UFOC
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample UFOC
WIRE1E5S Mil
Accessories for a Wireless woi
FRANCHISE OFFERING CIRCULAR fCALIFORNIAl
Wireless Accessories, LLC 3901 S.W. 47th Avenue, Suite 400 Davie, Florida 33314 888-809-4934
The franchise is a business selling wireless/cellular telephones, services and accessories and such other related products in accordance with the System and Marks. The business generally operates through carts or retail merchandise units in shopping malls. The Initial Franchise Fee is $12,500.00 and the Opening Assistance Fee is $2,500.00 for a total of $15,000.00. The cost of initial inventory that you will purchase from us will range from $8,000.00 to $9,000.00. If you purchase the computer hardware and software from us, the cost is currently $3,200.00. If you sublease the location from us or our affiliate, you may be required to pay us or our affiliate a security deposit of one month's rent and the first month's rent. In addition you may also be required to pay us or our affiliate for the cost of the buildout of the RMU which currently costs $5,000. The estimated total initial investment required for a franchise is $32,200.00 to $50,950.00. [See California State Law Addendum.]
Risk Factors:
THE FRANCHISE AGREEMENT REQUIRES THAT CERTAIN DISAGREEMENTS BE SETTLED BY LITIGATION OR ARBITRATION IN FLORIDA. OUT OF STATE LITIGATION OR ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO LITIGATE OR ARBITRATE WITH US IN FLORIDA THAN IN YOUR HOME STATE.
THE FRANCHISE AGREEMENT STATES THAT FLORIDA 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.
fTHE FORM OF THE LEASE AGREEMENT IS NOT INCLUDED IN THE UFOC, HOWEVER, ALL MATERIAL PROVISIONS REGARDING YOUR COSTS AND RIGHTS ARE INCLUDED IN THE SUBLEASE.
GENERALLY. THE TERM OF THE SUBLICENSE AGREEMENT WILL BE THE SAME TERM AS THE LICENSE AGREEMENT INCLUDING OPTIONS TO EXTEND THE TERM, IF ANY. UNDER THE LICENSE AGREEMENT, ONE OF THE LANDLORDS, GENERAL GROWTH, HAS
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THE RIGHT TO TERMINATE THE LICENSE AGREEMENT AT ANY TIME FOR ANY
REASON. WE OR OUR AFFILIATES HAVE THAT SAME RIGHT IN THE SUBLICENSE AGREEMENT. YOU SHOULD REVIEW OR HAVE YOUR ADVISORS REVIEW SECTIONS 2, 4 AND 5 OF THE SUBLICENSE AGREEMENT VERY CAREFULLY AS THESE SECTIONS CONTAIN INFORMATION WHICH MAY BE VERY IMPORTANT TO YOUR BUSINESS.]
THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
[THIS REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE CALIFORNIA COMMISSIONER OF CORPORATIONS.!
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 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.
(Issuance Date: March 1, 2005
Some states require franchisors to make additional disclosures related to the information contained in this offering circular and the franchise agreement. If applicable, these additional disclosures and amendments will be contained in a state law addenda included in this offering circular and attached to the franchise agreement.)
[Effective Date isl
{[3S6018.DOC;13I l527862.DOC:4li
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WIRELESS ACCESSORIES, LLC
INFORMATION FOR PROSPECTIVE
FRANCHISEES REQUIRED BY
FEDERAL TRADE COMMISSION
Date of Issuance: March 1,2005
TO PROTECT YOU, WE HAVE REQUIRED YOUR FRANCHISOR TO GIVE YOU THIS INFORMATION. WE HAVEN'T CHECKED IT. AND DON'T KNOW IF IT IS CORRECT. IT SHOULD HELP YOU MAKE UP YOUR MIND. STUDY IT CAREFULLY. WHILE IT INCLUDES SOME INFORMATION ABOUT YOUR CONTRACT, DO NOT RELY ON IT ALONE TO UNDERSTAND YOUR CONTRACT. READ ALL OF YOUR CONTRACT CAREFULLY, BUYING A FRANCHISE IS A COMPLICATED INVESTMENT. TAKE YOUR TIME TO DECIDE. IF POSSIBLE, SHOW YOUR CONTRACT AND THIS INFORMATION TO AN ADVISOR, LIKE A LAWYER OR AN ACCOUNTANT.
IF YOU FIND ANYTHING YOU THINK MAY BE WRONG OR ANYTHING IMPORTANT THAT'S BEEN LEFT OUT, YOU SHOULD LET US KNOW ABOUT IT. IT MAY BE AGAINST THE LAW.
THERE MAY ALSO BE LAWS ON FRANCHISING IN YOUR STATE. ASK YOUR STATE AGENCIES ABOUT THEM.
Federal Trade Commission Washington, D.C.
