UFOC
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample UFOC
Ass?
FRANCHISE OFFERING CIRCULAR
Anago Franchising, Inc. ^N 2 g ^Qqc
3111 University Drive, Suite 625 EpaRTmeNt Coral Springs, Florida 33065 L°SANGElSPFipORATlnK
(954)752-3111 6°^/C u/vs
Anago Franchising offers Subfranchise rights to sell its proprietary system of commercial janitorial services to unit franchisees.
The initial Franchise Fee charged is not identical for all Master Franchises. The minimum Initial Franchise Fee for a Master Franchise is $100,000. The method for calculating the fee is 9,500 to 15,000 US Dollars for each 100,000 thousand of population located within the counties and or cities that will comprise the Master Franchise territory, a portion of which may be financed. The estimated initial investment required, in addition to the Initial Franchise Fee, is between $233,025 and $1,204,000 which would include, insurance, bonding and office set-up. Items 5-7 give fiirther explanation regarding the Franchisee's total investment.
Risk Factors:
WE HAVE INSTITUTED CERTAIN SALES VOLUMES AND MARKET PENETRATION, WHICH ESTABLISHES MINIMUM ROYALTY PAYMENTS. IF THE SALES VOLUME AND MARKET PENETRATION ARE NOT MET, YOU ARE CAUTIONED THAT YOUR ABILITY TO PAY DEBTS AND EXPENSES ARE SEVERELY ENCUMBERED. THEREFORE, YOUR CONTINUATION OF TERRITORIAL EXCLUSIVITY IS DEPENDENT UPON ACHIEVEMENT OF THAT SALES VOLUME AND MARKET PENETRATION. FAILURE TO MEET ANAGO'S MINIMUM LEVELS COULD RESULT IN THE LOSS OR MODIFICATION IN THE EXCLUSIVITY RIGHTS TO THE TERRITORY.
FAILURE TO PAY MINIMUM ROYALTY FEES BETWEEN $24,000 AND $60,000 CONSTITUTES A DEFAULT UNDER THE SUBFRANCHISE RIGHTS AGREEMENT AND GROUNDS FOR TERMINATION OF YOUR FRANCHISE RIGHTS.
AN ADVERSE DETERMINATION BY THE PATENT AND TRADEMARK OFFICE MAY RESULT IN YOUR DISCONTINUANCE OF THE USE OF THE MARK AND CHANGES IN SIGNAGE AND OTHER ITEMS BEARING THE PROPRIETARY MARKS.
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THERE MAY BE OTHER RISKS CONCERNING YOUR FRANCHISE.
Information comparing franchisors is available. Call the state administrators listed in Exhibit E or your public library for sources of information.
Registration of this franchise by a state does not mean that the state recommends it or has verified the information in this offering circular. If you learn anything in the offering circular is untrue, contact the Federal Trade Commission and State Authorities.
The date of issuance of this Disclosure Statement is
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TABLE OF CONTENTS
ITEM 1 - THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES...................................................................3
ITEM 2 - BUSINESS EXPERIENCE..................................................................................................................................7
ITEM 3 - LITIGATION........................................................................................................................................................8
ITEM 4 - BANKRUPTCY....................................................................................................................................................8
ITEM 5 - INITIAL FRANCHISE FEE.................................................................................................................................8
ITEM 6-OTHER FEES.......................................................................................................................................................9
ITEM 7 - INITIAL INVESTMENT...................................................................................................................................12
ITEM 8 - RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES............................................................18
ITEM 9 - THE SUBFRANCHISOR'S OBLIGATIONS...................................................................................................20
ITEM 10-FINANCING.....................................................................................................................................................21
ITEM 11 - THE FRANCHISOR'S OBLIGATIONS.........................................................................................................22
ITEM 12-TERRITORY....................................................................................................................................................31
ITEM 13-TRADEMARKS...............................................................................................................................................32
ITEM 14 - PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION.........................................................34
ITEM 15 - OBLIGATION TO PARTICIPATE IN THE ACTUAL.................................................................................36
OPERATION OF THE FRANCHISE BUSINESS............................................................................................................36
ITEM 16 - RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL..................................................................36
ITEM 17 - RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION............................................37
ITEM 18-PUBLICFIGURES...........................................................................................................................................42
ITEM 19 - EARNINGS CLAIMS......................................................................................................................................42
ITEM 20 - LIST OF OUTLETS.........................................................................................................................................42
ITEM 20-LIST OF OUTLETS........................................................................................................................................43
ITEM 21-FINANCIAL STATEMENTS..........................................................................................................................51
ITEM 22 - CONTRACTS...................................................................................................................................................51
ITEM 23 - RECEIPT...........................................................................................................................................................51
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EXHIBIT A - ANAGO SUBFRANCHISE RIGHTS AGREEMENT EXHIBIT B - LIST OF AGENTS FOR SERVICE OF PROCESS EXHIBIT C - DEPOSIT AGREEMENT
EXHIBIT D - SITE DEVELOPMENT SERVICE AGREEMENT EXHIBIT E - LIST OF STATE ADMINISTRATORS EXHIBIT F - NBDS SOFTWARE LICENSE AGREEMENT EXHIBIT G - LIST OF ANAGO SUBFRANCHISORS EXHIBIT H - FINANCIAL STATEMENTS EXHIBIT I - ACKNOWLEDGMENT OF RECEIPT EXHIBIT I - ACKNOWLEDGMENT OF RECEIPT
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ITEM 1 - THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES
The Franchisor
The name of the franchisor is Anago Franchising, Inc. In order to simplify the language in this Franchise Offering Circular, "we," "us" or "our" means Anago Franchising, Inc. and "you" or "your" means the person who buys the subfranchise rights. We do business under the names "Anago Franchising, Inc." or "Anago." We do not do business under any other name. We maintain our principal business address at Suite 625, 3111 N. University Drive, Coral Springs, Florida 33065. We are a Florida corporation formed on February 15,1995.
