. 10 and 13 DA: None |
ITEMS 7 and 17 |
|
n. insurance |
FA: Section 15 DA: None |
ITEMS 6, 7 and 8 |
|
o. Advertising |
FA: Sections 3 and 11 DA: None |
ITEMS 6, 7 and 11 |
|
p. Indemnification |
FA: Section 21 DA: Section 11 |
ITEM 6 |
|
q. Owner's participation,' management/' staffing |
FA: Sections 8 and 13 DA: None |
ITEM 15 |
- 12-
|
Obligation |
Section in the Franchise Agreement (FA) and Development Agreement (DA) |
ITEM in the Offering Circular |
|
r. Records and reports |
FA: Sections 3, 11 and 12 DA: None |
ITEM 11 |
|
s. Inspections and audits |
FA: Sections 6 and 12 DA: None |
ITEMS 6, 11 and 13 |
|
t. Transfer |
FA: Section 18 DA: Section 7 |
ITEM 17 |
|
u. Renewal |
FA: Section 4 DA: Section 5 |
ITEM 17 |
|
v. Post-termination obligations |
FA: Section 17 DA: Section 9 |
ITEM 17 |
|
w. Non-competition covenants |
FA: Sections 7 and 17 DA: Section 9 |
ITEM 17 |
|
x. Dispute resolution |
FA: Section 23 DA: Section 13 |
ITEM 17 |
ITEM 10. FINANCING
We do not offer direct or indirect financing. We do not guarantee your lease or other obligations.
ITEM 11. FRANCHISOR'S OBLIGATIONS
Fxcept as listed below, we need not provide any assistance to you under the Franchise Agreement or Development Agreement.
A. Pre-Qpening Assistance
Before you open the Franchised Business, we will:
1. designate the Area of Primary Responsibility within which you will operate the Franchised Business. (Franchise Agreement, Section 2.1.6) See ITEM 12 for additional information on the Area of Primary Responsibility.
2. if you are a' Developer, designate your Development Territory, as further described in ITEM 12. (Development Agreement, Section 2.1)
3. if we have not already approved a site that you have selected before signing the Franchise Agreement, designate the area within which you will locate the Franchised Business, provide you with
our criteria for site selection and approve the site you have selected for the location of the Franchised Business. (Sections 0 and 0)
Neither we nor any of our employees have special expertise in selecting sites; we make no representations that the Franchised Business will be profitable or successful by being located at the Approved Location. Any approval is intended only to indicate that the proposed site meets our minimum criteria based upon our general business experience.
4. review and approve your lease or purchase agreement for the site for the Approved Location. (Section 0)
Our review of your lease or purchase agreement and any advice or recommendations we may offer is not a representation or guarantee by us that you will succeed at the leased or purchased premises.
5. provide you with standard plans and specifications for the build-out of the Approved Location along with a list of required equipment that you must purchase and install and improvements that you must make. (Section 0)
6. provide approximately 2 weeks of initial training for your Designated Manager and up to one assistant. This training is described in detail later in this ITEM. (Section 0)
7. provide you on-site assistance and guidance for approximately 5 days, subject (as to timing) to the availability of our personnel. (Section 0)
8. lend you one copy of the AccuDiagnostics Operations Manual or make the Manual available to you in electronic form. (Section 0) The Table of Contents of the Operations Manual, along with number of pages devoted to each section, is attached as Exhibit D to this Offering Circular.
