UFOC
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Sample UFOC
FRANCHISE OFFERING CIRCULAR
Signs Now Corporation, a Florida Corporation
4900 Manatee Avenue West
Suite 201
Bradenton, Florida 34209
(941)747-7747
The franchisee will produce and sell vinyl and other type signs and related products.
The initial franchise fee is $25,000. The franchise fee for additional centers is $5,000. The franchise fee for an independent sign store converting to the Signs Now® system under the conversion option is $10,000. The estimated initial investment required ranges from $139,525 to $362.775 for a new franchise, and from $50,865 to $194,975 for a conversion center described in this offering circular. This sum does not include rent for the business location]
Risk Factors:
1. THE FRANCHISE AGREEMENT PERMITS THE FRANCHISEE TO ARBITRATE WITH US ONLY IN FLORIDA. OUT OF STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT. IT MAY ALSO COST YOU MORE TO ARBITRATE WITH US IN FLORIDA THAN IN YOUR HOME STATE.
2. THE FRANCHISE AGREEMENT STATES THAT FLORIDA LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTION AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.
3. YOU WILL NOT RECEIVE AN EXCLUSIVE TERRITORY. WE MAY ESTABLISH OTHER FRANCHISED OR COMPANY-OWNED OUTLETS THAT MAY COMPETE WITH YOUR LOCATION.
4. THERE MAY BE OTHER RISKS CONCERNING THE FRANCHISE.
Information comparing franchisors is available. Call the state administrators listed in Exhibit A or your public library for sources of information.
Registration of this franchise with a state does not mean that the state recommends it or has verified the information in this offering circular. If you learn that anything in this offering circular is untrue, contact the Federal Trade Commission and the appropriate state administrator listed in Exhibit A.
Effective Date:ManjU5:_2004 (For state specific effective dates, see Exhibit A.)
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TABLE OF CONTENTS
ITEM PAGE ,
1 THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES .............................. 1
2 BUSINESS EXPERIENCE............................................................. 3
3 LITIGATION........................................................................ 5
4 BANKRUPTCY ..................................................................... 7
5 INITIAL FRANCHISE FEE............................................................ 8
6 OTHER FEES ....................................................................... 9
7 INITIAL INVESTMENT ............................................................. 11
8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES........................... 15
9 FRANCHISEE'S OBLIGATIONS ...................................................... 17
10 FINANCING....................................................................... 19
11 FRANCHISOR'S OBLIGATIONS...................................................... 20
12 TERRITORY....................................................................... 26
13 PRINCIPAL TRADEMARKS.......................................................... 27
14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION........................... 29
15 OBLIGATION TO PARTICIPATE IN THE
ACTUAL OPERATION OF THE FRANCHISE BUSINESS ................................. 30
16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL............................... 31
17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION.................... 32
18 PUBLIC FIGURES.................................................................. 35
19 EARNINGS CLAIMS................................................................ 36
20 LIST OF OUTLETS ................................................................. 37
21 FINANCIAL STATEMENTS.......................................................... 40
22 CONTRACTS................................................'...................... 41
23 RECEIPT (IN DUPLICATE) .......................................Last Pages - After Exhibits
EXHIBITS
A. List of State Administrators
B. Franchise Systems Consultants
C. List of Franchisees
D. List of Former Franchisees
E. Financial Statements
F. Franchise Agreement
G. Independent Center Conversion Addendum H. Non-Disclosure of Confidential Information
I. Tables of Contents for Operations Manual and Technical Operations Manual
J. California Addendum
K. Notices of Negotiated Sales
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ITEM1
THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES
To simplify the language in this Offering Circular "we," "us," or "our" means Signs Now Corporation, the Franchisor. "You" or "your" means the person who buys the franchise. If the purchaser of the franchise is a corporation, partnership or other entity, "you" will include the franchisee and all its owners. We are a Florida corporation, initially incorporated on March 17, 1986, in Alabama, and reincorporated in Florida on December 30, 1996. We do not do business under another name. Our principal business address is 4900 Manatee Avenue West, Suite 201, Bradenton, Florida, 34209. Our registered agents for service of process are listed on Exhibit A.
We franchise the right to establish and operate a Signs Now® retail center. Our franchisees produce and sell signs and graphics of all varieties. Your customers will include businesses of all kinds, including real estate companies, building managers, industries, as well as consumers. Your competitors include local, regional, and national retail and commercial sign painting, printing and graphics businesses, as well as other businesses offering and selling print media and related products, and businesses offering faxing, copying, packaging and shipping products and services.
