UFOC
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Sample UFOC
SUNBELT.
BUSINESS ADVISORS
Franchise Offering Circular
Sunbelt Business Advisors Network, LLC
a Delaware Limited Liability Company
474 Wando Park Boulevard, Suite 204
Mt. Pleasant, South Carolina 29464
(843)853-4781
The licensee will broker the sale of privately owned businesses under the name "Sunbelt."
The initial license fee ranges from $15,000 to $25,000, depending upon the population of the territory granted to the licensee. The estimated initial investment required ranges from $51,300 to $4000042im
1. THE LICENSE AGREEMENT PERMITS THE LICENSEE TO ARBITRATE OR SUE THE LICENSOR ONLY IN THE CITY CLOSEST TO THE CITY WHERE THE LICENSOR'S HEADQUARTERS IS LOCATED (CURRENTLY MT. PLEASANT, SOUTH CAROLINA). OUT OF STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE WITH THE LICENSOR IN THE CITY CLOSEST TO THE CITY WHERE ITS HEADQUARTERS IS LOCATED THAN IN YOUR HOME STATE.
2. THE LICENSE AGREEMENT STATES THAT THE LAW OF THE STATE WHERE THE LICENSOR'S HEADQUARTERS IS LOCATED GOVERNSTHE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS. (CURRENTLY. SOUTH CAROLINA) LAW GOVERNS THE AGREEMENT. AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.
2, SOME STATE FRANCHISE LAWS PROVIDE THAT CHOICE OF LAW_AND
CONSENT TO JURISDICTION PROVISIONS ARE VOID OR SUPERSEDED. YOU MAY WANT TO INVESTIGATE WHETHER YOU ARE PROTECTED BY A STATE FRANCHISE LAW. YOU SHOULD REVIEW ANY ADDENDA OR RIDERS INCLUDED IN EXHIBIT F FOR DISCLOSURES REGARDING STATE FRANCHISE LAWS.
4. THE LICENSOR HAS BEEN IN EXISTENCE FOR A SHORT PERIOD OF TIME-
SINCE OCTOBER 28. 2002. THEREFORE. THERE IS ONLY A BRIEF OPERATING HISTORY TO ASSIST YOU IN JUDGING WHETHER OR NOT TO MAKE THIS INVESTMENT.
L ^-THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
Information about comparisons of franchisors is available. Call the state administrators listed in Exhibit D or your public library for sources of information.
Registration of this franchise with the 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 applicable state administrator as listed in Exhibit D.
The effective dates (if any) of this offering circular in the states with franchise registration laws are in Exhibit D.
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FOR TRANSACTIONS REGULATED BY THE MICHIGAN FRANCHISE
INVESTMENT LAW ONLY
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
(a) A prohibition on the right of a franchisee to join an association of franchisees.
(b) A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in the Michigan Franchise Investment Act. This shall not preclude a franchisee, after entering into a franchise agreement, from settling any and all claims.
(c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
(d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation. This subsection applies only if: (i) the term of the franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisor's intent not to renew the franchise.
(e) A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances. This section does not require a renewal provision.
(f) A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.
(g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
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(i) The failure of the proposed transferee to meet the franchisor's then current reasonable qualifications or standards.
(ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
(iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
(h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor. This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchise on the same " terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
(i) A provision which permits the franchisor to directly or indirectly convey, assign, or otherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provision has been made for providing the required contractual services.
If the franchisor's most recent financial statements are unaudited and show a net worth of less than $100,000, the franchisor shall, at the request of a franchisee, arrange for the escrow of initial investment and other funds paid by the franchisee until the obligations to provide real estate, improvements, equipment, inventory, training, or other items included in the franchise offering are fulfilled. At the option of the franchisor, a surety bond may be provided in place of escrow.
THE FACT THAT THERE IS A NOTICE OF THIS OFFERING ON FILE WITH THE ATTORNEY GENERAL DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENFORCEMENT BY THE ATTORNEY GENERAL.