We are a licensee of Anago Cleaning Systems, Inc. who licenses us to use and to sublicense to our Subfranchisors and their unit franchisees the use of the Proprietary Marks and other Proprietary Property. Anago Cleaning Systems, Inc. is a separate corporation from us and is our parent company. Please see the subheading Our Predecessor, below, for additional information on Anago Cleaning Systems, Inc.
Our Experience
We have not operated a business of the type you will operate. We are not in any other line of business, except for the ownership, operation and sale of the type of subfranchise rights offered under this Franchise Offering Circular. Our affiliate, Estrellita, Inc., who is our subfranchisor in Dade, Broward and Palm Beach Counties, State of Florida, has operated a business of the type you will operate for 10 years.
Our agent for service of process in this state may be found on Exhibit B.
Our Business
We were formed for the purpose of offering and selling Anago Subfranchise Rights and servicing, supporting and administering all functions inherent in operating the System. We have a license from Anago Cleaning Systems, Inc. to use its Proprietary Marks and the System and to sublicense these items to Subfranchisors and their Unit Franchisees in the U.S. and Internationally.
Our Predecessor
The name of our predecessor is Anago International, Inc. that began selling franchises in 1991. Anago International, Inc. is no longer in the Franchise business. Anago Cleaning Systems, Inc., a Florida corporation is our parent company. Our parent company maintains its principal business address at 3111 University Drive, Suite 625, Coral Springs, Florida 33065. The parent company was incorporated on December 5, 2000.
The parent company is a separate corporation from us and is not responsible for our activities. The Predecessor is an independent entity without liability for our acts and omissions and we are an independent entity without liability for the acts and omissions of the Predecessor.
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Our Affiliate
The name of our affiliate is Estrellita, Inc., a Florida corporation (the "Affiliate"). The Affiliate maintains its principal business address at 3350 NW 22nd Terrace, Suite 1200B, Pompano Beach, Florida 33069. The Affiliate was incorporated on February 15, 1995 and has conducted a business of the type you will operate since 1995. The Affiliate is our subfranchisor for Dade, Broward and Palm Beach Counties in the State of Florida. Our Affiliate's predecessor was Anago International, Inc. Anago International, Inc. is no longer in the Franchise business.
The Affiliate is a separate corporation from us and is not responsible for our activities. The Affiliate is an independent entity without liability for our acts and omissions and we are an independent entity without liability for the acts and omissions of the Affiliate.
Description of Our Subfranchise Rights
The business you will conduct is that of a subfranchisor of janitorial service franchises. You will sell Unit Franchises to independent persons in your territory, who along with yourself will be licensed to use the Anago trademarks, trade names, service marks, trade secrets, programs, materials and procedures in the performance of janitorial service contracts and related supply and equipment services. You will be selling janitorial service contracts and assigning them to your Unit Franchisees. As a subfranchisor, you will be competing with national and local businesses offering comparable services.
Applying for Subfranchise Rights
You, as a subfranchisor, will enter the Anago system either by developing a new Anago territory or by purchasing an existing territory. We have absolute discretion and the right to approve or disapprove your application or the contemplated transaction. We will decide whether to approve your application based on several factors, including your experience, qualifications, financial status, net worth and the availability of opportunities for development of new unit franchises in the relevant geographic area.
In order to apply for Anago Subfranchise Rights, you must complete and submit a franchise application. THE PROCESSING OF YOUR APPLICATION CANNOT BEGIN UNTIL ALL INFORMATION HAS BEEN SUBMITTED AND CONFIRMED.
Your submission of a franchise application authorizes us to obtain a credit check and to check your records with the Division of Motor Vehicles and the courts. All information received from these confirmations will be held in confidence and made available to the applicant upon request. If two (2) or more persons apply for Subfranchise rights, each must submit a separate franchise application with a personal financial statement. A separate franchise application must also be submitted for any entity proposed to have an interest in the franchise.