We have offered franchises for the operation of sign centers since July 1986. From 1986 until September 1992, we owned and operated several retail centers all of which were sold to franchisees. Our subsidiary, Signs Now Operating Corp. ("SNOC"), has operated several retail sign centers in Florida which were later sold to franchisees. SNOC is currently a member of Manasota Signs, LLC ("Manasota Signs"), which owns and operates three centers. We may open or acquire additional centers in the future and may use SNOC, Manasota Signs, or other entities to do so. SNOC's and Manasota Signs* principal business addresses are 4900 Manatee Avenue West, Suite 201, Bradenton, Florida, 34209.
On February 28, 1995, TSC Franchise Corporation ('TSC"), a Florida corporation, whose principal business address is 4900 Manatee Avenue West, Suite 201, Bradenton, Florida, 34209, acquired the franchise agreements and certain other assets of The Signery Corporation, a competing retail sign store franchisor. TSC is wholly owned by Biz Base Technologies Corporation, which is owned by Mike Etchieson, our Chief Executive Officer. Most of those franchised stores were offered the opportunity to convert their stores and, during 1995, many of them became our franchisees.
On March 1, 1997, our subsidiary, Signs Now Canada Corporation ("SNCC"), a Florida corporation, whose principal business address is 4900 Manatee Avenue West, Suite 201, Bradenton, Florida, 34209, acquired all of the franchise agreements and related assets from the Signs Now® master franchisee in Canada.
Our subsidiary, Signs Now Brazil Corporation ("SNBC"). a Florida corporation, whose principal business address is 4900 Manatee Avenue West, Suite 201, Bradenton, Florida, 34209, is the franchisor of the franchised stores in Brazil.
On May 31,1997, we acquired the international franchise agreements and certain other assets of Sign Express, Inc., a competing retail sign store franchisor. Certain stores operate as our franchisees under the Sign Express name and marks outside the United States. TSC acquired the domestic franchise agreements and trademarks of Sign Express. These domestic franchised stores were offered the opportunity to convert their stores and, many of them have become our franchisees. Several of them remain as licenses of TSC using the Sign Express name.
We are the sole_memhei-Of-Signs Now Promotional Fund Corporation ("SNPFC"), a Florida non-profit corporation, whose principal business address is 4900 Manatee Avenue West, Suite 201, Bradenton, Florida 34209, was formed to administer the Signs Now Marketing Fund.
You are required to conduct your business in a lawful manner and comply with all applicable federal, state, city, local or other laws and regulations applicable to your Signs Now® Center. These laws include local building codes, zoning ordinances and noise ordinances. You may also need to comply with the Americans with Disabilities Act of 1990 (ADA) governing public accommodations. If you provide large format digital imaging at your center, you will need to comply with federal, state and local laws dealing with the disposal of hazardous materials due to the ink byproduct. If
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you choose to install signs for your customers, you may need to obtain a general or other contractor's license, depending on your local regulations. We recommend that you seek the assistance of an attorney to comply with these laws and regulations. We are not aware of any special laws or regulations affecting your center that are not applicable to businesses generally.
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ITEM 2
BUSINESS EXPERIENCE
Chief Executive Officer: Secretary: Treasurer; Chairman and Member - Board of Directors: Mike L. Etchieson
MikeL. Etchieson joined us in December of 1991 as Director of Finance. He has served in various capacities and now serves as our Chief Executive Officer, Secretary and Treasurer, and as Chairman and the sole member of the Board of Directors. Mr. Etchieson is also an officer and director of SNCC, SNBC, SNOC, SNPFC, TSC, and its parent company, Biz Base Technologies Corporation, and an officer of Manasota Signs.
President and Chief Operating Officer: Randy Corona
Randy Corona joined us in September of 1998 as Vice President of Operations. He became our President and Chief Operating Officer on March 15,2004. From July 1989 through March 1998 he was employed by American Fastsigns, Inc. of Dallas, Texas, first as a Field Support Representative and later as the manager of the Field Support Department. He is also an officer of SNCC, SNBC, SNOC, and Manasota Signs, and an officer and director of SNPFC.
Director of Franchise Development: Dennis Staub
Dennis Staub joined us in August of 2001, as Director of Franchise Development. Beginning in 1996 through July 2001, he was employed as Vice President of the Crafter's Marketplace in Dallas, Texas. He previously served as a Director of Franchise Development for Burger King Corporation in Miami, Florida, from 1976 to 1981; as Vice President of Franchise Development for Tony Roma's Restaurants in Miami, Florida, from 1981 to 1982; and as Director of Franchise Development for FDC, Inc. (Franchise Development Consultants) in Dallas, Texas, from 1984 to 1996.
Director of Franchise Support: Terry M. Huber
Terry M, Huber joined us in June of 1999 as Corporate Regional Manager for the West Coast Region. He has served as our Director of Training and now is our Director of Franchise Support. From June 1992 through April 1999, he was employed by Environmental Biotech, Inc. in Sarasota, Florida, as Director of Training and Franchise Operations.
