Initial Investment

The following estimated costs are excerpted from the Floods4Less Franchising, Inc. Franchise Disclosure Document (FDD). The minimum financial requirement to open a Floods4Less franchise in the United States is $200,000 net worth with a minimum of $75,000 in liquid assets. For complete investment information and a franchise packet, please request more information.

Item 5: Initial Fees.

The Initial Fee for the purchase of a Floods4Less franchise is $28,500.00 (“Franchise Fee”). You will receive an “Area of Primary Responsibility”. You may enlarge the size of Your “Area of Primary Responsibility”, at franchisor’s discretion and if available, at a price of $280.00 per 1,000 persons (population).  See Items 7 and 12 for more information about the Franchise Fee and “Area of Primary Responsibility”.    If you do not complete the Initial Training Program and the Mold Remediation Course within ninety (90) days after You sign the Franchise Agreement, We can cancel the franchise and retain $20,000.00 from the $28,500.00 Franchise Fee.  Otherwise, no portion of the Initial Fee is refundable.

The franchisor may adjust the minimum initial franchise fee if You are already a franchisee who is being awarded an additional license.  We will reduce the purchase price by $8,500.00 (20%).  An existing franchisee must meet Our qualification criteria in order to be awarded an additional license, which includes achieving a qualifying minimum gross volume, meeting Our current equipment standards, staffing the franchise at specific levels and meeting other financial criteria.

If You are already the owner of an established flood and water damage restoration business, a general contractor or in a related trade or business, the initial franchise fee is adjusted based on Your circumstances, subject to our approval. The initial franchise fee for a “conversion” franchisee will be reduced by 10% for each $100,000.00 of such business’s gross sales in excess of $500,000.00. Franchisor reserves the right to award the first ten (10) franchises at a discount to account for the start-up nature of the franchise system.

You must pay the minimum initial franchise fee and purchase an Equipment and Products Package when You sign the Franchise Agreement.  The form of Franchise Agreement is attached to this disclosure document as Exhibit A. The cost of Your initial training is included in the minimum initial franchise fee.  See Items 6, 7 and 11.  We are not currently offering any financing to Our franchisees for the purchase of Your franchise. See Item 10.

We may occasionally re-license an Area of Primary Responsibility where a franchise was previously located. You may acquire an existing franchise from a current franchisee on terms negotiated between You and Our franchisee, subject to the transfer portions of the selling franchisee’s agreement with Us and subject to meeting Our then-current qualification guide for first-time owners, which is similar to the qualification to be awarded a new franchise.

Item 6: Other Fees.

Type of Fee
Amount
Due Date
Remarks

Royalty
(Notes 2, 3 and 4)

7% of Your weekly Gross Volume from all sources and sales

Payable weekly on Wednesdays by electronic funds transfer

You must pay Us a percentage of the Gross Volume of Your franchise.  See Note 2 for the definition of Gross Volume.  See Note 3 for the definition of Subcontract Volume.  See Note 4 for the Royalty rates and franchisee financial reporting and accounting requirements. Franchise Agreement, § 5.3.

System Marketing Fee
(Item 11)

The greater of $200.00 per week or 1.5% of Your weekly Gross Volume.

Payable weekly on Wednesdays by electronic funds transfer

We may collect the greater of $200.00 per week or 1.5% of Your weekly Gross volume as a System Marketing Fee. We may increase the percentage by up to 1% by giving You 90 days’ written notice.  Franchise Agreement, § 5.4.

Initial Promotional Fee

$5,000.00

Prior to opening

You must spend a minimum of $5,000.00 on initial promotions in Your Area of Primary Responsibility within 60 days following Your opening.  We reserve the right to collect this fee from You prior to opening and to implement the initial promotions in Your Area of Primary Responsibility on Your behalf. Franchise Agreement, § 5.6.