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WIRELESS ACCESSORIES, LLC UNIFORM FRANCHISE OFFERING CIRCULAR
TABLE OF CONTENTS
ITEM 1 THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES..........................................1
ITEM 2 BUSINESS EXPERIENCE.........................................................................................................2
ITEM 3 LITIGATION..............................................................................................................................4
ITEM 4 BANKRUPTCY..........................................................................................................................4
ITEM 5 INITIAL FRANCHISE FEE.......................................................................................................4
ITEM 6 OTHER FEES.............................................................................................................................6
ITEM 7 YOUR ESTIMATED INITIAL INVESTMENT........................................................................9
ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES....................................10
ITEM 9 FRANCHISEE'S OBLIGATIONS...........................................................................................12
ITEM 10 FINANCING.............................................................................................................................12
ITEM 11 FRANCHISOR'S OBLIGATIONS...........................................................................................14
ITEM 12 TERRITORY............................................................................................................................18
ITEM 13 TRADEMARKS.......................................................................................................................19
ITEM 14 PATENTS AND COPYRIGHTS..............................................................................................20
ITEM 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE
BUSINESS................................................................................................................................20
ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL............................................21
ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION......................21
ITEM 18 PUBLIC FIGURES...................................................................................................................23
ITEM 19 EARNINGS CLAIMS...............................................................................................................23
ITEM 20 LIST OF OUTLETS..................................................................................................................25
ITEM 21 FINANCIAL STATEMENTS..................................................................................................27
ITEM 22 CONTRACTS...........................................................................................................................28
ITEM 23 RECEIPT...................................................................................................................................28
EXHIBIT A. FRANCHISE AGREEMENT
EXHIBIT B PROMISSORY NOTE AND GUARANTEE
EXHIBIT C TABLE OF CONTENTS OF CONFIDENTIAL OPERATIONS MANUAL
EXHIBIT D. LIST OF FRANCHISEES
EXHIBIT E. LIST OF STATE AGENCIES/AGENTS FOR SERVICE OF PROCESS
EXHIBIT F. STATE LAW ADDENDA (IF APPLICABLE)
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EXHIBIT G. AUDITED FINANCIAL STATEMENTS EXHIBIT H. UNAUDITED FINANCIAL STATEMENTS EXHIBIT I. RECEIPT
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WIRELESS ACCESSORIES, LLC UNIFORM FRANCHISE OFFERING CIRCULAR
ITEM 1 THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES
To simplify the language in this offering circular "WIRELESS," "we" "us" or "our" means Wireless Accessories, LLC, the franchisor. "You" means the person who buys a franchise from us. If the franchise will be owned by a corporation, partnership, limited liability company, or other entity, certain provisions of the Franchise Agreement will also apply to your owners, and in those cases, "you" will also mean the owners of the corporation or partners of the partnership or members or managers of the limited liability company.
Wireless Accessories, LLC is a Nevada limited liability company which was formed on March 6, 2002. Our principal place of business is at 3901 S. W. 47* Avenue, Suite 400, Davie, FL 33314. In addition to operating our Wireless Dimensions franchise system, we have two separate divisions that distribute wireless accessories to big box retailers and cellular telephone providers under the tradenames "Wireless Generations" and "World Wide Accessories" respectively. You will do business under the fictitious or assumed name "Wireless Dimensions".
Our Predecessors and Affiliates
Our affiliate, WD Licensing, LLC (referred to as "WD") was organized in Nevada on March 6, 2002, under the name of Wireless Dimensions, LLC. In May 2002, WD changed its name to WD Licensing, LLC. On or about March 28, 2002, WD purchased certain assets, such as inventory, tradenames, marketing materials, customer lists, accounts receivables, and goodwill from Wireless Dimensions, Inc. under the terms of an Asset Purchase Agreement. Included in the purchase were license agreements between Wireless Dimensions, Inc. and its licensees. These license agreements granted licensees the right to operate a business similar to the business you will be operating under the Franchise Agreement under the name of "Wireless Dimensions". However, these license agreements differ in various respects from the terms and conditions of your Franchise Agreement. These licenses contained terms of 4 or 5 years with rights of renewal for additional 2 year terms. We offered the former licensees of Wireless Dimensions, Inc. an opportunity to convert their license agreements to a Franchise Agreement with certain modifications and most of these licensees have converted or closed. WD assigned its common law rights to use the Marks to us and we filed the application to register the Marks with the United States Patent and Trademark Office. WD also acquired certain assets of Wireless Electronics, Inc. and Faceplates.CC, Inc., both affiliates of Wireless Dimensions, Inc. Wireless Dimensions, Inc.'s principal place of business was 2994 W. New Haven Ave. Melbourne, Florida 32904. On March 1, 2004, WD Licensing, LLC merged into WIRELESS.
Our affiliate, Wireless Accessories Real Estate, L.L.C. ("WARE") was organized under the laws of the State of Nevada on December 17, 2004. WARE has or plans to enter into to various license agreement with General Growth Properties or an entity affiliated with or related to it ("General Growth Properties"), the owner or manager of these properties for the right to lease space. WARE may sublease these locations to you or other WIRELESS franchisees. WARE'S principal place of business is 3901 S. W. 47th Avenue, Suite 400, Davie, FL 33314.