Sunbelt-2004 UFOC
Any questions regarding this notice should be directed to:
State of Michigan
Consumer Protection Division
Attn: Franchise
670 G. Mennen Williams Building
525 West Ottawa
Lansing, Michigan 48933
Telephone Number: (517)373-7117
Note: Despite paragraph (f) above, we intend and we and you agree to fully enforce the arbitration provisions of the License Agreement. We believe that paragraph- (f) is unconstitutional and cannot preclude us from enforcing these arbitration provisions.
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TABLE OF CONTENTS
ITEM PAGE
1 THE LICENSOR, ITS PREDECESSORS AND AFFILIATES.........................................1
2 BUSINESS EXPERIENCE.................................................................................................2
3 LITIGATION.......................................................................................................................3
4 BANKRUPTCY..................................................................................................................4
5 INITIAL LICENSE FEE....................................................:..............................................41
6 OTHER FEES....................................................................................................................4f>
7 INITIAL INVESTMENT..................................................................................................S§
8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES..............................7
9 LICENSEE'S OBLIGATIONS..........................................................................................78
10 FINANCING.............................'.......................................................................................9JJ)
11 LICENSOR'S OBLIGATIONS.......................................................................................91Q
12 TERRITORY.................................................................................................................-1214
13 TRADEMARKS............................................................................................................H15
14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION........................Ul
15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE LICENSED BUSINESS...............................................................................................1&1&
16 RESTRICTIONS ON WHAT THE LICENSEE MAY SELL......................................4^12
17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION...........Ull
18 PUBLIC FIGURES........................................................................................................43JJ
19 EARNINGS CLAIMS REPRESENTATIONS REGARDING EARNINGS CAPABILITY................................................................................................................Un
20 LIST OF OUTLETS......................................................................................................4S2Q
21 FINANCIAL STATEMENTS.......................................................................................2024
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22 CONTRACTS................................................................................................................3024
23 RECEIPT.......................................................................................................................2424
EXHIBITS
A License Agreement
B Financial Statements
C Tables of Contents for Sunbelt Publications
D List of State Administrators/Agents for Service of Process/State Effective Dates
E Names, Addresses and Phone Numbers of Licensees
E-1 List of Former Licensees
F State-Specific Additional Disclosures and Riders
G General Release
APPLICABLE STATE LAW MIGHT REQUIRE ADDITIONAL DISCLOSURES RELATED TO THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR. THESE ADDITIONAL DISCLOSURES, IF ANY, APPEAR IN EXHIBIT F.
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Iteml
THE LICENSOR, ITS PREDECESSORS AND AFFILIATES
Throughout this offering circular, "Sunbelt" means Sunbelt Business Advisors Network, LLC, the licensor. "You" means the person who buys the license and includes the owners of any corporation, partnership or limited liability company that buys the license.
Sunbelt is a Delaware limited liability company that was formed on October 28, 2002. Sunbelt does business as Sunbelt Business Brokers. Our principal business address is 474Wando Park Boulevard, Suite 204, Mt. Pleasant, South Carolina 29464. Our agents for service or process are listed in Exhibit D.
Sunbelt does not engage in the business brokerage business. Sunbelt licenses the right to use the Sunbelt name, logo, computer programs and business methods in the business brokerage business. You will engage in the business of business brokerage; which includes listing privately held businesses for sale, finding buyers for the listed businesses,, assisting in negotiating the terms and conditions for the sale of the business, assisting in consummating the sale of the business, mergers and acquisitions, business valuations and the sale of franchises (the "Services"). Generally, business brokers list businesses for sale which have annual sales ranging from $50,000 to $20,000,000. Approximately 80% of the buyers that the business broker works with are first time business buyers. Many of these buyers are people who have lost their jobs due to reduction in work force or other similar situations. The remaining 20% of the buyers are previous business owners who are buying an additional business, or who have sold a business and are desirous of buying a business in a different field. There are many business brokerage firms in operation and any particular market may have numerous competing firms. There are other national business brokerage firms and they may be in direct competition with you.
There are numerous advantages to being part of a network of business brokerage offices (as opposed to being a non-network business brokerage office). The network advantages include name recognition, access to the network's multiple listing system (a sharing of listings and buyers), use of the network's computerized office management system, availability of continuing training programs, comprehensive operating manuals and guide books, and the ability to work with a cohesive group of offices who share a common operating methodology and training background.