Transfer Fee

$14,250.00 to $28,500.00 currently

Before the transfer is effective

You must pay Us a non-refundable transfer fee equal to one-half (50%) of the then-current Franchise Fee for a transfer to an existing franchisee and equal to the then-current Franchise Fee for a transfer to a party which is not a current franchisee for any transfer of an interest in the franchise or the legal entity owning the franchise.  Franchise Agreement, Article 7 and § 7.4.

Training Fee

 

 

You must attend initial training.  We provide initial training for two (2) owners at no additional charge when You pay Us a Franchise Fee/Transfer Fee.  The initial training includes the eight (8) day Initial Training Program and the four (4) day Mold Remediation Course class held at Our headquarters or at a location selected by Us. See Items 11 and 15 and Franchise Agreement, § 9.1.  Each franchisee must attend the training courses which they schedule.  A fee of $250.00 will be charged for any training course cancellations received less than fourteen (14) days prior to the scheduled date.  See Item 11 and Franchise Agreement, § 9.2.

Additional Training

$2,000.00 per employee for the Initial Training Program and $1,200.00 per employee for the Mold Remediation Course

Two (2) weeks prior to beginning of training

If space is available, We will provide training for Your employees who pay a training fee and sign a Confidentiality Agreement.  See Item 11 and Franchise Agreement, § 9.2.

New Training Programs

We may charge You Our then-current training fee, currently $375 per day, for new training courses

Net ten (10)  days after billing

You may be required to purchase additional equipment, computer programs and other supplies that We deem necessary for any additional training program and/or make other reasonable expenditures necessitated by a change or modification to the System.  There is no training, travel or expense allowance for these programs. Franchise Agreement, Article 9 and §§ 9.1 and 9.2. 

Additional Assistance

$500 per day per trainer (plus all incurred expenses)

Net ten (10)  days after billing

We will provide on-site opening assistance.  See Item 11 and Franchise Agreement, § 9.2.

Computer Consulting

$200.00 per hour

Net ten (10)  days after billing

We do not provide regular computer consulting, but We agree to provide five (5) telephone calls per year to Our technical support department for free.   We may charge a fee for additional technical support. Franchise Agreement, § 9.5. 

Technology Fee

$175.00 per month

Net ten (10) days after billing

FLOODS4LESS FRANCHISING, INC., or Vendors

National Call Center Administrative Fees

$22.00 for each job lead provided by telephone, email or facsimile; an additional $7.50 will be charged if the job lead converts to a job file

Net ten (10) days after billing

You will be charged the then-current fee for jobs dispatched from the National Call Center. Franchise Agreement, § 6.3. 

Website

(No charge for Your basic website page)

Net ten (10) days after billing

You receive a standard website page free of charge.  You may purchase custom add-on pages. See Item 7 and Franchise Agreement, § 6.2. 

 

 

Floods4Less Hub Management System® license

$1,000.00 per year

Net ten (10) days after billing

The Floods4Less Hub Management System® license must be renewed annually after the first year of operations.

Examination /Audit

Actual cost plus 15%; delinquent amounts owed plus interest

Net ten (10) days after billing

If We examine or audit Your franchise records and find that You have underreported Gross Volume, or if You have otherwise underpaid Royalties, Fixed Fees, System Marketing Fees or any other fees or accounts,   You must pay Us 115% of the actual cost of the examination/audit in addition to any delinquent amounts owed, plus a penalty at the rate of 2% per month (or a penalty or interest at the highest rate allowed by law) on all delinquent amounts from the date the same were due.  Franchise Agreement, § 6.6.

Penalty for Dishonored Payment

$100.00 each

Upon demand

We may charge You $100.00 for each dishonored check presented to Us, or each EFT transfer to Us which is declined by Your bank. Franchise Agreement, § 5.5.

Penalties Late  Financial Reporting and Payment Delinquencies

$250.00 late fee plus 2% per month penalty

Upon demand

You must pay Us a $250.00 late fee for each delinquent financial report or for if You fail to fulfill Your financial accounting requirements. We may charge You a $250.00 late fee plus a penalty at the rate of 2% per month (or a penalty or interest at the highest rate allowed by law) on delinquent amounts You owe Us.  We may offset any delinquent amount You owe Us from any amount We may owe You. Franchise Agreement, § 5.5.