You must successfully complete our initial interview process, which will take place at your location or in Coral Springs, Florida. If there is a continuing mutual interest following these interviews, we may offer you a Deposit Agreement (the "Deposit Agreement"), (a copy of the
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current form is attached as Exhibit C). The Deposit Agreement sets forth the terms of the preliminary approval and specifies the target territory and population in which you are authorized to search for office space for the location of your office.
Subfranchise Fee Deposit
Upon signing the Deposit Agreement, you must pay a deposit equal to the down payment for the territory. We may grant you approval to pursue additional target locations without requiring an additional deposit, except as described below. The Subfranchise Fee Deposit is nonrefundable; however, we will credit the Subfranchise Fee Deposit against the Initial Subfranchise Fee upon signing the Subfranchise Rights Agreement. The Subfranchise Fee Deposit may be transferred from the original target territory to a substitute target territory, if we agree on the substitute target territory. We will refund up to 75% the Subfranchise Fee Deposit should the parties not enter into a Subfranchise Rights Agreement within 30 days of the signing and payment of the Subfranchise Deposit, or if an acceptable site for the Master Franchise Office is not secured within 60 days after the signing of the Subfranchise Rights Agreement. The are no other provisions for a refund of the Subfranchise Deposit Fee
Site Development
Upon receipt of the signed and paid Site Development Services Agreement, (Exhibit D to this UFOC), we will schedule our representative to visit your Master Franchise Territory for the purpose of selecting an office site as well as developing business relationships with area vendors concerning telephone systems, office furniture, office supplies, janitorial supplies and newspaper advertising.
You agree to open the Master Franchise Office in a Class A or Class B building, with the location having been approved by us.
YOU SHOULD NOT LEASE, PURCHASE OR OTHERWISE COMMIT FINANCIALLY TO A POTENTIAL SITE UNTIL YOU HAVE RECEIVED WRITTEN SITE APPROVAL. Any unauthorized commitment is made at your sole risk.
Regardless of whether we grant Site Approval, we make no representation about the suitability, viability or potential sales at any site. Site Approval is granted or denied by us based on our own business interests, and you must make your own business judgment about any potential site. You must also construct, equip and furnish the office at the approved site in accordance with plans and specifications approved by us. Our approval of your plans and specifications is for our own purposes only. You are responsible for ensuring that your office is constructed, equipped and furnished in a manner that complies with all applicable laws, regulations, codes and other such requirements.
Before the planned opening of your office, you will receive a signed copy of the Subfranchise Rights Agreement and be required to return the signed Subfranchise Rights Agreement and the balance of the Initial Subfranchise Fee.
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THE PROCESS OF APPLYING FOR SUBFRANCHISE RIGHTS, OBTAINING NECESSARY APPROVALS (INCLUDING THE COMPLETION OF TRAINING) AND DEVELOPING AN OFFICE, TAKES A SUBSTANTIAL PERIOD OF TIME AND INVOLVES RISKS.
IF YOU CHOOSE TO MAKE CHANGES IN YOUR EMPLOYMENT STATUS, FINANCIAL ARRANGEMENTS OR LIFESTYLE IN ANTICIPATION OF OBTAINING FRANCHISE APPROVAL FROM US OR OF OPENING YOUR OFFICE AFTER YOU HAVE OBTAINED PRELIMINARY APPROVAL, YOU DO SO AT YOUR OWN RISK. DO NOT MAKE THESE DECISIONS WITHOUT CAREFUL THOUGHT.
Our approval of your application for Subfranchise Rights does not ensure your success. Your success will depend upon your own ability as an independent businessperson and on other factors. We make no representation or warranty as to your success. No employee or representative of us is authorized to make any representation or warranty. You should make an independent investigation regarding the purchase of Anago Subfranchise Rights and the Anago System. You should visit and speak to existing subfranchisors and franchisees and obtain the advice of an attorney and accountant who have experience and knowledge of franchise relations and ownership.
Industry Specific Regulations
There are no statutes or regulations specific to the operation of an Anago Franchise. You are required to comply with all local, state and federal laws in the operation of your Anago Franchise. There may be other laws applicable to your business and we urge you to make additional inquiries about these laws.
Franchise Offering and Sales Regulations
You, as a subfranchisor, will be selling Anago unit franchises to individuals in your exclusive area. You are required to register with regulatory authorities as required in exclusive area in order to offer and sell franchises. You are also required to retain counsel to ensure that you meet any requirements of registration with all regulatory agencies. All registration materials to be filed with your exclusive area regulatory authorities must be submitted to Anago for approval prior to filing.
Competition
You will have to compete with other businesses selling similar products and services. Competitors include national chains, regional chains and independently owned commercial cleaning service providers.