Director of Marketing: Bernard J. Haun
Bernard Haun joined us in November of 2002 as Director of Marketing. From March 1994 through February of 2002, he was employed as Director of Sales and Marketing and Area Marketing Director for the Northeast/Midwest for Kinko's, Inc. in Marlboro, Massachusetts. He previously served as a Divisional Marketing Director for Pearle Vision Centers, Inc. in Pittsburgh, Pennsylvania, from 1985 to 1994, and as Vice President and Director of Franchise Operations forNTW, Inc. in Woodbridge, Virginia, from 1982 to 1985.
Training Manager: Lee Manevitch
Lee Manevitch joined us in July of 2002 as a Training Specialist. He now serves as the Training Manager under our Director of Franchise Support, Terry Huber. From 1996 to March 2001, he was an instructor and graduate teaching assistant at Owens Community College in Toledo/Findlay, Ohio, and was an instructor at Keiser College in Sarasota, Florida, during the Fall of 2001. From February 1997 until March 2001, he was a digital imaging specialist with H.O.T. Graphic Services, Inc. in Toledo, Ohio.
In certain areas of the U.S., we operate through Franchise Systems Consultants (previously known as Regional Managers), whose duties include franchise sales, site location assistance, training, and operational assistance to franchisees. Some of the Franchise Systems Consultants are selected from our existing franchisees. As compensation, we pay them a portion of the initial franchise fee and a portion of royalties collected. Franchise Systems Consultants may not make any representations of sales or profits to prospective purchasers of franchises. Additionally, they must
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abide by all federal and state laws in the performance of their duties. Those Franchise Systems Consultants selected from the franchisees are independent contractors and not our employees. We disclaim responsibility for any acts or statements made by Franchise Systems Consultants contrary or in addition to the disclosures made in the Offering Circular, the Franchise Agreement, the Signs Now® Resource Library and related documents.
Additionally, we may employ outside sales representatives whose duties include franchise sales in certain areas. As of the effective date of this Offering Circular, our Franchise Systems Consultants and sales representatives are shown on Exhibit B.
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ITEM 3
LITIGATION
Signs Now Corporation v. Diane Szymczyk and Gregory Szymczyk. (American Arbitration Association, Case No. 33 E114 00202 03). On or about June 2,2003, Signs Now initiated an AAA proceeding against Diane and Gregory Szymczyk seeking damages and injunctive relief as a result of their breach of the Franchise Agreement. The Szymczyks abandoned their Signs Now® franchise and failed to pay royalties and other fees. Shortly after they abandoned their Signs Now® franchise, the Szymczyks started operating a competing store at the same location initially under the name of "Signs Wow," and then under the name "Sign Solutions." Under the terms of the Franchise Agreement, the Szymczyks are precluded, for a period of two years, from operating or being associated with any business that is competitive with any Signs Now® store. Notwithstanding the express terms of the covenant not to compete in the Franchise Agreement, the Szymczyks are violating the terms of the Franchise Agreement by operating a competing business at the exact same location where they operated their Signs Now® store. In order to obtain a temporary injunction precluding the Szymczyks from violating the covenant not to compete in the Franchise Agreement, pending the final arbitration hearing, Signs Now also filed an action, sub. nom., Signs Now Corporation v. Diane Szymczyk and Gregory Szymczyk, in the Circuit Court for the Twelfth Judicial Circuit in and for Manatee County, Case No. 200. CA 3636.
In response to the Arbitration Demand, the Szymczyks filed an action in North Carolina, sub nom., Gregory and Diane Szymczyk v. Signs Now Corporation, Wilson County, North Carolina, Court No. 03 CVS-1331, seeking injunctive relief to preclude the arbitration and the Manatee County court action from proceeding in Florida. The Szymczyks also sought to invalidate the covenant not to compete and to recover damages for Signs Now's alleged breach of the Franchise Agreement. The North Carolina Court entered an injunction precluding Signs Now from seeking a temporary injunction in Florida and from prosecuting the arbitration in Florida and allowing the parties to seek any damages claims in arbitration in North Carolina only. The North Carolina Court's decision is currently on appeal to the North Carolina Court of Appeals. In accordance with the North Carolina Court's order, Signs Now had the Arbitration Demand moved to North Carolina. The Szymczyks deny all allegations in the Arbitration Demand and filed a Counterclaim against Signs Now seeking damages for breach of the Franchise Agreement and breach of the covenant of good faith and fair dealing. The Szymczyks' claims against Signs Now are based primarily on computer software they purchased from a third party recommended by Signs Now to operate their store. The Szymczyks claim the software did not work as represented. Signs Now denies all allegations in the Counterclaim. The arbitration hearing in this matter is scheduled for April 26-28,2004. Signs Now intends to fully enforce its rights under the Franchise Agreement through the arbitration process and to defend against the Szymczyks' Counterclaim. We express no opinion as to the probable outcome of this matter.