Indemnification

Our actual costs plus 15%

Upon demand

You must indemnify Us and hold Us harmless from any fines, claims, judgments, damages, costs and expenses of any nature, including attorneys’ fees and expert witness fees, that We incur as a result of Your franchise.  Franchise Agreement, §§ 6.6, 11.2 and 15.9.

Lost Manuals Fee

$4,000.00

Upon demand

Franchisor reserves the right to charge Franchisee a replacement fee of $4,000.00 if Franchisee destroys or loses the Manuals. Franchise Agreement, § 8.22.

Failure to Complete Training Timely

$20,000.00 plus actual property damage

 

If You fail to complete the Initial Training Program and the Mold Remediation Course within ninety (90) days after the execution of the Franchise Agreement, We may cancel the Franchise License, retain $20,000.00 from the Franchise Fee and refund the balance, less any actual damage You cause to the Equipment or Our property.  Franchise Agreement, § 5.1.

 

Taxes

Amount imposed by Federal, state and local tax authorities on any fees or amounts payable to Us by You

Upon demand

Except for income taxes, You will reimburse Us for any taxes on the amounts You pay Us.  Franchise Agreement, § 8.14.

Renewal Fee

$2,000.00

Sixty (60) days before renewal

You must pay Us a $2,000.00 renewal fee when You renew Your Franchise Agreement.  If You do not complete the renewal requirements by Your expiration date, You will pay an additional $500.00.  Franchise Agreement, Article 4 and § 4.2 (i).  See Item 17 for renewal conditions and requirements.

Franchise Notes

  1. Technology Fee.  This fee covers Your costs for hosting all of Your web-based applications in the Floods4Less Hub Management System™, including up to 10 gigabytes of data storage.  This fee is imposed by Us, payable to Us and collected by Us and is non-refundable. A portion of these fees will be paid by Us to E-claim, LLC.com.

    2.   National Call Center Administrative Fees.  These fees are imposed by Us, payable to Us and collected by Us and are non-refundable. A portion of these fees will be paid by Us to E-claim, LLC.com.   Until the Areas of Primary Responsibility of all franchisees cover a geographic region (a city or county, for example), the franchisor will direct calls received at the National Call Center to the franchisee whose Area of Primary Responsibility is closest to the location of the prospective job.

    3.  Floods4Less Hub Management System® License. The Floods4Less Hub Management System® license fee for Your first year of operations is included in Your initial equipment package.  This fee is imposed by Us, payable to Us and collected by Us and is non-refundable. A portion of this fee will be paid by Us to E-claim, LLC.com. 

    4.     Gross Volume means all revenue of the franchise from all services rendered or performed from, through, by or on account of the operation of the franchise, whether directly or indirectly through the franchisee or any affiliate of the franchisee or by a subcontractor (See Note 3) or other person or entity the franchisee may refer to or contract with, and all other income of any kind and nature related to the franchise, including referral fees, finder’s fees and sale of products identified from month to month by all receipts together with the total of any billing on which a partial payment has been received.  All billings, whether collected directly by the franchisee or collected by another person or entity, shall be included in Gross Volume.  Franchise Agreement, § 5.2(a). (See Note 4. below regarding franchisee financial reporting and accounting requirements.)

    5.     Subcontract services means all outside services performed by an independent third party contractor retained by franchisee.

    6.     See Franchise Agreement, § 5.3.  The Royalty and Fixed Fees are collected weekly calculated based on seven percent (7%) of weekly Gross Volume from cleaning, deodorization, damage restoration and related services. The Royalty and Fixed Fees shall be reported to franchisor weekly via facsimile or email and paid by franchisee to franchisor by electronic funds transfer (“EFT”). Franchisee shall provide monthly to franchisor and franchisor’s auditors, as designated in writing from time to time by franchisor, complete financial statements, working trial balance and general ledger.  Franchisee shall provide electronic access to franchisee’s general ledger via the internet to franchisor and franchisor’s auditors, as designated in writing from time to time by franchisor in furtherance of the franchisee’s financial reporting and accounting requirements.