, There are no federal government regulations specific to business brokerage. Certain states require that you have a real estate license or be registered with the state to engage in business brokerage.
In March 1993, Sunbelt Business Brokers Network, Inc., Sunbelt's immediate predecessor, was formed to franchise the business brokerage business throughout the USA. Sunbelt purchased the assets of Sunbelt Business Brokers Network, Inc. on August 31, 2002. Except as noted above. Sunbelt has no predecessors or affiliates. The principal business address for Sunbelt Business Brokers Network. Inc. is 2 Amherst Street. Charleston. South Carolina 29406.
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Sunbelt Business Brokers Network, Inc. entered into one hundred eighty (180) license agreements with others to use the Sunbelt name, logo, and business methods in the business brokerage business; these one hundred eighty (180) license agreements have been transferred to Sunbelt. Sunbelt Business Brokers Network, Inc. is not licensed or authorized to issue any additional licenses.
Sunbelt and its predecessor do not, and have not, engaged in any other line of business other than licensing business brokerage offices.
Item 2 BUSINESS EXPERIENCE
President and Chairman: Edward T. Pendarvis
Mr. Pendarvis has been President and Chairman of Sunbelt since its formation in October, 2002. He also was President and Chairman of Sunbelt Business Brokers Network, Inc. from 1982 to 2002.
Chief Operating Officer: William H. Davoli
Mr. Davoli has been the Chief Operating Officer of Sunbelt since our formation. He has been Managing Director of Sunbelt Business Advisors of Charleston, LLC of Charleston, South Carolina since February, 2001. He also has been President of Citadel Management, Inc. in Sarasota, Florida since 1998, and Chief Executive Officer of Horticultural Industries, Inc. located in Samson, Florida from 1987 to 1998.
1st Vice Chairman: Carl E. Grimes
Mr. Grimes has been 1st Vice Chairman of Sunbelt since our formation. He has been President of Sunbelt Business Advisors of the Ozarks located in Fayetteville, Arkansas since 1995.
2nd Vice Chairman: Daniel Elliott
Mr. Elliott has been 2n Vice Chairman of Sunbelt since our formation. He has been President of The Elliott Group, Inc., in Houston, Texas since 1997, and Managing Director of Sunbelt Corporate Advisors in Houston, Texas since 1993.
Secretary: Deborah Moore
Ms. Moore has been Secretary of Sunbelt since our formation. She also has been President of DM Enterprises Inc. in Reading, Pennsylvania since 1996.
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Assistant Secretary: Steven Rosen
Mr. Rosen has been Assistant Secretary of Sunbelt since March, 2003 and was Secretary from December, 2002 until March, 2003. He also has been President and Assistant Secretary of Sunbelt Business Brokers of Pennsylvania Inc. located in Reading, Pennsylvania since 1997.
Treasurer: Ronald Hottcs
Mr. Hottes has been Treasurer of Sunbelt since our formation. He has been President of Sunbelt Business Brokers of Southern Cal. with offices in Torrence, Fullerton and West Los Angeles, California 1997.
Assistant Treasurer: Daniel Pedersen
Mr. Pedersen has been Assistant Treasurer of Sunbelt since our formation. He has been President of Sunbelt Kansas City in Kansas City, Missouri since 1998.
Member at Large: Scott Evert
Mr. Evert has been a Member at Large of Sunbelt since our formation. He also has been Region Manager and President of Sunbelt of Minnesota with offices in Minnesota and Chicago, Illinois since 2000. He was Senior Vice President of Major Video Concepts in Indianapolis, Indiana from 1991 to 2000.
Item 3
LITIGATION
Landcare USA vs. William Davoli. U.S. District Court for the Middle District of Florida, Case #99-CV-742. In 1999 Mr. Davoli, our Chief Operating Officer, was named as a defendant in an action in which the Plaintiff, the acquirer of a business owned by Mr. Davoli, alleged that he had fraudulently submitted financial results which caused the price paid for the business to be higher than justified. On December 18, 2000 the case was settled and dismissed without prejudice without Mr. Davoli being required to make any payment.