Our agents for service of process in various states are disclosed in Exhibit E.
The Franchise Business
We grant franchises for the operation of businesses selling wireless/cellular telephone, services and wireless accessories and such other products that we may offer. The businesses generally operate
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through carts or retail merchandise units (which we refer to as "RMU") or kiosks in shopping malls and sell products for resale and provide services related to such products. You will purchase most of your inventory directly from us or from our approved suppliers. You will package most of your products in blister packs with inserts containing the name "Wireless Dimensions". In this Circular, we sometimes refer to the business you will be operating as the "Business." "Wireless Dimensions Stores" refers to any store operating under the Wireless Dimensions mark, including those which are owned by us or our affiliates and those which are licensed or franchised by us or our affiliates. The place you will operate your Business is referred to as the "Location." In order to purchase a franchise, you will be required to sign a Franchisee Agreement (Exhibit A).
Market For Franchise Services
You will target customers of all ages who have a need for wireless/cellular telephones, services and accessories, including wireless accessories and such other products that we may authorize.
You will be competing with other businesses and competitive distributors, dealers, licensees, and franchises which offer similar products. Competitors include other carts, kiosks, cellular or wireless telephone stores, internet sites, catalogues, department stores, electronic superstores, and any other stores or outlets that sell similar products and services.
Industry Specific Regulations
Except as described in this paragraph, there are no regulations specific to the industry in which the Business will operate. You must comply with all laws and regulations governing the proper storage and disposal of the type of batteries used in cell phones. You must also comply with all local, state and federal and licensing laws that apply to businesses generally. You must check all applicable governmental laws, regulations, and ordinances to be certain that you are in compliance with them.
Prior Experience
We began offering franchises in May 2002. As of December 31, 2004, we have 128 franchises operating and 3 company-owned locations. We have not conducted a business of the type you will operate. Our affiliate, WD had approximately 150 license agreements of which 134 were purchased from Wireless Dimensions, Inc. and 16 of which were issued by WD based on commitments made by Wireless Dimensions, Inc. These licensees operated businesses similar to your Business; however, they operated under license agreements that contain different terms from those in your Franchise Agreement. All of these licensees were given the opportunity to convert to become our franchisees. All of these licensees did convert to become our franchisees or closed. Wireless Dimensions, Inc. began offering licenses in July 1999. Neither us nor our affiliates have offered or sold any franchises in any other line of business. Our affiliates have not sold any franchises similar to the Business.
ITEM 2 BUSINESS EXPERIENCE
Chief Executive Officer: Douglas J. Von Allmen
Since its inception, Douglas Von Allmen has been a member and chief executive officer of WIRELESS.
Since its inception, Mr. Von Allmen has been a member and chief executive officer of WD Licensing LLC.
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Since 2001, Mr. Von Allmen has been the chairman of Von Allmen Capital, Inc. in Ft. Lauderdale, Florida, a company which arranges for investments in privately owned businesses.
Since April 1999, Mr. Von Allmen has been chairman of Beauty Alliance, Inc., a distributor of professional beauty supplies, located in Clearwater, Florida. Prior to that time (dating back to 1987) he has been chairman of various companies that were merged into Beauty Alliance, Inc.
Since 1985, Mr. Von Allmen has been the chairman of Group One Capital, Inc. in St. Louis, Missouri, which arranges for investments in privately held businesses.
President and Chief Operating Officer: Dean Kretschmar
Since February 2003, Dean Kretschmar has been the president and chief operating officer of WIRELESS.
Since February 2003, Mr. Kretschmar has been the president and chief operating officer of WD Licensing, LLC.
From March 2002 to February 2003, Mr. Kretschmar was the vice president of WIRELESS.
From March 2002 to February 2003, Mr. Kretschmar was the vice president of WD Licensing LLC.
Since March 2001, Mr. Kretschmar has been a vice president of Von Allmen Capital, Inc., Ft. Lauderdale, Florida.
From December 1999 until June 2001, Mr. Kretschmar was the vice president of D & L Partners, a company involved in starting various companies.
From August 1997 until December 1999, Mr. Kretschmar was an analyst for Nations Bank, St. Louis, Missouri and Ft. Lauderdale, Florida, which was subsequently acquired by Bank of America.
Executive Administrator/Franchise Coordinator: Janis Hoffman
Since October 2004, Ms. Hoffman has been the Executive Administrator/Franchise Coordinator for WIRELESS.
From September 2003 until June 2004, Ms. Hoffman was the Director of Salon Business Process for HCX Salons International in Florida.
From September 2000 until September 2003, Ms. Hoffman was the Director of Corporate Administration for Haircolorxpress LLC (which later sold to HCX Salons International) in Florida.
From December 1998 until September 2000, Ms. Hoffman was the Manager of Chenzo & Co., the founder of Haircolorxpress LLC.