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ITEM 2 - BUSINESS EXPERIENCE
The following persons are the directors, principal officers and other executives who have management responsibility in the operation of our business for the Subfranchise Rights described in this Franchise Offering Circular and all franchise brokers. The principal occupation, title and business experience of each person during the last 5 years including the names and locations of employers is indicated below:
Terry M. Mollica, President
Terry M. Mollica joined Anago as Vice President and COO on July 1, 1995. He was appointed to the office of President in April 2004. Mr. Mollica is co-developer of the NBDS and IGAS computer systems currently used by Anago Cleaning Systems. He has over 20 years operational and management experience in the janitorial franchise industry. Terry held the position of Operations Manager with Jani-King of Miami from 1990 until 1992 as well as previously owning and operating a Jani-King unit Franchise for over three years.
Mary E. Barker, Senior Vice President/ Franchise Development
Ms. Barker has been with Anago Franchising since it's inception in 1995. She has held several positions within the Anago system, starting with, our Predecessor, Anago International, Inc. in 1993, to include, Director of Administration, as well as, Regional Director of the South Florida Master Franchise. Ms. Barker is co-developer of the NBDS and IGAS computer system.
Judy Walker. Vice President Marketing
Judy Walker joined Anago Franchising in August 2001 and became Director of Franchise Marketing in 2002. She was appointed Vice President of Marketing in February 2005. Mrs. Walker started with Anago International, Inc. in 1994 and became head of the telemarketing department in August 1994. In April 1998, she became Director of Telemarketing for the South Florida Master Franchise. Previously, she was Assistant Director of Sales and Marketing for Windows on the World Restaurant in New York City. She is fluent in Italian and Spanish.
Saul B. Lipson, Accounting Consultant
Mr. Lipson is the owner of the Lipson Professional Group, Inc. d/b/a Saul B. Lipson & Company. He has been in business in Broward County since November 1982. His firm is an accounting/financial consulting firm. He holds a Masters degree in Accounting from Nova Southeastern University and is enrolled to practice before the IRS and is a Certified Financial Planner.
There can be no assurance that these persons will remain affiliated with us indefinitely or for any time, or that the scope of their involvement will not change.
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ITEM 3 - LITIGATION
No litigation must be disclosed in this Franchise Offering Circular.
ITEM 4 - BANKRUPTCY
No person previously identified in ITEMS 1 or 2 of this Franchise Offering Circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed in this ITEM.
ITEM 5 - INITIAL FRANCHISE FEE
Subfranchise Fee Deposit
Upon signing the Deposit Agreement, you must pay a deposit equal to the down payment for the territory. We may grant you approval to pursue additional target locations without requiring an additional deposit, except as described below. The Subfranchise Fee Deposit is nonrefundable, however, we will credit the Subfranchise Fee Deposit against the Initial Subfranchise Fee upon signing the Subfranchise Rights Agreement. The Subfranchise Fee Deposit may be transferred from the original target territory to a substitute target territory, if we agree on the substitute target territory. We will refund up to 75% of the Subfranchise Fee Deposit only if the proposed "site approval" is rejected and a subsequent "site approval" is denied.
Initial Subfranchise Fee
The Initial Subfranchise Fee for Anago Subfranchise Rights starts from $100,000 with the method for calculating the fee at 9,500 to 15,000 US Dollars for each 100,000 thousand of population located within the counties and or cities that will comprise the Master Franchise territory. The Initial Subfranchise Fee is payable to us in full upon signing the Subfranchise Rights Agreement. The Initial Subfranchise Fee is fully earned and non-refundable upon signing the Subfranchise Rights Agreement. The Initial Subfranchise Fee is as stated below for all Subfranchisors to whom we are currently offering Subfranchise Rights. You are responsible to pay any sales, use or other taxes (other than our income tax) relating to the purchase of Anago Subfranchise Rights.
You delineate specific population categories, which may be adjusted ±% in order to facilitate a specific target area and subsequent Subfranchise Rights Agreement. Modifications of the Initial Subfranchise Fees based upon the population criteria as stated above will be negotiated by you and us. These population figures must be agreed upon before signing the Subfranchise Rights Agreement.
Unit Franchise Fee
You will pay to us a flat fee sum of $400.00 for each Anago unit Franchise sold by or on
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the behalf of your Subfranchise. You must submit to us a signed copy all Unit Franchise Agreements within 10 days after the date of those agreements.
Training Fees
We will provide, at no extra charge to you, the Anago Training Program and training materials at our location in Coral Springs, Florida. You are solely responsible for all travel, meals and lodging costs for your attendees. If the training is to be done at your location, then you will be billed for all costs associated with travel, lodging and food for the Anago training team. See ITEM 11 for additional information on training.
Site Development Services Fees
You will retain us to provide site development services as described in ITEM 1, p. 3, you will pay to us $250 per day consulting fees plus travel expenses, meals and lodging. Our services are outlined in Exhibit D - Site Development Services Agreement.