/ Signs Now Canada Corp. v. Thompson Manson Stevens, Patsy Marie Stevens and Atpac Holdings, Inc..
(Supreme Court of British Columbia, Case No.C98 6627). The Stevens, either themselves or through corporations, are the owners of two Signs Now® Centers in British Columbia, Canada. The franchise agreement for the Chilliwack location expired and the Stevens declined to renew it. However, they continued to operate the Signs Now® Center in Langley, British Columbia. After SNCC offered to resolve the matter by allowing the Stevens to renew the franchise agreement for the Chilliwack Store for a short period of time equal to the remaining term of the franchise agreement for the Langley Store, the Stevens refused and continued operation. The continued operation of the Signs Now® Center in Langley and the continued operation of a sign store in Chilliwack violated both franchise agreements. SNCC sued the defendants for injunctive relief to enforce the non-competition covenants and damages. SNCC moved for a preliminary injunction. The defendants claimed that the Franchisor was in breach of the franchise agreements by failing to provide support and assistance. The case was settled on April 1,1999, and the Stevens agreed to pay all past-due royalties and to renew the franchise agreement for the Chilliwack Store. Otherwise, the parties exchanged mutual releases.
William A. Franks and Esther D. Franks v. Signs Now Corporation, and Murry J. Evans (Civil Action No. 94-0488-AH-S, United States District Court for the Southern District of Alabama). On January 20, 1994, while in breach of their franchise agreement, our franchisees, William A. Franks and Esther D. Franks filed an action against us and Murry J. Evans (formerly our sole stockholder and one of our former officers and directors) alleging that the sale of the
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franchise to them violated applicable franchise law. They claimed breach of contract, fraudulent and negligent misrepresentations and a violation of the Alabama Deceptive Trade Practices Act. The suit was originally filed in the United States District Court for the Eastern District of Pennsylvania. On our motion, the suit was dismissed for lack of venue and transferred to the Alabama federal court. The Franks amended their complaint to assert a violation of 18 U.S.C. § 1962(a) and (d) (RICO). We counterclaimed against the Franks and Frankensigns, Inc., their company, alleging breach of contract, trademark infringement and conversion due to their failure to pay royalties and their unauthorized use of our service marks. The Franks asked the Court for permission to file an amended complaint which, among other things would add Dewey Eason (another former officer) and Sam Huddleston (a former employee), as defendants. The court denied their request. Before trial, the court granted our motion for summary judgment dismissing all claims against us and Mr. Evans that involved violations of franchise law, fraud, deceit and deceptive trade practices. The plaintiffs voluntarily withdrew their claims for outrage and RICO. Before trial, the remaining claims were settled by the parties mutually releasing all claims against each other as well as all contractual obligations. Neither party paid any funds to the other. Both parties denied any liability to the other but settled for business reasons.
John G. Dickerson v. Signs Now Corporation and Murrv J. Evans (Civil Action No. 94-1635, Mobile County, Alabama Circuit Court). On January 4,1994, while in breach of his franchise agreement, our franchisee, John Dickerson, filed an action in the United States District Court for the Eastern District of Pennsylvania against us and Mr. Evans, alleging that the sale of the franchise to him violated applicable franchise law. He claimed breach of contract, fraudulent and negligent misrepresentations and a violation of the Alabama Deceptive Trade Practices Act. On our motion, the case was dismissed for lack of venue. Dickerson then filed suit in Alabama state court. Dickerson amended his complaint to assert a violation of 18 U.S.C. § 1962(a) and (d) (RICO). He also added and later voluntarily dismissed Dewey Eason and Sam Huddleston as defendants. We filed counterclaims against Dickerson and Bill Henry Enterprises, Inc., his company, alleging breach of contract, trademark infringement and conversion due to their failure to pay royalties and their unauthorized use of our service marks. The state court granted summary judgment in favor of us and Mr. Evans on the counts involving fraud, fraudulent suppression, deceit and deceptive trade practices. The plaintiff voluntarily withdrew the counts of RICO, breach of good faith and fair dealing and outrage. Dickerson also filed a separate complaint against us, Mr. Evans, Dewey Eason, Sam Huddleston and others as defendants in the United States District Court for the Southern District of Alabama, (Civil Action No. 95-0115-AH-C), with essentially the same allegations. Dickerson then voluntarily dismissed us and Mr. Evans as defendants in his federal court case. Before trial, the parties settled by mutually releasing all claims against each other as well as all contractual obligations. Both parties denied any liability to the other but settled for business reasons. We paid Dickerson $15,000 to dismiss the case without further proceedings.
y Other than these 4 actions mentioned above, there is no litigation required to be disclosed in this offering
circular.