Controller: Andrea Simon
Since September 2004, Ms. Simon has been the Controller of WIRELESS.
From April 2003 until September 2004, Ms. Simon was the Director of Finance for the Southern Florida Guardianship Program.
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From April 1999 until April 2003, Ms. Simon was the Controller of Rapid Wireless of Southern Florida.
Owner Development Training Manager; Pete M. White
Since October 2004, Mr. White has been the Owner Development Training Manager for WIRELESS.
From June 1997 until February 2004, Mr. White was employed by Sprint. He held the following positions: Resource Management & Technician, Operations Readiness Analyst, Assistant Operations Manager, Project Manager and Compliance Auditor.
Sales Manager; Michael Sandlofer
Since October 2004, Mr. Sandlofer has been the Sales Manager for WIRELESS.
From March 2004 until October 2004, Mr. Sandlofer was the Marketing Sales Service Consultant for Transitioning Lifestyles.
From June 1999 until October 2003, Mr. Sandlofer was the National Vendor Incentive Administrator for Office Depot.
ITEM 3 LITIGATION
No litigation is required to be disclosed in the offering circular. [See California State Law Addendum. I
ITEM 4 BANKRUPTCY
On May 5, 2000, PenUltima, Inc., filed a petition to reorganize under Chapter XI of the U. S. Bankruptcy Code in the United States Bankruptcy Court in the Eastern District of Missouri, Eastern Division; Case No. 00-44611-72. PenUltima, Inc. was liquidated pursuant to a plan filed with the Bankruptcy Court on March 8, 2001. Our chief executive officer, Douglas Von Allmen was a vice president of PenUltima, Inc. and a minority shareholder.
Other than the action discussed above, 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.
ITEM 5 INITIAL FRANCHISE FEE
You must pay us an initial franchise fee of $12,500.00 ("Initial Franchise Fee") for the franchise in a lump sum when you sign the Franchise Agreement.
You must pay us an opening assistance fee of $2,500.00 ("Opening Assistance Fee") in lump sum when you sign the Franchise Agreement.
You must purchase the initial inventory and supplies in the amount of between $8,000.00 and $9,000.00. At the present time, we or our affiliate are the only approved supplier of inventory for the products you will sell. Therefore, you will pay us for the initial inventory and supplies at the time of delivery.
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You must purchase a computer/point of sale computer with the required software before you open for business. The requirements are set forth in Item 11. We are an approved supplier of the computer hardware and software although you can purchase your computer hardware from any vendor. If you purchase the hardware and software from us, you must pay us approximately $3,200.00 prior to shipment of the equipment. The hardware includes the computer, printer, cash drawer, bar code scanner and monitor. If you purchase only the software from us, you must pay us approximately $1,295.00 prior to shipment. The prices listed for computer hardware and software are the current prices, but are subject to increases which we will pass on based on increases in the cost of the hardware and software.
If you sublease the location from us or our Affiliate, you will be required to pay us or our Affiliate a security deposit of one month's rent and the first month's rent when you sign the Sub-License Agreement to lease the space. The range of the security deposit is between $1,500 and $11,000 depending on the amount of the rent. You may also be required to pay us or our Affiliate for the cost of the buildout of the RMU which is $5,000 at the present time.
All of these fees and costs are nonrefundable. [See California State Law Addendum.]
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ITEM 6 OTHER FEES*
|
NAME OF FEE |
AMOUNT |
DUE DATE |
REMARKS |
|
License Fee Note 1 |
6% of Gross Revenues |
Payable monthly by 10th day of the following month |
License Fees and sales reports are due |
|
Additional or Refresher Training or Assistance Note 2 |
Reasonable fees and travel expenses |
As required |
No fees for initial training and assistance |
|
Product Purchases Note 3 |
On Price List |
Pay by check with each order |
Payment must include cost of goods, shipping and handling |
|
Interest and Late Fee Note 4 |
Lesser of 1 Vi% per month or maximum legal rate and to the extent permissible by applicable law and a late fee of $100 for each month that you fail to pay any amounts due to us and our affiliates or you fail to provide a report in a timely manner. |
Upon demand |
Payable on all overdue amount amounts, including Royalties, inventory purchases, and all other amounts that you owe us and our affiliates. |
|
Rent and Lease Deposit |
A lease deposit of 1 month's rent and monthly rent |
Lease Deposit due upon signing the sublease and rent due monthly by the 1 st day of each month |
This is payable to us or our Affiliate only if you sublease the space for the RMU from us or our Affiliate. Otherwise you will pay this directly to your landlord. |
|
Transfer Fee |
25% of the most current initial franchise fee and the current opening assistance fee |
At the time of transfer |
Not charged if the transfer is to a designated heir |
|
Costs and Attorneys' Fees |
Expenses and attorneys' fees |
As incurred |
Payable if you fail to comply with the Franchise Agreement |
|
Renewal Fee |
Reasonable fee to cover our out of pocket expenses |
At the time you sign the most current franchise agreement |
Payable when you renew the franchise |
|
Arbitration Fee |
Cost of Arbitration and attorneys' fees |
As incurred |
If awarded by Arbitrators |
|
Indemnification |
Will vary under circumstances |
As incurred |
You must reimburse us if we incur any expenses in defending ourselves or are held liable for claims arising from your Business |
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|
NAME OF FEE |
AMOUNT |
DUE DATE |
REMARKS |
|
Advertising Materials |
Reasonable fees |
If you desire to use the materials and if we provide you the materials |
We may provide advertising materials and we reserve the right to charge you a reasonable fee if you purchase these materials. |
|
Audit Fees Note 4 |
Cost of audit |
Upon demand |
If audit shows you under-reported by more than 2% |
|
Liquidated Damages Fee Note 5 |
$200 per day |
Upon demand |
Payable for each day unauthorized products or services are offered for sale or sold |
* All fees are imposed by and are payable to us except as noted below. All fees are non-refundable.