    7.     The imposition of liquidated damages may be restricted in Your state.

Item 7: Estimated Initial Investment.

Type of Expenditure
Actual or Estimated Amount (Low)
Actual or Estimated Amount (High)
Method of Payment
When Due
To Whom Payment is to be Made

Franchise Fee

$ 28,500
 (Note 1)

$ 28,500
(Note 1)

Lump Sum

At signing of Franchise Agreement

FLOODS4LESS FRANCHISING, INC.

Lease and Utility Security deposits

$ 4,000
(Note 2)

$ 6,000
(Note 2)

As Incurred by You

Before Opening

First month’s rent and lease security  deposit, Suppliers, Phones and phone services, Internet,

Rent
(3 months)

$ 6,000
(Note 2)

$ 9,000
(Note 2)

As Incurred by You

Before Opening

 

Equipment Package

$ 64,000
(Note 3)

$ 74,000
(Note 3)

Lump Sum

Before Opening

FLOODS4LESS FRANCHISING, INC., or Vendors

Ancillary Equipment

$ 3,200

$ 5,000

As Incurred by You

Before Opening

FLOODS4LESS FRANCHISING, INC., or Vendors

Vehicle

$ 5,000.00
(Notes 3 and 4)

$ 40,000.00
(Notes 3 and 4)

Lump sum or financed by a third party

Before Opening

Franchisee will need a van for mounting the water extraction system and transporting equipment and personnel to job sites.  The range of expenditure depends on whether franchisee owns, leases or purchases a used van or new van.  Franchisee will pay for or finance the van purchase.

Signage

$ 800

$ 850

Lump Sum

Before Opening

FLOODS4LESS FRANCHISING, INC, Inc. or Vendors

Furniture & Fixtures

$ 950

$ 1,045

As Incurred by You

Before Opening

Vendors

Computer Hardware & Software

$ 2,050

$ 3,750

As Incurred by You

Before Opening

Vendors

Xactimate Software License Fee

$ 125

$ 170

As Incurred by You

Monthly

Xactware Solutions, Inc. (vendor)

Office Equipment & Supplies

$ 475

$ 523

As Incurred by You

Before Opening

Vendors

Insurance

$ 2,500

$ 5,000

As Incurred by You

Before Opening

Vendors

Forms & Stationery Package

$ 700

$ 770

As Incurred by You

Before Opening

FLOODS4LESS FRANCHISING, INC, Inc. or Vendors

Opening Inventory & Supplies

$ 4,750
(Notes 5 and 6)

$ 5,225
(Notes 5 and 6)

As Incurred by You

Before Opening

Vendors

Uniforms

$ 880

$ 1,320

As Incurred by You

Before Opening

FLOODS4LESS FRANCHISING, INC, Inc. or Vendors

Business Licenses

$ 450

$ 495

As Incurred by You

Before Opening

Municipal Authorities

Association Dues

$ 675

$ 743

As Incurred by You

Before Opening

Vendors

Professional Fees

$ 2,000

$ 3,500

As Incurred by You

Before Opening

Vendors

Miscellaneous Opening Costs

$ 2,750
(Notes 5 and 6)

$ 5,000
(Notes 5 and 6)

As Incurred by You

Before Opening

Vendors

Training Expenses

$ 2,531

$ 7,294

As Incurred by You

Before Opening

Vendors

 

Initial Marketing Expenditures

$ 5,000

$ 5,000

As Incurred by You

Before Opening

FLOODS4LESS FRANCHISING, INC., or Vendors

Technology Fee

$ 525

$ 525

$ 175 per month

Monthly

FLOODS4LESS FRANCHISING, INC., or Vendors

Additional Funds / Working Capital

$ 17,250
(Notes 5 and 6)

$ 34,500
(Notes 5 and 6)