New Age Beverage Inc. vs. The Elliott Corporation, 284th District Court of Montgomery County, Texas Case # 03-02-01127-CV. In marehMareh of 2002, EffieetElliott Corporation, a corporation in which Daniel Elliott, a director and second vice Chairman of the Company, is sole shareholder and President, was named as a defendant in an action alleging, inter alia, fraud in the sale of a business in which Elliott Corporation acted as a broker. Elliott Corporation has denied the allegations and the case is still pending.
J& H Copy. Inc. vs. Sunbelt Business Brokers of Southern California, Superior Court of California, County of Orange, Case # 02CC01955. In January, 2002, Sunbelt Business Brokers of Southern California, a corporation in which Ronald Hottes, the Treasurer and a Director of the
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Company is President, was named as a defendant in an action arising out of the sale of a business. The plaintiff alleges neglect of duty of care and fraud, indicating that the defendant presented an unqualified buyer for its business and as a result the plaintiff suffered a financial loss when it was unable to collect on a Note issued by the buyer in the transaction. The allegations have been denied and the case is still pending.
Frederick O. Robbins v. Sunbelt Business Brokers Network. Inc.. Bissell Brokers. Inc.. Bissell Brokers Orange County. Inc.. Sunbelt Business Brokers of Southern California. Ronald Hottes. et al. Superior Court of the State of California. Orange County. Case # 03CC09526. In July 2003. the plaintiff, a seller of a business, alleged that the defendants failed to disclose certain information about the buver. The defendants have filed multiple demurrers and motions to strike, which have been granted by the court. The defendants have filed an answer and the case is otherwise in the pre-trial stages.
Michael and Sarah Levai v. Ronald Hottes. David Silber. Kenneth Mitan. Sunbelt Business Brokers Network. Inc.. Sunbelt Business Brokers of Southern California, et al. Case No. YC048031. Superior Court of the State of California. Los Angeles County. Southwest District. This case was filed in November. 2003 bv the plaintiffs relating to the sale of the plaintiffs1 business. The plaintiffs allege that the defendants intentionally and negligently misrepresented facts relating to the purchasers' financial condition and also alleged breach of contract, unfair business practices, breach of fiduciary dutvT breach of covenant of good faith and fair dealing and conspiracy and seek unspecified damages. The defendants have denied the allegations and the case is in the pre-trial stages.
In September of 2003. the State of Illinois determined that our predecessor. Sunbelt Business Brokers Network. Inc. had engaged in certain unregistered offers and sales of licenses in violation of the Illinois Franchise Disclosure Act of 1987 ("IFDA"). The State of Illinois required Sunbelt Business Brokers Network. Inc. to send notices of violation to certain licensees in Illinois and to pav a fine with respect to these violations.
Except for the throo caseo6 matters described above, no litigation is required to be disclosed in this offering circular.
Item 4 BANKRUPTCY
No person previously identified in Items 1 or 2 of this offering circular has been involved has been involved as a debtor in proceedings under the U.S. Bankruptcy Code (or comparable foreign law) required to be disclosed in this Item.
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Item 5
INITIAL LICENSE FEE
You must pay an initial license fee ranging from $15,000 to $25,000. License fees are nonrefundable. The initial license fee will be $15,000 if the population in your territory is 150.000 or lessr than 250T000. Your initial license fee will increase by $5,000 for every additional 100.000 of population, up to a maximum of 350.00 $20.000 if the population in vour territory is between 250.000 and 350.000 and $25T000 if the population in vour territory is over 350.000.
You pay the initial license fee in a lump sum when you sign the license agreement, which defines your territory. The initial license fee is fully earned bv Sunbelt when paid and is not refundable under anv circumstances. You do not sign the license agreement and pay the initial license fee until you have attended basic business brokerage training (see Item 11). All of the manuals, guides and computer software detailed in Item 11 of this offering circular will be given to you when you sign the license agreement.