Note 1: License Fee. You are required to pay us a License Fee by the 10 day of each month of
6% of Gross Revenues of the previous month. "Gross Revenues" means the total amounts of all sales of goods and services (including activation fees, rebates and commissions received from providers of cellular services) and other merchandise sold from, through, or in connection with the Business, whether for cash, on credit, barter or otherwise, exclusive of applicable sales use or service taxes and any bona fide refunds and allowances actually given to customers.
Note 2: Training and Assistance. There is no charge for the initial training program, however
you are responsible for any travel, food, incidental and lodging expenses incurred by you and your employees attending the training. We will make available continuing advisory assistance in a manner as we deem appropriate, and we can charge a reasonable fee for it as well as require you to be responsible for any travel, meals, incidental and lodging expenses incurred by the person providing the assistance. There is no charge for the opening assistance we provide so long as you have paid the Opening Assistance Fee as discussed in Item 5 above. However, we reserve the right to charge you a reasonable fee for any training we provide to you and your employees after the opening of the Business. You will also be responsible for any travel, meal, incidental, and lodging expenses incurred by persons conducting the training programs and attending the training program.
Note 3: Product Purchases. You may purchase from us or our affiliate certain products which
you will sell in your Business. (See Item 8) The price and terms and conditions for these purchases are contained on our Price List. The terms and conditions for these purchases may be changed by us or its affiliates at any time on 30 days notice. All of the individuals who guaranteed the Franchise Agreement must also guarantee all of your purchases of products and equipment. You must pay for all shipping and handling costs. If you fail to pay for any products or equipment when payment is due, we or our affiliates can require you to pay for future products and/or equipment on a C.O.D. basis or withhold shipment of products and/or equipment in addition to requiring you to paying late fees and interest.
Note 4: Late Fees and Audit Fees. If you under-report your Gross Revenues, in addition to
paying us for the amount of unpaid License Fees you owe, you must pay interest on any unpaid amounts at the rate of the lesser of one and one-half percent (1 '/2%) per month or the maximum legal rate in the jurisdiction where your Business is located. If you are late in paying any amounts owed to us and our affiliate, in addition to the interest you will owe, you will also owe us or our affiliate, to the extent permissible by applicable law, a late fee of $100 for each month that you fail to pay. If the amount of Gross Revenues you report for any calendar year is less than 98% of the actual Gross Revenues for that
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period, you must reimburse us for all costs of the investigation or audit that uncovered the under-reported sales, including salaries, professional fees, travel, meals, and lodging. You are required to send your monthly reports by the 10th day of the following month. If you are late in sending any financial reports, you must pay $100 for each report that is late.
Note 5: Liquidated Damages for Sale of Unauthorized Products or Services. Uniformity of
products and services offered by all Wireless Dimensions stores is of utmost importance to us and the entire franchise system. If you offer to sell or do sell products or services which are not authorized by us, you agree we will be damaged by your non-compliance. These damages will be calculated at the rate of $200 per day for each day unauthorized products or services are offered or sold. We have the right to collect these amounts in addition to any and all of our other rights for non-compliance provided for under the Franchise Agreement. You agree that a precise calculation of the full extent of the damages that we will incur from the offer or sale of unauthorized products and services are difficult to determine and we and you desire certainty in this matter and agree that the damages provided here are reasonable, constitute liquidated damages and not a penalty.