CALIFORNIA RESIDENTS SHOULD REVIEW THE CALIFORNIA ADDENDUM ATTACHED AS EXHIBIT J.
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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 item.
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ITEM 5
INITIAL FRANCHISE FEE
All franchisees pay a $25,000 lump sum franchise fee when they sign the Franchise Agreement. If you fully comply with the Franchise Agreement and other obligations to us, and wish to open an additional Signs Now® Center, we may, in our discretion, allow a discounted franchise fee, which currently is $5,000 per store. Those independent stores converting to the Signs Now® system pay a franchise fee of $10,000 per store. Otherwise, the initial franchise fee is uniform. The initial franchise fee is not refundable under any circumstances.
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ITEM 6
OTHER FEES
|
Name of Fee3 |
Amount |
Due Date |
Remarks |
|
Royalty1 |
5% of total gross sales |
Payable monthly on the 10th day of the next month |
Gross sales means all monies collected for sales of every kind and nature made at or from the franchised center excluding sales taxes. |
|
Marketing Contribution1,2 |
2% of total gross sales |
Payable monthly on the 20th day of the next month |
Gross sales means all monies collected for sales of every kind and nature made at or from the franchised center excluding sales taxes. |
|
Transfer1 |
$5,000 |
Before consummation of transfer |
Payable when you sell your franchise. No charge if franchise transferred to an entity which you control |
|
Audit1 |
Cost of audit plus interest on underpayment at maximum allowed bylaw |
Immediately |
Payable only if audit shows an understatement of at least 3% of gross sales for any month |
|
Renewal Fee1 |
25% of then current initial franchise fee |
At time of renewal |
|
|
Late Payment1 |
1 14% per month or highest rate allowed by law |
Accrues from due date |
Payable on payments not received when due |
|
Insurance |
Amount needed to reimburse us for mandatory insurance coverage |
Upon demand |
We have the right to purchase insurance for you if you fail to do so |
All fees are imposed by and are payable to us. Royalties are paid by electronic funds transfer or bank draft. If you do not timely submit gross sales statements, we are authorized to transfer or draft an amount equal to twice the amount owed for the most recent month sales were reported, until you properly report your sales, at which time, the monies collected will be applied to royalties due.
The Marketing Contribution will be applied to all centers operated by you under a franchise agreement with us.
These fees are not refundable under any circumstances.
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|
Name of Fee* |
Amount |
Due Date |
Remarks |
|
Action Selling Program |
$795 |
At time of initial training |
This fee is charged for this portion of training by a transferee, conversion or additional center, if the franchisee has not previously participated in this program. The cost is included in the franchise fee for a new franchised center. |
|
Indemnification |
Amount to defend and hold us harmless from liability to third parties resulting from your operation of store |
Upon demand |
|
|
Enforcement Costs |
Amount of our reasonable expenses, including attorney's fees, to enforce |
Upon demand |
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These fees are not refundable under any circumstances.
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ITEM 7
YOUR ESTIMATED INITIAL INVESTMENT
A. NEW CENTER
|
Name of Expenditures |
Actual or Estimated AMOUNTS |
Method of Payment |
When Due |
To Whom Payment Is To Be Made |
|
Initial Franchise Fee (I) |
$25,000 |
As Arranged |
See Note 1 |
Us |
|
Rent(2) |
See Note 2 |
As Arranged |
As Arranged |
Lessor or Seller |
|
Store Lease Deposits |
$5,400 - $9,500 |
As Arranged |
As Arranged |
Lessor |
|
Utility Deposits |
$300 - $500 |
As Arranged |
Before Opening |
Utility Companies |
|
Leasehold Improvements (3) |
$5,000 - $48,000 |
Progress Payments from Commencement of Construction until Completion |
As Arranged |
Contractors |
|
Furniture & Fixtures (4) |
$24,225 - $47,775 |
As Arranged |
As Arranged |
You Determine |
|
Production Equipment (5) |
$43,000 - $97,000 |
As Arranged |
As Arranged |
Equipment Vendor |
|
Tools and Equipment |
$2,500 - $5,000 |
As Arranged |
As Arranged |
Equipment Contractor |
|
Inventory |
$5,500 - $7,500 |
Lump Sum |
As Arranged |
Approved Suppliers |
|
Insurance (6) |