ITEM 6 - OTHER FEES
The following is a detailed description of other recurring or isolated fees or payments that you must pay to us or our affiliates or that we or an affiliate imposes or collects for a third party.
|
Name of Fee |
Amount |
Due Date |
Remarks |
|
Royalty Fee |
The greater of (i) 5% of weekly Gross Revenues received by you and/or the Unit Franchisee under a Unit Franchise Agreement, or a minimum of $2,000 per month the 2nd year, $3,000 per month the 3rd year, $4,000 per month the 4th year and $5,000 per month the 5th year |
By Wednesday for the previous week. |
"Gross Revenues" means the entire amount of all of your Client revenues from the ownership and operation of your Anago Subfranchise. |
|
Training Fees |
Additional training as set by our Predecessor or us. Initial training is provided without charge. |
As incurred. |
We will provide, at no extra charge to you, the Anago Training Program for subfranchisors and training literature and materials. You are solely responsible for all travel, meals and lodging costs for your attendees. If the training is to be |
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|
Name of Fee |
Amount |
Due Date |
Remarks |
|
done at your location, then you will be billed for all costs associated with travel, lodging and food for the Anago training team. Any training fee paid is not refundable under any circumstance. See ITEM 11 for additional information training. If you receive unsatisfactory inspection reports from us and fail to promptly remedy the deficiencies, we may require you and designated employees to attend refresher training at our location as soon as reasonably possible. You are solely responsible for all expenses associated with these programs including all travel, meals and lodging costs of your attendees. If you fail the Anago Training Program, you must attend retraining classes in the areas the training officer feels are necessary for you to successfully complete the Anago Training Program for subfranchisors. |
|||
|
Accounting Fees |
In our effort to facilitate your cash flow and familiarization with the NBDS Software, we require that your invoicing be provided by us for not less than 6 months (the "break-in period") and , indefinitely, after an Event of Default. |
||
|
Deficiencies |
Actual cost to us |
Immediately upon receipt of invoice |
If you do not satisfy your obligations under the Subfranchise Rights Agreement, we may perform your obligations for you. You must reimburse us for our costs in performing your obligations. |
|
Anago NBDS Software Support1 |
$100.00 per month |
Immediately upon receipt of invoice |
Paid directly to us. |
|
Transfer Fee |
$5,000 |
At the time of transfer |
Upon a transfer, you or your personal representative or other legal representative must pay a Transfer Fee in lieu of an Initial Subfranchise Fee. If the transferee is a spouse or child of the transferor, no Transfer Fee will be charged, but a reasonable administrative fee (currently $2,500) will be charged. |
|
Initial Fee for |
None |
An initial complete set of Manuals will |
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|
Name of Fee |
Amount |
Due Date |
Remarks |
|
Manuals |
be provided to you at no cost. The Manuals contain trade secrets and proprietary materials of Anago and great care should be taken to preserve the Manuals and the information they contain. |
||
|
Indemnification |
Actual cost to us |
Immediately upon receipt of invoice |
You indemnify and hold us harmless from all damages (including reasonable attorneys' fees and costs, even if incident to appellate, post-judgment or bankruptcy proceedings), from claims brought by third parties involving your ownership or operation of your Anago business. This indemnity obligation continues in full effect after the expiration or termination of your Subfranchise Rights Agreement. |
|
Enforcement Costs |
Actual cost to us |
Immediately upon receipt of invoice |
If any legal action or other proceeding is begun for the enforcement of your Subfranchise Rights Agreement, or because of an alleged dispute, breach, default or misrepresentation under any provision of your Subfranchise Rights Agreement, the prevailing party is entitled to recover reasonable pre-institution and post-institution attorneys' fees, court costs and all expenses even if not taxable as court costs. If we engage legal counsel for your failure to pay when due any monies owed under your Subfranchise Rights Agreement or submit when due any reports, information or supporting records, or for any failure otherwise to comply with your Subfranchise Rights Agreement, you must reimburse us for all of the Enforcement Costs we incur. |
|
Miscellaneous Franchisee Merchandise |
Various |
Immediately upon receipt of invoice |
We make available miscellaneous and sundry items embossed with Anago's logo. These items can be purchased through us for the then current price. Items include polo and T-shirts, aprons, caps and other miscellaneous and sundry items. You are not allowed to purchase, design or develop any item bearing the Anago logo without our written consent. |
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|
Name of Fee |
Amount |
Due Date |
Remarks |
|
Sale of Unit Franchise Fee |
$400 flat fee. |
Upon sale of each Unit Franchise |
As long as the Subfranchise Rights Agreement is in force, you will pay a flat fee of $400 for each Unit Franchise sold by you. This is a flat fee that is nonrefundable. |
|
Advertising Fee |
Various |
When Invoiced |
Advertising Fees, when imposed shall be paid upon receipt of invoice. |
|
Audit |
Cost of Audit |
Immediately upon receipt of invoice. |
If an audit by us discloses an understatement of Gross Revenues in excess of 5% for any period or periods, you will be required to reimburse us for all costs of the audit in addition to paying past due Royalties, Advertising Fees (when imposed) plus any late charges that may have accrued. |
Anago NBDS Software Support Relative to the Computer Software License Agreement attached to this Franchise Offering Circular as Exhibit IH. You must purchase software maintenance and support services from a supplier approved by us. As of the date of this Franchise Offering Circular, our supplier charges $100.00 per month, (invoiced in advance, quarterly) for program maintenance and modem support services; however, this fee is subject to change. If you damage, lose or change the original software, you will be required to pay us the then current cost of replacement. This and all software payments are not refundable,
Uniformity; Nonrefundable
The fees and costs in this ITEM are uniform for persons currently offered Subfranchise Rights. Except as otherwise provided above, they are non-refundable and are not collected for, nor paid to, any third party.