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ITEM 7 YOUR ESTIMATED INITIAL INVESTMENT
|
ITEM |
AMOUNT |
METHOD OF PAYMENT |
WHEN DUE |
TO WHOM PAYMENT IS TO BE MADE |
|
Initial Franchise Fee |
$12,500 |
Lump Sum |
Signing Franchise Agreement |
Us |
|
Opening Assistance Fee |
$ 2,500 |
Lump sum |
Signing Franchise Agreement |
Us |
|
Rent and Lease Deposit (Note 1) |
$ 1,500-$11,000 |
Lump sum |
Signing Lease |
Landlord or our Affiliate if you sublease from our Affiliate |
|
RMU display and buildout (Note 2) |
$ 3,000-$ 5,000 |
Prior to delivery |
Prior to Opening |
Approved supplier |
|
Inventory and supplies (Note 3) |
$ 8,000-$ 9,000 |
As incurred |
Signing Franchise Agreement |
Approved supplier including us |
|
Computer Hardware and software (Note 4) |
$ 3,200 $ 4,000 |
As incurred |
Prior to Opening |
Vendors or us. |
|
Business licenses, permits, utilities and other prepaid expenses |
$ 100-$ 200 |
As incurred |
Prior to Opening |
Government agencies, utilities etc. |
|
Professional Fees |
$ 0- $ 750 |
As incurred |
Prior to Opening |
Accountants, attorneys, Advisors |
|
Signage (Note 5) |
$ 0 $ 200 |
As incurred |
Prior to Opening |
Vendor |
|
Insurance |
$ 400-$ 800 |
As incurred |
Prior to Opening |
Insurance company |
|
Additional Funds 3 months (Note 6) |
$ 1,000-$ 5,000 |
As incurred |
Prior to Opening |
Employees, suppliers etc. |
|
TOTAL * (Note 7) |
$32,200 -$50,950 |
* None of the above fees are refundable.
THE EXPENSES LISTED ABOVE ARE MERELY ESTIMATES. YOU ARE ENCOURAGED TO MAKE AN INDEPENDENT INVESTIGATION AND ANALYSIS OF THE POTENTIAL EXPENSES WHICH MAY BE INCURRED IN ORDER TO START THE BUSINESS.
Note 1: Rent and/or Security Deposit. Typically you will be responsible for paying your first
month's rent under the lease or sublease and as well as a security deposit which is generally one month's rent. This is payable to us or our Affiliate only if you sublease the location from us or our Affiliate. Otherwise you will pay this directly to your landlord.
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Note 2: RMU Display and Buildout. This is the estimate of what it will cost you to customize
the cart or buildout the RMU that you will rent from the shopping mall landlord. If you sublease through us or our Affiliate, you will be responsible for the $5,000 buildout that General Growth Properties is currently requiring in order to buildout the RMU. If you decide to build a kiosk instead of using a cart of RMU, your costs will be significantly higher, because you will actually be paying for the building of the kiosk and all of the customization. The prices will range from $3,000.00-530,000.00 depending on the size of the kiosk, the building costs in your location, and the decorations you choose.
Note 3: Inventory and Supplies. You will need to purchase certain inventory and supplies to
operate the Business.
Note 4: Computer Hardware and Software. The computer hardware and software purchases
and requirements are explained in Item 11 below.
Note 5: Sign. You may need a sign depending on the requirements of the shopping mall or
other place where your Business is located.
Note 6: Additional Funds. This estimates the amount of additional expenses you can expect to
incur during the first three months your Business is open. These expenses include payroll costs, benefits, additional supplies, etc., but do not include License Fees and do not include any expenses which are listed in the above chart. These figures are estimates and we cannot guarantee that you will not have additional expenses starting the business. Your costs will depend on factors such as: how much you follow our methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market; the prevailing wage rate; rent levels; competition; and the sales level reached during the initial period.
Note 7: Estimated Total Costs. Costs and expenses can vary depending on factors such as local
economic and market conditions. We based these figures on information provided to us by Wireless Dimensions, Inc., which information was based on its experience since 1998 and our experiences and our Affiliates experiences since March of 2002 to present. Except as described above, none of the fees listed in this Item are refundable. Your financial condition and arrangements negotiated by you and the business decisions you make will all impact the success of your Business and possibly the initial costs which you incur in opening your Business. We cannot assure you that the experience of a particular franchisee will correspond with the information presented above. You should review these figures carefully with a business advisor before you purchase the franchise. We do not offer, either directly or indirectly, financing to you for any of these items except as provided in Item 10.
ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
In order to maintain the quality of products sold by franchisees, we have established standards and specifications for you to follow. Therefore, you must purchase all services, supplies, inventory, equipment, and materials you need to operate the Business from manufacturers, suppliers, or distributors we approve, or from other suppliers who meet our specifications and are able to provide services, supplies, and equipment in accordance with our standards as to quality and service. The suppliers must show their ability to supply the goods to you in a timely and reliable manner. We have imposed these requirements in order to assure quality and uniformity of franchisees products, equipment and services.
Approved suppliers may be designated to you by written memoranda, bulletins, or in the Confidential Operations Manual. We may modify the list of approved brands, equipment, products, materials and suppliers, and will notify you of any modification by sending you a bulletin or supplement to the Confidential Operations Manual.