B. Other Assistance During the Operation of The Franchised Business
After the opening of the Franchised Business, we will:
1. from time to time, advise, discuss problems and olTer general guidance to you by telephone, e-mail, facsimile, newsletters and other methods. Our advice and guidance may relate to authorized services or products, operational methods, accounting procedures, and marketing and sales strategies, and is based on our and our franchisees" knowledge of and experience in operating AccuDiagnostics Businesses. (Section 0)
2. at our discretion, establish National Accounts that may require AccuDiagnostics services within your Area of Primary Responsibility. If we do enter into an agreement with a National Account that has a facility in your Area of Primary Responsibility, you have the right to service that facility at the System-wide prices we determine. You will receive 75% of the price charged to the client, and we will retain the remaining 25% to defray our costs associated with sales, administration and billing. If you decide not to service the facility, we can service it ourselves or we can allow other AccuDiagnostics Businesses or third parties to service it. (Section 0)
3. at our discretion, make periodic visits to the Franchised Business for the purposes of consultation, assistance and guidance in various aspects of the operation and management of the Franchised Business. We may prepare written reports outlining any suggested changes or improvements in the operations of the Franchised
- 14-
Business and detail any deficiencies that become evident as a result of our visit. If we prepare a report, you may request a copy from us. (Section 0)
4. make available to you additional operations assistance and ongoing training as we deem necessary. (Sections 0 and 0)
5. make available to you changes and additions to the System as generally made available to all franchisees. (Section 0)
6. periodically provide advertising and promotional materials, including ad-slicks. brochures, fliers and other materials to you for use in Grand Opening Advertising or Local Advertising. (Section 0)
C. Advertising and Promotion
1. Each month, you must spend at least 2% of your Gross Sales on advertising, promotions and public relations in the local area surrounding the Franchised Business. You will pay for your ads and promotions directly, but we will provide you with general marketing guidelines and we will review and approve your advertisements. (Section 0)
2. We will develop a System-wide Marketing Fund, and. you will be required to contribute up to 2% of your Gross Sales to the fund. (Section 0) We will administer the Marketing Fund as follows:
(a) We will control the creative concepts and the materials and media to be used. and we will determine the placement and allocation of advertisements. We may use print, television, radio, Internet or other media for advertisements and promotions. We do not guarantee that any particular franchisee will benefit directly or in proportion to their contribution from the placement of advertising by the Marketing Fund.
(b) We may use your contributions to meet any cost of producing, maintaining. administering and directing consumer advertising (including the cost of preparing and conducting television, radio, Internet, magazine and newspaper advertising campaigns and other public relations activities; developing and/or hosting an Internet web page of similar activities; employing advertising agencies to assistin this advertising: providing promotional brochures; conducting market research; and providing other marketing materials lo franchisees). We initially plan to conduct all advertising in-house, but we may use a national or regional advertising agency in the future. We will maintain your contributions in a separate account from our funds and we will not use them for any of our general operating expenses, except for our reasonable administrative costs and overhead related to the administration of the Marketing Fund. We will not use Marketing Fund Contributions for the direct solicitation of franchise sales.
(c) We expect to use all contributions in the fiscal year they are made. We will use any interest or other earnings of the Marketing Fund before using current contributions. We intend for the Marketing Fund to be perpetual, but we have the right to terminate it if necessary. We will not terminate the Marketing Fund until all contributions and earnings have been used for advertising and promotional purposes or have been returned to our franchisees on a pro rata basis.
(d) AH AccuDiagnostics Businesses owned by our Affiliate or us will make similar contributions to the Marketing Fund as required of franchisees.
- 15-
(e) We will have an accounting of the Marketing Fund prepared each year and we
will provide you with a copy if you request it. We may require that the annual accounting be audited by an independent certified public accountant at the expense of the Marketing Fund.
(0 The Marketing Fund is not a trust and we assume no fiduciary duty in
administering the Marketing Fund.