Item 6
OTHER FEES
Era
Ongoing Monthly Fee
$500 - $700
First dav of each monthFees are owed beginning four (4) menthsthe third (3rd) month after signing License Agreement
The exact amount depends upon the population in the
Territory.
Transfer
50% of the then current license fee (but no less than $5,000)
Upon transfer
Monthly Advertising Fee
20% of the ongoing Monthly fee
Monthly
Paid to an advertising fund.
Errors and Omissions Insurance
$4-^002.500
$2002J>QQ per year
As Incurred
Payable to us only in the event we obtain group coverage
Renewal Fee
$500
Upon execution of successor license agreement
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There are no other recurring or isolated fees required to be paid by you to Sunbelt or persons affiliated with Sunbelt.
Except as noted, all fees are imposed by and are payable to Sunbelt. All fees are nonrefundable.
We may offer additional services to you on an optional basis. If you use any such services, you shall pay for such services within 10 days of payment due date.
Note:
(1) The ongoing amount of the Monthly Fee will depend on the population of your Territory as follows:
Less that 250,000 - $500
250,000 but less than 350,000 - $600
350,000 or greater - $700
Item 7 INITIAL INVESTMENT
&03H3SXD
m
S3uT35uM
LEEUNDSBnEl
INITIAL LICENSE FEE
El5,000 to $25,000 (Note 1)
Lump Sum
At Signing of
License
Agreement
No
Sunbelt
TRAVEL AND LIVING
EXPENSES WHILE TRAINING
No
$100 to $1,500
As Incurred
During Training
Airlines, Hotels & Restaurants
BUSINESS OFFICE AND
IMPROVEMENT
$1,500 to $3,000 (Note 2)
Lump Sum
Prior to Opening
No
Landlord
OFFICE EQUIPMENT AND
FURNISHINGS
$2,000 to $20,000 (Note 3)
Lump Sum (Note 3)
Prior to Opening
No
Vendors
STATIONERY AND FORMS
$200 to $500
Lump Sum
Prior to Opening
No
Vendors
MISC. OPENING COSTS
$2,500 to
E5t0007.500
(Note 4)
As Incurred
As Incurred
No
Vendors
ADDITIONAL FUNDS FOR
3 MONTHS
$15,000 to $45,000 (Note 5)
As Incurred
As Incurred
No
Vendors
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El
Ie^ymentJ
TOTAL
$51,300 to S4O0^001fi
(Note 6)
None of the above fees and costs are refundable.
Notes:
(1) See Item 5 for details on how the amount of this fee is determined. Sunbelt does not finance any fee.
(2) Sunbelt anticipates that many of its licensees will have existing business offices. If you do not have a business office, you will have to lease one. We recommend that you start in an "executive office" which provides, for a fee, fully equipped office space and access
> to certain office equipment (copiers, fax machines, etc.). If "executive office" space is not available, you will have to lease office space. A typical Sunbelt office is located in a first class office building and contains from 700 to 1,200 square feet. Typically, there is an entrance lobby, an office for you, a conference room, and a large office which houses all of the brokers who will work with you. Sunbelt estimates that it will cost you up to $1,500 for a security deposit on suitable office space.
(3) If you do not have an existing office with standard office equipment, you will have to acquire the necessary equipment. You will need a phone system, office furnishings, a copier, a fax machine and a computer system.
(4) Includes incorporation costs, business licenses and insurance. The Licensor requires you to carry comprehensive general liability insurance in the minimum amount of $1,000,000, property damage insurance in the minimum amount of $500,000, and errors and
' omissions insurance in the amount of $1,000,000. The Licensor is to be named as additional insured on these policies.
(5) These estimates are based on 9 years of experience of Sunbelt and its predecessor in the business brokerage business and on the actual results of our existing licensees. You should review these figures carefully and, if you feel the need, discuss them with your business advisor, before you make any decision to purchase the license.
(6) Sunbelt does not offer direct or indirect financing to licensees for any items.
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Item 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Sunbelt has no required specifications, designated suppliers, or approved suppliers for goods, services or real estate relating to your licensed business. Sunbelt will not derive revenue from your purchases or leases.