$200 - $2,500 |
Installment |
As Arranged |
Insurance Company |
|
Training (7) |
$2,000 - $7,500 |
As Incurred |
See Note 7 |
Transportation Lines, Hotels & Others |
|
Signage |
$2,500-315,000 |
As Incurred |
As Incurred |
Vendors |
|
Printed Materials |
$500-$1,000 |
As Incurred |
As Incurred |
Vendors |
|
Grand Opening Marketing Materials (8) |
$2,500 |
As Arranged |
As Arranged |
Vendors |
|
Opening Promotional Expenses(8) |
$2,500 - $8,000 |
See Note (8) |
As Arranged |
Vendors |
|
Displays |
$2,000 |
As Incurred |
As Incurred |
Vendors |
|
Freight |
$1,400-$9,000 |
As Incurred |
As Incurred |
Vendors |
|
Additional Funds (9) |
$15,000-$75,000 |
As Incurred |
As Incurred |
Employees Misc.& Others |
|
TOTAL |
$139,525-$362,775 |
(Does Not Include Real Estate Costs) |
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B. CONVERSION CENTER
|
Name of Expenditures |
Actualor Estimated Amounts |
Method of Payment |
When Due |
To Whom Payment Is To Be Made |
|
Initial Franchise Fee (1) |
$10,000 |
As Arranged |
See Note 1 |
Us |
|
Furniture & Fixtures (4) Production Equipment (5) Training (7) Signage |
$14,165-$17,775 $0 - $97,000 $1,200-$4,700 $2,000 - $3,500 |
As Arranged As Arranged As Incurred As Incurred |
As Arranged As Arranged See Note 7 As Incurred |
You determine Equipment Vendor Transportation Lines, Hotels and Other Vendors |
|
Printed Materials Grand Re-Opening Marketing Materials (8) Opening Promotional Expense (8) Displays Freight |
$500-$ 1,000 $2,500 $2,500 - $3,500 $2,000 $1,000-$3,000 |
As Incurred See Note (8) As Arranged As Incurred As Incurred |
As Incurred As Arranged See Note (f) As Incurred As Incurred |
Vendors Vendors Vendors Vendors Vendors |
|
Additional Funds (9) |
$15,000-$50,000 |
As Incurred |
As Incurred |
Employees Misc. and Others |
|
TOTAL |
$50,865-$194,975 |
(Does Not Include Real Estate Costs) |
NOTES
1 Initial Franchise Fee
The initial franchise fee is more fully described in Item 5 of this Offering Circular, and is payable as follows: Twenty-Five Thousand Dollars ($25,000) per Store for the first center. Qualified franchisees may be allowed additional stores for a franchise fee of Five Thousand Dollars ($5,000) per center. Stores converting to the Signs Now® system pay a franchise fee of Ten Thousand Dollars ($ 10,000) per center. All franchise fees are due upon execution of the Franchise Agreement.
2 Rent
Monthly rental payments will vary substantially depending on the size and location of the proposed site. The typical Signs Now® Center will be located in a strip shopping center or storefront location having high visibility and easy access for customers. Centers typically are approximately one thousand eight hundred (1,800) to two thousand five hundred (2,500) square feet. Rent expense for a facility in which to operate the Signs Now® Center will vary depending
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on location, age and condition of the structure, lease arrangements and similar factors. Rent is estimated to be between $32.400-$90,000 per year depending on various factors.
3 Leasehold Improvements
The cost of construction and leasehold improvements depends upon the size and condition of the premises, the local cost of contract work and location of the premises. The landlord may provide the leasehold improvements for the franchisee. All centers will utilize the distinctive Signs Now® marks and name. Each center must be designed to comply with a detailed floor arrangement for equipment, furnishings and fixtures to maximize the efficiency of operations. The floor layout integrates (i) customer service for signs and other products, (ii) invoicing, (iii) storage and retrieval, (iv) banner and sign production, and, if offered, (v) digital imaging and lamination.
4 Furniture and Fixtures
The estimate provided includes the cost of our current image, including work tables, counters, computer tables, chairs, interior fixtures and various storage containers.
5 Production Equipment
The estimate for computer and production equipment.includes a variety of systems that include vinyl cutting sign-making equipment that allows full color printing on vinyland full color inkjet technology, either thermal aqueous or inkjet solvent. Costs vary based on size, capacity, and speed of equipment. Qualified individuals maybe able to lease such equipment from vendors or third parties.
6 Insurance
You must maintain insurance as we specify. The low estimate includes a quarterly premium; high estimate includes the annual cost of insurance.