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At the present time we or our affiliate are the only approved suppliers of the inventory of products that will be sold at the Business. If you want to use alternate suppliers for services, products, equipment, or materials other than those previously approved by us, we may require, at your expense, that samples from other suppliers be delivered to us for further testing before approval. Further, all proposed manufacturers, suppliers or distributors must agree to permit our agents or representatives to inspect their facilities regularly, both initially and from time to time as we may be reasonably require to assure us of the proper production and transportation of the services, supplies or materials you purchase and must agree to our other reasonable requirements necessary to protect the franchise system, the Marks, and our goodwill. We will advise you within a reasonable period of time (no more than 60 days after request and receipt of necessary information) of its approval or disapproval of alternate sources of services, supplies, materials and equipment. We are not required to approve an inordinate number of suppliers of a given item which in our reasonable judgment would prevent our effective supervision of suppliers. We reserve the right in our sole discretion to modify this policy, including, without limitation modifying the number and identity of authorized suppliers of the products.
In addition, we or our Affiliate may sublease the space for the RMU in the shopping mall to you. The agreement you will sign in order to sublease the space from us or our Affiliate is the same or similar as the Sub-License Agreement form in Exhibit IV of the Franchise Agreement.
As we determine consumer preferences and trends in the marketplace, or develop new marketing techniques, technologies, products and services, we may formulate and modify our specifications as we consider appropriate and useful, and notify you through amendments to the Manual, articles, newsletters, or other bulletins.
We may negotiate volume purchase agreements with some vendors for the purchase of goods and equipment needed to operate your Business.
We will derive revenue from products and leasing that you obtain from us. The estimated proportion of these required purchases to all purchases by you of goods and services in establishing and operating the Business represents approximately 90% or more of your total purchases in connection with the establishment of your Business and approximately 90% or more of your overall purchases in operating your Business. During the fiscal year ending December 31, (2003) [20041, our revenues from the sale of products and equipment to franchisees (and licensees of our Affiliate) was approximately ($1,163,523,) [$2,379,656.1 or (83%) [71%1 of our total revenues of ($4,964,523) [$3.364.9431.
In addition to the purchases or leases described above, you must buy and maintain, at your own expense, insurance coverage that we require from time to time and to meet the other insurance-related obligations in the Franchise Agreement. The cost of coverage will vary depending on the insurance carrier's charges, terms of payment and your history. All insurance policies must name us and our affiliate as additional insured parties.
Except as described above, neither we nor our affiliate currently derive revenue or other material consideration as a result of required purchases or leases, however we retain the right to do so in the future. There are currently no purchasing or distribution cooperatives. 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 in the future.
We do not provide or withhold material benefits to you (such as renewal rights or the right to open additional locations) based on whether or not you purchase through the sources we designate or approve. However, purchases of unapproved products and from unapproved vendors in violation of the Franchise Agreement will entitle us, among other things, to terminate your Franchise Agreement.
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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. ______________________
|
OBLIGATIONS |
SECTION IN FRANCHISE AGREEMENT |
ITEM IN OFFERING CIRCULAR |
|
(a) Site selection and acquisition/lease |
Sections II.C and VI.D. |
Items 7, 8, 11 and 12 |
|
(b) Pre-opening purchases/leases |
Sections II.C and VI.D |
Items 5, 6, 7 and 8 |
|
(c) Site Development and other pre-opening requirements |
Sections II.C and VI.D |
Items 6, 7 and 11 |
|
(d) Initial and ongoing training |
Section VI.A |
Item 11 |
|
(e) Opening |
Section VILA |
Item 11 |
|
(f) Fees |
Section V |
Items 5 and 6 |
|
(g) Compliance with standards and policies/Operating Manual |
Section X |
Item 8 and 11 |
|
(h) Trademarks and proprietary information |
Sections VIII and IX |
Items 13, 14 and 17 |
|
(i) Restrictions on products/services offered |
Section VII |
Items 8 and 16 |
|
(j) Warranty and customer service requirements |
Section VII |
Item 16 |
|
(k) Territorial development and sales quotas |
Section II |
Item 12 |
|
(1) Ongoing product/service purchases |
Section VII |
Item 8 |
|
(m) Maintenance, appearance and remodeling requirements |
Sections IV and VII |
Items 9 and 11 |
|
(n) Insurance |
Section VII.D. |
Items 7 and 8 |
|
(o) Advertising |
Section VII.H. |
Items 6 and 11 |
|
(p) Indemnification |
Section XVI |
Item 6 |
|
(q) Owner's participation/ Management/staffing |
Section VII.I |
Item 11 and 15 |
|
(r) Records/Reports |
Section V.G |
Items 6 and 11 |
|
(s) Inspections/audits |
Section V.E. |
Items 6 and 11 |
|
(t) Transfer |
Section XIV |
Items 6 and 17 |
|
(u) Renewal |
Section IV |
Items 6 and 17 |
|
(v) Post-termination obligations |
Section XI |
Item 17 |
|
(w) Non-competition covenants |
Section LX |
Item 17 |
|
(x) Dispute Resolution |
Section XXVI |
Item 17 |
ITEM 10 FINANCING
Generally we do not offer direct or indirect financing. However, under limited circumstances we have provided franchisees with financing for Opening Assistance Fees, Initial Franchise Fees, Transfer Fees and/or opening inventory cost and we reserve the right to do so in the future. We will decide to provide such financing on a case by case basis depending on your creditworthiness, because we have not required security for such financing. If we provide such financing, you would sign a promissory note for the amount being financed at the time you sign the Franchise Agreement. The promissory notes have
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varied in length from 2 months to 12 months. In the past we have not charged any interest on the principal, however we reserve the right to do so in the future. If you fail to pay the amount due, the interest rate will be 18% per annum or the highest interest rate allowable under the law. If you default in the payments under the promissory note we have the right to accelerate the indebtedness and declare the entire amount, with interest, due immediately and you may be required to pay court costs and attorneys' fee for collection and termination of the franchise or other cross defaults. The makers, sureties, endorsers and guarantors of the promissory note waive demand, presentment for payment, notice of non-payment, protest, notice of protest and diligence in bringing suit against any party. The promissory note may be pre-paid in whole or in part at any time without penalty. A default under the promissory note is considered a default under the Franchise Agreement. We do not plan nor is it our practice to sell, assign, or discount to a third party all or part of the promissory note. The promissory note will be personally guaranteed by the individuals who sign the Guarantee for the Franchise Agreement. The promissory note and guarantee will be in the same or similar form as found in Exhibit B. If you default under the promissory note, it is considered a default under the Franchise Agreement and vice versa.