As Incurred by You

Before Opening

Vendors

TOTAL ESTIMATED INITIAL INVESTMENT

$ 155,111
(Notes 5 and 6)

$ 238,210
(Notes 5 and 6)

As Incurred by You

 

 

Notes:

  1. The Franchise Fee may be higher if You have enlarged Your Area of Primary Responsibility. (You may enlarge the size of Your Area of Primary Responsibility, at franchisor’s discretion, and if available, at price of $280.00 per 1,000 persons (population).) We do not finance any fees. See Items 5, 7 and 12 for additional information about the Franchise Fee.
  2. If You do not currently lease or own adequate shop space, You must lease or buy space to operate Your franchise outlet in Your Area of Primary Responsibility.  Typical locations are light industrial and commercial areas.  The typical franchise outlet should have about 2000 square feet. You may want to create separate office space and warehouse space.  Rent is estimated to be between $2,000.00 and $3,000.00 per month depending on factors such as size, condition and location of the leased premises.  Landlords usually require one month’s rent in advance and one month’s rent as a security deposit. Landlords may give You a small amount of money for tenant improvements, require You to pay for Your own or build them at no cost, depending on Your negotiation of the lease terms. Before signing a multi-year lease, You should consider carefully whether You will have sufficient space for Your operations over the term of the lease and the need for possible expansion of Your operations.  We have no experience in the lease, sale or purchase of commercial real estate and cannot estimate the cost of Your franchise outlet space if You were to buy instead of lease it.  We are not advising You whether to lease or purchase space to operate Your franchise outlet; consult your legal and financial advisors.
  3. The Equipment Package cost ($64,000.00) is allocated to equipment and the Floods4Less Hub Management System® being supplied by the franchisor. The equipment is comprised of the truck-mounted water extraction [vacuum] system plus an allowance of up to $2,000.00 for its installation paid for by the franchisor to a third party contracted with by franchisee, or credited to franchisee by franchisor; fans (4), dehumidifiers (4); and one (1) HEPA air scrubber.  If the franchisee purchases additional equipment, the initial investment could be higher ($74,000.00).
  4. Franchisee will need to purchase or lease a van for mounting the water extraction system and transporting equipment and personnel to job sites.  Franchisor requires that the van have the same or substantially the same specifications as the Chevrolet Express 2500 EXT WB Work Van HD.  The range of expenditure depends on whether franchisee owns, leases or purchases a used van or new van.  Franchisee will pay for or finance the van purchase.  Franchisor reserves the right to approve the van and other vehicles used by franchisee in the business. Franchisee will receive an allowance from franchisor to cover the usual cost of mounting the water extraction system in the franchisee’s van.
  5. This estimates Your initial start up expenses.  These expenses include payroll costs, excluding salary or draws for the owners of the franchise.  These figures are estimates.  We do not guarantee that You will not have additional expenses starting the business.  Your costs will depend on factors, many of which are beyond Our and Your control, for example, Your management skill, experience and business acumen; local economic conditions; the local market for Your services; prevailing wages and the availability of qualified employees; competition; and reaching a level of sales that makes Your business profitable.
  6. WE HAVE RELIED ON THE OVER FIVE (5) YEARS OF OPERATING HISTORY OF OUR PREDECESSOR AND AFFILIATE, FLOODS4LESS, INC., AND ON THE ELEVEN (11) YEARS OF EXPERIENCE OF OUR PREDECESSOR AND AFFILIATE, TSC RESTORATION, INC., IN COMPILING THESE ESTIMATES.  THE TOTAL AMOUNT INCLUDES A ROUGH ESTIMATE OF YOUR REAL ESTATE COSTS.  YOU SHOULD REVIEW THESE FIGURES CAREFULLY WITH YOUR BUSINESS ADVISOR BEFORE MAKING ANY DECISION TO PURCHASE THE FRANCHISE. WE DO NOT OFFER DIRECT OR INDIRECT FINANCING TO FRANCHISES FOR ANY OF THE FOREGOING ITEMS.