7 Training
You will need to arrange transportation and pay the expenses of meals and lodging for any persons attending the training program. The amount expended will depend upon the distance those persons must travel and the type of accommodations chosen. The estimate contemplates attendance of two (2) people for three (3) weeks in Bradenton, Florida, and one (1) week of assistance at your center in connection with its opening, and three (3) days follow-up training four (4) to six (6) weeks after center opening. If you plan to offer inkjet technology, you may elect to attend additional vendor-based training programs at your expense.
8 Grand Opening Marketing Campaign and Opening Promotional Expenses
We have developed a package of materials to promote your grand opening that you are required to purchase from an outside vendor. The current cost of these materials is approximately $2,500. Additionally, we strongly encourage you to spend a significant amount on other promotional efforts associated with the opening or re-opening of franchised centers. This is a suggested amount, which includes the minimum requirement. However, we do not warrant or guarantee that this amount will be sufficient.
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9 Additional Funds
The amount of additional funds for working capital is projected as sufficient to cover operating expenses, including employees' salaries for six (6) months. This range is based on our experience in dealing with new franchised centers. However, we do not warrant or guarantee that this amount will be sufficient. You should review these figures carefully with a business advisor before making a decision to purchase the franchise.
10 Conversion Centers
The total is an estimate of the costs necessary to convert the existing sign store to a Signs Now® Center. We have assumed the center will offer full color digital printing on vinyl. If you choose to add inkjet technology, your costs will be higher. We have also assumed that all other items (including necessary production equipment) are already in place.
We do not offer direct or indirect financing to franchisees. Any fees paid to us are not refundable except as outlined in Item (5) of this Offering Circular; fees paid to any third party may be refundable, depending upon the contracts, if any, between a third party and you.
These fees are estimates only. We cannot guarantee that you will not have additional expenses starting the business. Your costs will vary and depend on these and other factors: how much you follow our methods and procedures; your management skill, experience, and business acumen; local economic conditions; the local market for products offered by Signs Now® Centers; the prevailing wage rate; real estate costs; competition; and the sales level reached during the initial period.
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ITEM 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
The following table summarizes the approximate percentages of your purchases of equipment and supplies through sourcing restrictions, based on the nature of the restriction. The source for virtually all of your purchases are restricted in some way.
Purchases from Purchases from Purchases According to
Us or Our Affiliates Approved Suppliers Specifications and Standards
Establishment - 0% Establishment - 95% Establishment - 95%
Operation - 0% Operation - 95% Operation - 95%
Purchases from Us or Our Affiliates
You are not required to purchase or lease any goods, supplies, equipment or fixtures from us or our affiliates.
Approved Suppliers
In order to maintain the quality of the goods and services sold by Signs Now® Centers and the reputation of the Signs Now® franchise network items from supphers approved by us. Currently, you must purchase fixtures for the front-end of your center and tables from Advanced Fixtures, Inc. and the grand opening campaign package from Direct Check Marketing. You are also currently required to purchase your initial inventory fromTubelite Company, Inc., Safety Speed Cut, Ameriban, Seal Graphics Americas, Oce-USA, Jemco Displays, and Cyrious Software. Certain sign-making equipment is manufactured by Gerber Scientific Company and Hewlett-Packard Company although you may choose the distributor from whom you purchase this equipment. We do not make any express or implied warranties for any products or goods that we recommend for your use. Required purchases from approved suppliers represents approximately 95% of your total purchases in establishing your center and approximately 95% of your overall purchases in operating the center, depending on the type center you open.
Standards and Specifications
You must operate and develop the center according to our standards. Our standards may regulate, among other things, the use of certain non-architectural floor plans and specifications, for development of the center, types, models and brands of required fixtures, furnishings, equipment and signs to be used in operating the center, the products, services or items that may be sold on or from the center. Our standards and specifications may impose minimum requirements for quality, service, production, merchandising and advertising. We will notify you in our confidential Resource Library or other communications of our standards and specifications and/or names of approved suppliers Required purchases according to our specifications and standards represents approximately 95% of your total purchases in establishing your center and approximately 95% of your overall purchases in operating the center, depending on the type center you open.
Supplier Payments to Us
Suppliers do not make any payments to us on account of purchases made by franchisees, nor are they authorized to make payments to our officers, directors, or employees. However, we reserve the right to accept rebates from suppliers in the future. However, some suppliers pay the cost of advertising in our monthly newsletter sent to our franchisees and for space at our national conventions. In the year ending December 31, 2003, we received $827 in gross advertising revenue and $ 167,920 in gross convention revenues (which were used tor natlOnal'Convention expenses) from suppliers. Some suppliersiiave contributed to the marketing fund to develop materials, advertising products and services provided by Signs Now® Centers. Some suppliers have provided equipment and materials for use in training our franchisees.