You may sublease the space for an RMU or kiosk in the shopping mall pursuant to a Sub-License Agreement that will be the same or similar to the form found in Exhibit IV of the Franchise Agreement. The term will vary depending upon the term of the License Agreement between General Growth Properties and us ("License Agreement").
You will sign a Sub-License Agreement with us which will, among other things, have the following provisions and requirements:
a. Security Deposit - 1 month rent. [(Section 6 of the Sub-License Agreement.)!
b. Rent - both base rent and percentage rent and sales tax [(Section 4 of the Sub-License Agreement.)!
c. Other monetary obligations including common area maintenance (CAM), taxes or insurance expenses
d. Term - Generally, the term will be the same term as the License Agreement including options to extend the term, if any. Under the License Agreement, General Growth has the right to terminate the License Agreement at any time for any reason. We or our Affiliates have that same right in the Sub-License Agreement. [(Section 2 of the Sub-License Agreement.)!
e. Prepayment Penalty - None
f. Guaranty - The personal guarantee of you and other partners if you are a partnership, or shareholders if you operate as a corporation, or members if you operates as a limited liability company, will be required.
g. Consequences of Default - We have the right to terminate the Sub-License Agreement and remove you from the property. You are also obligated to pay us a late fee of $100 per day for any rent or other monetary obligations not paid when due and interest at the rate of 4% over Prime Rate not to exceed the maximum interest rate allowed by the law in your jurisdiction. The Prime Rate means the prime rate as published by the Wall Street Journal or any successor publication. [(Section 5 of the Sub-License Agreement.)!
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h. The Sub-License contains a waiver by you of any notices regarding default and
termination. [(Section 5 of the Sub-License Agreement.)]
Other than as discussed above, we do not offer direct or indirect financing. We do not guarantee your note, lease or obligations. We do not place any financing with third parties and therefore do not receive direct or indirect payments for placing financing. [See California State Law Addendum.1
ITEM 11 FRANCHISOR'S OBLIGATIONS
Except as listed below, we are not required to provide any assistance to you. Obligations Prior to the Opening of the Franchise
1. Grant you the right to operate the Business in a particular location. (Section II of the Franchise Agreement);
2. Provide you an initial training program for the operation of the Business (Section VI.A of the Franchise Agreement);
3. Provide you with on-site opening assistance when you open your Business (Section VLB. of the Franchise Agreement);
4. Grant you the right and license to use the Marks in connection with the Business. (Section VIII of the Franchise Agreement);
5. Provide specifications for, and approved lists of suppliers for equipment, services, and products. (Section VI of the Franchise Agreement).
Our Obligations During the Operation of the Franchise
During the term of the Franchise Agreement, we will provide the following assistance to you:
1. Furnish you, at your request, with additional guidance and assistance. We reserve the right to charge a reasonable fee. (Section VI of the Franchise Agreement); and
2. Will loan you with a copy of the Confidential Operations Manual ("Manual") once it is completed. (Section X of the Franchise Agreement).
Confidential Operations Manual
We will provide you a copy of the Manual. This Manual is confidential and remains our property. You will operate your business in strict compliance with those operational systems, procedures, policies, methods and requirements found in the Manual which are designated as mandatory and in any supplemental bulletins and notices, revisions, modifications, or amendments thereto, (the "Supplements") all of which are a part of the Manual.
You must treat the Manual, any other manuals or written materials provided by us or our Affiliate for use in the operation of the Business, and the information contained in them, as confidential, and must use all reasonable efforts to maintain this information as secret and confidential. You must not copy, duplicate, record, or otherwise reproduce these materials, in whole or in part, or otherwise make them
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The original documents were scanned as an image. The original file can be downloaded at the link above.