Payment Schedule
Our share of Royalty Fees will be deducted by Wednesday during the Term for the previous week. All other amounts due to us from you will be paid at this time. If no time is specified, these amounts are due upon receipt of an invoice from us. Any payment we do not actually receive on or before the due date (through no fault of our own) is overdue.
Cooperatives
There are currently no cooperatives that you may or must participate; however, we may negotiate with some suppliers for you, at your request.
ITEM 7 - INITIAL INVESTMENT
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We present the following estimate of your initial investment to become an Anago Subfranchisor. The estimates presented cover the period before the opening and for the initial phase of your Anago Subfranchise (6 months). They do not provide for your cash requirements to cover operating costs after the initial phase or personal living expenses. You must have additional sums available, whether in cash or through unsecured credit lines, or have other assets that you may liquidate, or that you may borrow against, to cover your personal living expenses and any operating costs after the initial phase of your Anago Subfranchise. We urge you to retain the services of an experienced accountant or financial advisor in order to develop a business plan and financial projections for your Anago Subfranchise.
Your actual investment will vary depending upon local conditions peculiar to your geographic area or market conditions. We do not expect you to purchase real estate or construct the building containing your Anago Subfranchise although this may be done. You must maintain an appropriate business office, which must be approved as to location and decor by us. (See ITEM 1, pp. 3 and 4.) You must not operate your business from a home office.
The following chart contains a summary of your initial investment. Unless otherwise indicated, payments are generally not refundable.
|
Expense |
Amount |
Method of Payment |
When Due |
To Whom Payment Is To Be Made |
|
Subfranchise Fee Deposit1 |
$50,000 to $300,000 |
Lump sum |
On signing the Deposit Agreement |
Us |
|
Initial Subfranchise Fee2 |
$100,000 to $1,000,000 |
Lump Sum (if cash) or 120 months (if financed) |
On signing the Subfranchise Rights Agreement or 120 months |
Us |
|
Site Development Services Fee3 |
$1,000 to $2,500 |
Lump Sum |
Upon receipt of invoice. |
Us |
|
Incorporation and/or Legal Review4 |
$400 to $2,000 |
Lump Sum |
Before beginning business |
Third Party |
|
Fictitious Name Registration5 |
$100 to $500 |
Lump Sum |
Before beginning business |
Third Party |
|
Legal FOC Development6 |
$3,000 to $5,000 |
As Incurred |
Before beginning business |
Franchise Attorney |
|
Licenses and Permits7 |
$125 to $1,000 |
Lump Sum or monthly installments |
Before beginning business |
Governmental authorities |
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|
Expense |
Amount |
Method of Payment |
When Due |
To Whom Payment Is To Be Made |
|
Insurance |
$15,000 |
Lump Sum or monthly installments |
Before beginning business |
Third Party |
|
Travel, Lodging, Meals, etc for Initial Training9 |
$1,500 to $3,500 |
As Incurred |
Before beginning business |
Third Parties |
|
Real Property (Business Office)10 |
$1,500 to $3,500 |
As Arranged |
As Arranged |
Lessor |
|
Security Deposits11 |
$1,000 to $5,000 |
Lump Sum |
Prior to opening |
Government Agencies Utility companies |
|
Furniture and Fixtures12 |
$3,000 to $10,000 |
Lump Sum Installment |
Prior to opening |
Third Parties |
|
Office Equipment13 |
$500 to $3,000 |
Lump Sum |
Prior to opening |
Varies |
|
Office Supplies14 |
$1,500 to $2,500 |
Lump Sum or installments/ Lease |
Before beginning business |
Third Party |
|
Computers Printers15 |
$12,000 to $15,000 |
Lump Sum |
30 days prior to opening |
Anago may arrange with Vendor |
|
Software and Installation16 |
$2,500 to $3,000 |
As incurred |
30 days prior to opening |
Anago arranges with Vendor |
|
Vehicle Operating Expenses17 |
$7,200 to $12,000 |
As Incurred |
As incurred |
Third Parties |
|
Miscellaneous Start-up Costs18 |
$2,000 to $5,000 |
As Incurred |
Before beginning business |
Third Parties |
|
Working Capital (6 months)19 |
$80,200 to $115,500 |
First 6 months of operation |
Third Parties |
|
|
TOTALS |
$233,025 to $1,204,000 |
|||
See ITEM 1, p.3 above for a description of the Subfranchise Fee Deposit.