3. Although we are not obligated to do so, we may create a Cooperative Advertising program for the benefit of all AccuDiagnostics Businesses located within a particular region. We have the right to (a) allocate any portion of the Marketing Fund to a Cooperative Advertising program; and (b) collect and designate all or a portion of the Local Advertising for a Cooperative Advertising program. We will determine the geographic territory and market areas for each Cooperative Advertising program. You must participate in any Cooperative Advertising program established in your region. If a Cooperative Advertising program is implemented in a particular region, we may establish an advertising council for franchisees in that region to self-administer the program. (Section 0)
4. During your first 3 months of operation, you must spend at least $3,000 on Grand Opening Advertising, including print ads, news media promotions, direct mail advertising, dues for business organizations, event dues or other solicitation and promotional efforts. We will provide you with guidance for conducting Grand Opening Advertising, and we will review and approve the materials you use in your Grand Opening Advertising. (Section 0)
5. You must list the telephone number for the Franchised Business in your local telephone directory and in the "yellow pages" category we specify. You must place the listings together with other Franchised Businesses operating within the distribution area of the directories. (Section 0)
D. Computer/Point-of Sale System
We have the right, under the Franchise Agreement, to require you to purchase and use any and all computer software programs that we may designate and to purchase all computer hardware necessary for the efficient operation of the software. (Section 0) Presently, we require you to purchase the DrugPak Software Suite. DrugPak is a leading software package for the management of drug and alcohol testing facilities. At a minimum. you must purchase the Main Module (Full Version) at a cost of $1,295 and the DP Billing Module at a cost of $695. The Main Module manages the central database, performs random selections, stores test results and prints reports. among other things. The DP Billing Module creates invoices for testing activity. You may also choose to purchase additional modules, such as the DP Informer Module at a cost of $795, and the DP Live Module, the price of which varies based on the number of users. The total price of the software depends on the number of modules you purchase. Our Affiliate has used this software in the operation of its AccuDiagnostics Business since 2004. We are the only approved supplier of the DrugPak Sofware Suite; and require you to purchase this software from us so that we can negotiate quantity discounts from its manufacturer, which we will pass onto you and other franchisees in whole or in part. The DrugPak Software Suite is made by Scanlon Associates. 123 Hoy Street, Stale College, Pennsylvania. You can view detailed information about this software on the Internet at www.drugpak.com.
Additionally, you must also purchase QuickBooks (single user or multi-user) and Microsoft Office.
You must also purchase and use computer hardware compatible with our system and capable of running the above-described software, which at a minimum includes a computer with a Pentium III 2.80GHz processor, 256MB ram. a 40GB hard drive, a 15-inch monitor and a high-speed-Intemet-compatible modem. You
- 16-
must purchase a compatible inkjet or laser printer. We do not currently require you to comply with any other computer hardware specifications.
We have no obligation to provide support, ongoing maintenance, repairs or upgrades for the required computer hardware. We recommend that you purchase an extended warranty when you purchase your computer hardware.
We have the right to independently access all information collected or compiled by or in accordance with your use of the software at any time without first notifying you.
You must update or upgrade computer hardware components and/or software as we deem necessary but not more than one time per calendar year.
E. Methods Used to Select the Location of the Franchised Business
If you have a potential site for the Franchised Business, you may propose the location for our consideration. We may consent to the site after we have evaluated it. If you do not have a proposed site, we will designate an area within which you must locate the Franchised Business and we will furnish you with our general site selection criteria. You are solely responsible for locating and obtaining a site that meets our standards and criteria and that is acceptable to us. (Sections 0 and 0)
The general site selection and evaluation criteria that we consider in approving your site includes condition of the premises, demographics of the surrounding area, proximity to potential clients, proximity to other AccuDiagnostics Businesses, lease requirements, proximity to major roads and overall suitability. We will provide you with written notice of our approval or disapproval of any proposed site within a reasonable lime after receiving all requested information. If you and we cannoi agree on a suitable site for the Franchised Business, we may terminate the Franchise Agreement.
If you are a Developer, we will grant you a Development Territory, which is the area within which you must locate each of your AccuDiagnostics Businesses. For each AccuDiagnostics Business you develop, you must first propose the specific sites for our consideration according to the process above. (Development Agreemenl, Section 2.1)
F. Typical Lenglh of Time Before Operation
The typical length of time between the signing of the Franchise Agreement and the opening of your Franchised Business is approximately 3 months: however, you are required to open your Franchised Business and be operational within 5 months after signing the Franchise Agreement. Factors that may affect how long it takes you to open the Franchised Business include your ability to secure permits, zoning and local ordinances, weather conditions and delays in installation of equipment and fixtures. (Section 0)
G. Training
We will conduct an initial training program that the Designated Manager (which is you, if you are not a corporation or other business entity) must attend and complete to our satisfaction not more than 90 days after signing the Franchise Agreement. Although initial (raining is mandatory for the Designated Manager, it is also available for one additional assistant. Training will lake place at our headquarters, or at another location we designate. on an as needed basis as we may determine. The initial training program will be approximately 2 weeks long and will cover all material aspects of the operation of an AccuDiagnostics Business, including such topics as sample
- 17-
The original documents were scanned as an image. The original file can be downloaded at the link above.