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Changes to Suppliers
If you want to use any item that does not comply with our specifications or is to be purchased from a supplier that has not yet been approved, you must first submit sufficient information, specifications and samples for our determination whether the item complies with our specifications or the supplier meets approved supplier criteria. We may charge you a reasonable fee to cover the costs we incur in making this determination. We will respond to requests to change suppliers within 30 days as long as we have the opportunity to fully evaluate a proposed supplier. If we refuse to change or add a supplier suggested by you, we will give you the reasons for our disapproval. We will, periodically, establish procedures for submitting requests for approval of items and suppliers and may impose limits on the number of approved items and suppliers. Approval of a supplier may be conditioned on quality, design, price, distribution methods, supply considerations, compatibility with the Signs Now® system and service and concentration of purchases with one or more suppliers in order to obtain better prices and service. The approval may be temporary, pending our further evaluation of the supplier.
Center Development
Signs Now® Centers must be constructed or remodeled in accordance with our specifications. You must purchase or lease and use only the equipment and supplies as we may specify or approve.
Site Selection
We must approve the site for the location of your center. The site must meet our criteria for traffic count, demographic characteristics, appearance of location and zoning regulations. We also must approve the lease or sublease for the premises of your center. We will not unreasonably or untimely withhold our approval. Our approval of the lease indicates only that we believe that its terms fall within the acceptable criteria we have established as of the time of our approval. We may require you to include in your lease, language granting us certain rights, including our option to assume the lease if the franchise is terminated..
Insurance
In addition to the purchases or leases described above, you must obtain and maintain, at your own expense, insurance coverage that we require periodically and meet the other insurance-related obligations in the Franchise Agreement. The cost of this coverage will vary depending on the insurance carrier's charges, terms of payment and your history. All insurance policies must name us as an additional insured party.
Miscellaneous
Except as described above, neither we nor our affiliates currently derive revenue or other material consideration as a result of required purchases or leases. There currently are no purchasing or distribution cooperatives. We have developed purchase arrangements with suppliers for the benefit of franchisees. We may negotiate purchase arrangements with suppliers for the benefit of franchisees, and/or to derive revenue or other material consideration as a result of required purchases or leases, but intend to do so only if there will be a net cost savings to franchisees from the particular arrangement.
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ITEM 9
FRANCHISEE'S OBLIGATIONS
THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE 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 Agreement * |
Item in Offering Circular |
|
a. Site selection and acquisition/ lease |
Section 9, Conversion Addendum § 2 |
Item 11 |
|
b. Pre-opening purchases/leases |
Section 10 Conversion Addendum § 3 |
Item 8 |
|
c. Site development and other pre-opening requirements |
Section 10, Conversion Addendum § 4 |
Items 6, 7 and 11 |
|
d. Initial and ongoing training |
Section 13, Conversion Addendum § 6 |
Item 11 |
|
e. Opening |
Section 10(b), Conversion Addendum § 4 |
Item 11 |
|
f. Fees |
Sections 3, 5, 6 Conversion Addendum § 1 |
Items 5, 6 |
|
g. Compliance with standards and policies/Resource Library |
Section 11 |
Item 11 |
|
h. Trademarks and proprietary information |
Section 19, Conversion Addendum § 5 |
Items 13, 14 |
|
I. Restrictions on products/services offered |
Section 11 |
Item 16 |
|
j. Warranty and customer service requirements |
Sections 11, 12 |
Item 11 |
|
k. Territorial development and sales quotas |
None |
|
|
1. Ongoing product/service purchases |
Sections 11, 15 |
Item 8 |
|
m. Maintenance, appearance and remodeling requirements |
Section 10, Conversion Addendum §§ 3-4 |
Item 11 |
|
n. Insurance |
Section 16 |
Item 6 |
|
o. Advertising |
Section 6, 11 |
Items 6, 11 |
References are to the Franchise Agreement unless otherwise indicated. 03/04 - UFOC (California) 17
|
Obligation |
Section in Agreement * |
Item in Offering Circular |
|
p. Indemnification |
Section 17 |
Item 6 |
|
q. Owner's participation/ management/staffing |
Section 11 |
Items 11,15 |
|
r. Records/reports |
Sections 7, 12 |
Item 6 |
|
s. Inspections/audits |
Sections 6,7, 10 |
Items 6, 11 |
|
t. Transfer |
Section 18 |
Item 17 |
|
u. Renewal |
Section 8 |
Item 17 |
|
v. Post-termination obligations |
Sections 20, 24 |
Item 17 |
|
w. Non-competition covenants |
Section 20 |
Item 17 |
|
x. Dispute resolution |
Section 25 |
Item 17 |
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References are to the Franchise Agreement unless otherwise indicated. 03/04 - UFOC (California) 18
The original documents were scanned as an image. The original file can be downloaded at the link above.