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2/
See ITEM 5 for a description of Initial Subfranchise Fee.
See ITEM 1, p.3 above for a description of the Site Development Services Fee.
4/ We require that all subfranchisors be a business entity utilizing a combination of numbers or
letters totaling four characters..
51 Once you are incorporated, a registration of a fictitious name, e.g., JKCA, Inc. d/b/a Anago
of (your city name) will be required. Under no circumstances do we allow you to use the Anago name as part of your business entity name. We estimate that the attorneys' fees, publication fees, filing fees and other costs will total $100 to $500 for compliance with a state's fictitious name statute, depending on the scope of legal services rendered. These fees may vary from state to state depending on each state's laws and the prevailing rate of attorneys' fees. These costs are paid to attorneys, newspapers and governmental agencies, and are not refundable and usually incurred before beginning business.
6/ You will be responsible for the development of your Franchise Offering Circular and, if
required, state registration. We will assist you by giving you a current template from which you will be able to follow in its development.
11 Local, municipal, county and state regulations vary on what licenses and permits are
required to operate an Anago subfranchisor business. In Florida, one must obtain city and county occupational licenses in the total amount of approximately $125 to $1,000. These fees are paid to governmental authorities, when incurred, before beginning business and are usually not refundable.
8/ As discussed in ITEM 8 and Section 3.4 of the Subfranchise Rights Agreement, we require
that you carry certain specified insurance. The method and timing of payments is a matter to be resolved between you and your insurer. Because the selection of the carrier, amount of wages and other related conditions vary considerably, it is difficult to estimate the ultimate cost to any given franchisee. Therefore, we, in light of the volatility of the insurance industry, estimate the total cost with the caution that you should obtain quotes from carriers of choice before proceeding. Our best estimate is $3,000 per year for insurance coverage other than for Workers' Compensation Insurance and $12,000 per year for Workers' Compensation Insurance. Insurance carriers usually audit your payrolls annually.
9/ Some costs of training that you may bear are transportation, lodging, compensation and
meals. The estimate is for items that are non-discretionary in nature. Generally these costs will vary widely as a function of the distance traveled, the accommodations selected, the restaurants patronized, the distance between the hotel and the training center and the transportation selected. Considering different lifestyles, distances and compensation assumptions, the estimates are from $1,500 to $3,500.
10/ Anago Franchising, Inc. recommends that you lease office space in a commercial building centrally located within the Area. It should consist of approximately 1,000 to 1,500 square fee, divided into areas for reception, secretaries, bookkeeper, 3 telephone solicitors, 2 salesmen, 1 operations and supply storage. It is estimated that lease rates will range from $12.50 to $25.00 per
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square foot annually, depending primarily on location. You may be required to pay a security deposit, utilities, property tax and Common Area Maintenance (CAM). You may be required to pay for any improvements, such as redecorating which varies widely from $1,500 to $3,500 depending on the original condition of the office space.
u/ Security deposits as defined in footnote l0/ above for office space lease and/or utilities and telephone service.
12/ You will need office furniture and fixtures in an amount to facilitate the initial number of working personnel as outlined in footnote working capital.
i3/ Your office equipment will consist of, but not limited to, a copy machine, fax, typewriter and telephone system. Payment for leased items will be paid directly or indirectly to the lessor. No lessor is related to or affiliated with us. For new and/or acceptable used equipment, you may purchase, rent, lease or otherwise acquire the items from whomever you may choose.
I4/ We will only allow office supplies that support the image and positioning of the system in the marketplace. You agree to the importance of image and positioning to the Anago system and agree to use only the supplies we specify or otherwise approve. The term "supplies" refers to brochures, flyers, forms, proposal covers, 3-ring binders, presentation materials, whether electronic or otherwise, and other miscellaneous items.
15/ The computers, printers, as well as the Software supplied by Anago and other local vendors must be installed and operating at least 30 days before your actual date of opening. This allows ample time for training relative to their use as a tool in generating leads as well as operational control and the ability to generate statements for your Unit Franchisees.
16 The NBDS Software will be installed on the primary server to include Windows current networking operating system, IGAS. Telemagic software may reside on your local server, Additional software must be pre-approved by us.
17/ Each salesperson, operations person, as well as the subfranchisor, will be required to furnish transportation in order to facilitate the bidding and estimating along with the coordination of the matching of the unit franchisee with the job site, once the sale has been consummated. You, as the subfranchisor should, as a practical matter, require your sales and operating personnel to furnish their own transportation. Estimates for gas, oil and insurance per automobile you supply is approximately $7,200 to $12,000 annually. This is a rough estimate because of the size of the franchise territory, location of the office relative to the territory and the driving habits of the individual vary considerably.