You are not required to do so, but if you wish to use the Sunbelt Office Management and Networking software, you will have to have an IBM compatible computer with at least a Pentium processor, 128 MB RAM, a 56K Baud Hayes-compatible modem and use the Windows Operating System®, version 98 or higher, and a compatible printer.
If you decide to use the Sunbelt software and you purchase the necessary computer system, such expense (approximately $2,000) would represent from 4% to 24% of all required costs incurred to start your licensed business. If you do use the software, in the event the software is modified and the minimum computer requirements change, you would have to update your computer hardware to use the modified software. Software modifications requiring computer upgrades will not occur more than once every two years and would require upgrade costs not to exceed $1,000.
Neither Sunbelt nor persons affiliated with Sunbelt are currently approved suppliers for any goods, services or real estate relating to your licensed business. There are currently no purchasing or distribution cooperatives. Sunbelt currently does not negotiate purchase arrangements with suppliers (including price termsl for licensees. Sunbelt does not provide material benefits to a licensee for using designated or approved sources.
Item 9
LICENSEE'S OBLIGATIONS
THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE LICENSE AGREEMENT. IT WILL HELP YOU FIND-MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THE LICENSE AGREEMENT AND IN OTHER ITEMS OF THIS OFFERING CIRCULAR.
|
191 |
----------;----------------T----------------------------■", ■ Jt;^.'- Vi.'- ~m----------------------------f;---------------------......-------1. - ■ -"- |
|||
|
a. |
Site selection and acquisition/lease |
None |
Item 8 |
|
|
b. |
Pre-opening purchases/leases |
None |
Item 8 |
|
-CHGOl^
V30421255.v1
|
1 |
■mum |
H8H |
IE1 |
|
c. |
Site development and other pre-opening requirements |
Section 2D of the License Agreement |
None |
|
d. |
Initial and ongoing training |
Section 4 of the License Agreement |
Item 11 |
|
e. |
Opening |
None |
None |
|
f. |
Fees |
Section 9 of the License Agreement |
Items 5 and 6 |
|
g- |
Compliance with standards and policies/Operating Manual |
Sections 5 and 10 of the License Agreement |
Item 11 |
|
h. |
Trademarks and proprietary information |
Section 6 of the License Agreement |
Items 13 and 14 |
|
i. |
Restrictions on products/ services offered |
None |
Item 16 |
|
J- |
Warranty and customer service requirements |
None |
Item 11 |
|
k. |
Territorial development and sales quotas |
None |
None |
|
1. |
Ongoing product/service purchases |
None |
Item 8 |
|
m. |
Maintenance, appearance and remodeling requirements |
None |
None |
|
n. |
Insurance |
Section 10 of the License Agreement |
Item 7 |
|
o. |
Advertising |
Section 11 of the License Agreement |
None |
|
P- |
Indemnification |
Section 7 of the License Agreement |
None |
|
q- |
Owner's participation/ management/staffing |
Section 8 of the License Agreement |
Items 11 and 15 |
|
r. |
Records/reports |
Section 12 of the' License Agreement |
None |
|
s. |
Inspections/audits |
None |
Item 11 |
|
t. |
Transfer |
Section 13 of the License Agreement |
Items 6 and 17 |
|
u. |
Renewal |
Section 16 of the License Agreement |
Item 17 |
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Item 10
FINANCING
Sunbelt does not offer direct or indirect financing. Sunbelt does not guarantee your note, lease or obligation.
Item 11 LICENSOR'S OBLIGATIONS
Except as listed below, Sunbelt need not provide any assistance to you.
Before you open your business, Sunbelt will:
1) Designate your exclusive territory (License Agreement, Section 2A).
2) Provide telephonic assistance in helping you locate a business office. You are not required to obtain Sunbelt's approval for your business location, but you are not permitted to use a post office box or virtual office (License Agreement, Section 2D).
3) Train you in basic business brokerage as detailed in the training chart below (License Agreement, Section 4).
Sunbelt does not charge for this training or service, but you must pay your travel and living expenses. Training occurs at one of our regional offices, according to the training schedule which is published at least every three months. The locations of the regional training sites are listed Exhibit F. You must complete the initial training program to Sunbelt's satisfaction. (License Agreement, Section 4).
4) Loan you a copy of each of the following Sunbelt publications which contain suggested Gpocifioations. standards and procodureG. These publications general operating procedures
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(the "Operations Manuals"). The Operations Manuals are confidential and remain our property. Sunbelt will modify these publicationathe Operations Manuals, but the modifications will not alter your status and rights under the License Agreement. (License Agreement, Section 5). The tables of contents for these publicationsthe Operations Manuals are included in Exhibit C.
5) Provide you with an initial supply of the Sunbelt business forms described in the manuals listed in 4 above. This does not include your stationary or business cards. There is no charge for this initial supply of forms.
6) Provide you with a Login Name and Password to access the Sunbelt Office Management and Networking System. This system will assist you to input and manage listings, monitor broker activity, develop a floor schedule, allow other offices to have access to your listings, provide amortization calculations, function as a bulletin board and manage internet inquiries. This software is confidential and remains our property. Sunbelt will maintain and may modify the software. Any modifications will be at no cost to you. To use this software, you must have a computer that meets the following minimum requirements:
IBM compatible
Pentium processor
128 MB RAM
56K Baud Hayes-compatible modem
Windows Operating System® (version 98 or higher)
Compatible printer
You are not required to use the Sunbelt software. If you do use the software, in the event the software is modified and the minimum computer requirements change, you would have to update your computer hardware to use the modified software. Software modifications requiring computer hardware upgrades will not occur more than once every two years and would require upgrade costs not to exceed $1,000.
Sunbelt will have independent access to all of the information and data collected by the users of the Sunbelt computer software.
After you open for business and during the operation of your business, Sunbelt will:
Provide new broker training sessions, as detailed in the chart below, in our Charleston, South Carolina or at one of our designated regional training sites at least once every three weeks. A schedule of new broker training sessions will be published at least every three months. You may send as many brokers to as many of the training sessions as you wish, at no additional cost to you. You or your brokers must pay all travel costs associated with their attendance at the training sessions. (License Agreement, Section 4).
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Provide continuing broker training sessions, as detailed in the chart below, in Charleston, South Carolina or at one of our designated regional training sites at least once every quarter. A schedule of continuing training sessions will be published at least every three months. You may send as many brokers to as many of the training sessions as you wish, at no additional cost to you. You or your brokers must pay all travel costs associated with their attendance at the training sessions. (License Agreement, Section 4).
TRAINING CHART
Brill
1®?'
il^SMlieillQRg
Basic
Business
Brokerage
Morning
Manual
16
Ed Pendarvis
or designee
Continuing Business Brokerage (Optional)
Morning
None
Ed Pendarvis or designee
Franchise Sales Training (Optional)
Morning
Manual
Tom Miller
and
Associates
You and every broker you hire are required to attend Basic Business Brokerage training within 90 days after the.opening of your business. Continuing training is optional but is recommended to be taken within 6 months after the opening of your business.
Mr. Pendarvis will supervise all of the training and has been a business broker since 1981 and has been involved in brokering over 400 business sales. See Item 2 for Mr. Pendarvis1 background and experience. Tom Miller of Tom Miller and Associates has had 12 years of experience in franchise sales. Tom Miller and Associates is based in Phoenix, Arizona.
Sunbelt will also be available by telephone to provide assistance to you. Each week for the first 90 days after you open your office, Sunbelt will insure that we have spoken to you by phone to discuss your progress and your problems.
Sunbelt will hold an annual meeting and educational conference for all licensees. Educational programs will be geared to topical matters with emphasis on running a successful office. There will be a nominal charge for the annual meeting to partially offset the cost. You are responsible for all of your travel and living expenses. The annual meeting is held in Charleston, South Carolina, or at Sunbelt's option, another suitable location.
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At least once each quarter, a four-hour regional meeting of licensees is held at the applicable regional training office. These meetings are held to enable office owners to exchange ideas and discuss problems. There is no charge for these meetings, but you must pay for your travel and living expenses.