In every business start up, there are numerous unanticipated "nickel and dime" costs, for example, additional licenses and permits, professional fees for accountants or additional fees for attorneys, utility deposits, miscellaneous supplies, last minute decisions for additional equipment, furniture, phones. Our estimate is $2,000 to $5,000 and most probably will be incurred during the initial 6 months of start-up.
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i9/ You should have adequate working capital before beginning operation of Anago Subfranchise Rights. These additional funds should be sufficient to keep the Anago business in operation for 6 months, and capable of covering the excess of expenses over cash flow covering employee wages and taxes, insurance premiums and other normal expenses that are associated with your day-to-day business operation. You must be able to meet operating expenses from pre-opening, including hiring and training expenses, until the business develops sufficient cash flow to cover all costs. The estimate for additional funds is $80,700 to $115,500. These figures do not include any payments to you during the start-up period. You must have sufficient personal resources to cover your living expenses during this period. You are encouraged to fill out a personal/family cash flow budget and determine if there is sufficient revenue on the personal level to provide for your family through the start-up period. Clearly, additional funds requirements will be a function of your decisions regarding nearly every aspect of your Anago business, for example, the size of the payroll, size of the operation and many other expenses that you decide to incur.
Your minimum monthly working capital requirements should include:
Rent $1,500-52,000
Utilities $100-$500
Telephones (equipment and service) $1,000 - $1,500
Advertising $800-$1,000
Postage $150-$250
Salaries and Employment taxes for 2 Salespersons, $7,500 - $10,000 1 Operations, Telemarketers and Secretaries
Automobile expense $600 - $ 1,000
Insurance $300-$1,000
Office equipment, computers and furniture (leased) $1,500 - $2,000
Total for month $13,6450 - $19,250
20 These costs range between $233,025 and $1,204,000 depending on the real property and
equipment purchased (new or used), number and quantity of personnel employed, the location and size of the franchise territory, the charges for legal and accounting services incurred by you including preparation of your Franchise Offering Circular as well as applications and registrations for the offer and sale of franchises. If you own an existing business, you will probably already have the necessary office furniture, office equipment supplies, insurance, business office and employees. You will not need to purchase these items again nor incur additional costs and therefore your total investment may be significantly less than the amounts estimated. Furthermore, the figures listed in the chart are only estimates based on our experience and we cannot guarantee that you will not have additional expenses starting the business. Additional factors affecting your costs will be how well you follow our methods and procedures, your management skill, experience and business acumen, your local economic conditions, the local market for our services, the current wage rate, competition and the sales level reached during your first year of operation.
Basis for Estimate
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We relied on our principals' 29 years of experience in the commercial cleaning business to compile these estimates. You should review these figures carefully with a business advisor before making any decisions to purchase Anago Subfranchise Rights.
Financing
Please see ITEM 10 for a discussion of available financing.
ITEM 8 - RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Restrictions from Us or Our Designee
We require you to purchase or lease the computer equipment in accordance with specifications disclosed in the NBDS Software License Agreement (Exhibit F), software, printer and other equipment described in Exhibit III to the Subfranchise Rights Agreement for the establishment of your Anago Subfranchise from us or a Designee. Anago Manuals relating to Unit Franchisees will be provided by us for loan to your Unit Franchisees. These manuals may not be edited, changed, or altered by you or the Unit Franchisees.
Specifications and Standards
To help retain the uniform and high standards necessary to maintain and enhance the good will of the System and acceptance in your market, we provide specifications and/or required suppliers for the purchase or lease of certain items. Specifications may include standards for enhancing the System's image and minimum standards for safety, appearance and other factors. We formulate and modify specifications based upon the uniform and high standards necessary to maintain and enhance the good will of the System. Specifications are issued to you in the Manuals or otherwise in writing. The categories for these purchases or leases are as follows:
Insurance
You must obtain arid maintain insurance, at your expense, as we require, in addition to any other insurance that may be required by applicable law, your landlord, lender or otherwise. The policies must be written by an insurance company reasonably satisfactory to us with a Best rating of "A" or better and include the risks, amount of coverage and deductibles as stated in the Manuals and Section 3.4 of the Subfranchise Rights Agreement.
Advertising.
You will spend $10,000 per calendar year on advertising the solicitation of Unit Franchises and agree to provide us with satisfactory proof of these expenditures, upon request. You will refrain from using any false or misleading advertising in the solicitation of prospective Unit Franchises. All advertising must receive our written approval before its use and you will comply with all laws regulating the content and use of advertising including registration with, and approval by, applicable state franchise regulators.
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The original documents were scanned as an image. The original file can be downloaded at the link above.