Sunbelt provides advertising and promotional materials for your use. These items include various classified and display advertisements, and promotional brochures. You will receive copies of all classified advertisements, and a sample of the promotional brochures. Additional copies of the promotional brochures are available at Sunbelt's cost, plus shipping charges.. You are responsible for the cost of placing classified and display advertisements. (License Agreement, Section 11 A).
At your request, Sunbelt will assist you with your advertising by reviewing your weekly or display advertisements and giving you suggestions for improvement.
New promotional materials that are developed after you open for business will be made available to you at our cost, plus shipping charges.
Before vou use them, vou must send Sunbelt for review samples of all advertising and promotional materials that Sunbelt has not prepared or previously reviewed Sunbelt retains the right to require you to cease using anv advertising or promotional materials that violate anv state or federal laws, rules or regulations or that Sunbelt considers to constitute an unauthorized use of Sunbelt's trademarks. You mav not use anv advertising or promotional materials that Sunbelt has not approved or has disapproved. (License Agreement. Section 1H
Sunbelt does not charge an advertising fee.However, vou You are required by the License Agreement to pay a monthly advertising fee of 20% of your ongoing monthly fee to an advertising fund (the "Fund") administered by the franchise advisory counsel (the "Council") established by Sunbelt. The Council will make recommendations regarding the use of Fund monies which must be approved by a majority of Sunbelt Network Business. (License Agreement, Section 44B4r9Q. There is no separate advertising council established by Sunbelt. Sunbelt is not empowered to form an advertising cooperative nor can Sunbelt require any licensee to join any cooperative. Anv advertising developed bv Sunbelt will be disseminated through the use of national print, radio and television as approved bv the Council. Sunbelt's in-house marketing department will produce the advertising materials. Licensor units, if anv. must contribute to the Fund on the same basis as licensees. Sunbelt is not required to spend anv amount on advertising in the territory where vou or anv licensee is located. No advertising funds will be used to solicit the sale of licenses. All advertising funds will be spent in the budget year as approved. Anv surplus will carry forward to the next year's budget.
The Council will make recommendations concerning the Fund but Sunbelt will administer the Fund and make final determination as to the Fund's use. You mav. upon requestT receive an annual accounting of fees but such report will not be audited. Sunbelt will not receive anv fees for administering the Fund. Because Sunbelt has not vet established the FundT Sunbelt has received no contributions as of the date of this Offering Circular.
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You select the location for your office within your exclusive territory. Sunbelt will, upon request, assist you in determining the proper location for your office.
Licensees usually open their offices within 1 to 3 months after signing the License Agreement. The factors that affect this time are the ability to obtain a lease and delayed installation of equipment and fixtures.
Sunbelt does not have the power to require any licensee cooperatives to be formed, changed, dissolved or merged.
Item 12 TERRITORY
You will receive an exclusive territory. The area covered by your exclusive territory will be agreed to by you and Sunbelt prior to your signing the License Agreement. Generally, territories are defined by counties, zip codes or other geographic determination that will be set forth in Exhibit A to your License Agreement. The minimum territory granted to you will be an area with a population of at least 75.000 people. You may do business with buyers and sellers outside your exclusive territory, but you may not open a business brokerage office, satellite office, home office or advertise in any way an' office or telephone number outside of your exclusive territory. Except as noted below, Sunbelt will not operate company-owned offices or grant licensees for the Services using the Marks within your area.
Unless specifically stated otherwise in your license agreement, no additional licenses to offer the Services will be sold within your exclusive territory. In some cases, territories will be designated for more than one license. If you purchase a license within a territory designated as a multi-license territory, you will be given the first option to purchase the additional licensees.
There are no minimum sales quotas. You maintain rights to your area even though the population increases.
Unless specifically agreed to in writing by Sunbelt, you have no option, right of first refusal or any similar right to acquire any additional licenses within your territory or in any contiguous territories.
Sunbelt, and its affiliates, will not establish other franchises or company-owned offices or other channels of distribution selling or leasing similar products or services under a different trademark.
During the license term we may:
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The original documents were scanned as an image. The original file can be downloaded at the link above.