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WAI-3175240v6
FRANCHISE DISCLOSURE DOCUMENT
CROWNING TOUCH SENIOR MOVING SERVICES, INC.
CROWNING TOUCH SENIOR MOVING
SERVICES®, INC. 6704 Williamson Road, NW
Roanoke, VA 24019
(540) 982-5800
www.crowningtouchusa.com
The franchisee will establish and operate a Crowning Touch Senior Moving Services®,
Inc. (“Crowning Touch”) business specializing in providing moving assistance and
related needs, such as consultations, furniture placement, packing, appraisals, storage,
cleaning, consignment, auctions, and real estate services offered primarily to senior
citizens (the “Franchised Business”).
The total investment necessary to begin operation of a Crowning Touch franchise is
$279,000 to approximately $516,500. This includes the initial franchise fee, ranging
from $26,000 to approximately $50,000 that must be paid to the franchisor or affiliate.
This disclosure document summarizes certain provisions of your franchise agreement
with us (“Franchise Agreement”) and other information in plain English. Read this
disclosure document and all accompanying agreements carefully. You must receive this
disclosure document at least 14 calendar days before you sign a binding agreement with,
or make any payment to, the franchisor or an affiliate in connection with the proposed
franchise sale. NOTE, HOWEVER, THAT NO GOVERNMENT AGENCY HAS
VERIFIED THE INFORMATION CONTAINED IN THIS DOCUMENT.
The terms of your contract will govern your franchise relationship. Do not rely on the
disclosure document alone to understand your contract. Read all of your contract
carefully. Show your contract and this disclosure document to an advisor, like a lawyer
or an accountant.
Buying a franchise is a complex investment. The information in this disclosure document
can help you make up your mind. More information on franchising, such as “A
Consumer’s Guide to Buying a Franchise,” which can help you understand how to use
this disclosure document, is available from the Federal Trade Commission. You can
contact the FTC at 1-877-FTC-HELP or by writing to the FTC at 600 Pennsylvania
Avenue, NW, Washington, DC 20580. You can also visit the FTC’s home page at
www.ftc.gov for more information. Call your state agency or visit your public library for
other sources of information on franchising.
There may also be laws on franchising in your state. Ask your state agencies about them.
Issuance Date: September 2014.
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STATE COVER PAGE
Your state may have a franchise law that requires a franchisor to register or file
with a state franchise administrator before offering or selling in your state.
REGISTRATION OF A FRANCHISE BY A STATE DOES NOT MEAN THAT THE
STATE RECOMMENDS THE FRANCHISE OR HAS VERIFIED THE
INFORMATION IN THIS DISCLOSURE DOCUMENT.
Call the state franchise administrator listed in Exhibit B for information about the
franchisor or about franchising in your state.
MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW
UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE
TO SIGN A NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN
ORDER TO CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY,
CONSIDER WHAT RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY,
AND WHAT TERMS YOU MIGHT HAVE TO ACCEPT IN ORDER TO RENEW.
Please consider the following RISK FACTORS before you buy this franchise:
1. THE FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES
WITH US BY ARBITRATION ONLY IN VIRGINIA. OUT-OF-STATE
ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE
SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO
ARBITRATE WITH US IN VIRGINIA THAN IN YOUR OWN STATE.
2. THE FRANCHISE AGREEMENT STATES THAT THE LAW OF THE STATE
OF VIRGINIA GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT
PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW.
YOU MAY WANT TO COMPARE THESE LAWS.
3. IF YOU FAIL TO MEET PERFORMANCE STANDARDS, WE MAY
TERMINATE YOUR FRANCHISE AGREEMENT OR TERMINATE YOUR
EXCLUSIVITY RIGHTS FOR THE TERRITORY, REDUCE THE SIZE OF
THE TERRITORY, OR TERMINATE YOUR SUBFRANCHISING RIGHTS.
THESE REMEDIES ARE NOT MUTUALLY EXCLUSIVE.
3. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
We may use the services of one or more FRANCHISE BROKERS or referral
sources to assist us in selling our franchise. Any franchise broker or referral source
we use represents us, not you and we may pay this person a fee for selling our
franchise or referring you to us. You should be sure to do your own investigation of
the franchise.
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STATE EFFECTIVE DATES
The following states require that the disclosure document be registered or filed with the state, or
be exempt from registration: California, Hawaii, Illinois, Indiana, Maryland, Michigan,
Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and
Wisconsin.
This Franchise Disclosure Document is registered, on file or exempt from registration in the
following states having franchise registration and disclosure laws, with the following effective
dates:
STATE EFFECTIVE DATE
California N/A
Hawaii N/A
Illinois N/A
Indiana N/A
Maryland N/A
Michigan N/A
Minnesota N/A
New York N/A
North Dakota N/A
Rhode Island N/A
South Dakota N/A
Virginia N/A
Washington N/A
Wisconsin N/A
WAI-3175240v6
ITEM 1. THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS, AND AFFILIATES ................ 1
ITEM 2. BUSINESS EXPERIENCE ................................................................................................................... 5
ITEM 3. LITIGATION ....................................................................................................................................... 6
ITEM 4. BANKRUPTCY ................................................................................................................................... 6
ITEM 5. INITIAL FRANCHISE FEE ................................................................................................................ 6
ITEM 6. OTHER FEES ........................................................................................................................................ 7
ITEM 7. ESTIMATED INITIAL INVESTMENT ........................................................................................... 10
ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES ........................................... 12
ITEM 9. FRANCHISEE’S OBLIGATIONS .................................................................................................... 15
ITEM 10. FINANCING ........................................................................................................................................ 16
ITEM 11. FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND
TRAINING……… .................................................................................................................................... 16
ITEM 12. TERRITORY ....................................................................................................................................... 23
ITEM 13. TRADEMARKS .................................................................................................................................. 25
ITEM 14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION .......................................... 28
ITEM 15. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISED
BUSINESS ................................................................................................................................................. 30
ITEM 16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL ................................................... 31
ITEM 17. RENEWAL, TERMINATION, TRANSFER & DISPUTE RESOLUTION .................................. 31
ITEM 18. PUBLIC FIGURES.............................................................................................................................. 35
ITEM 19. FINANCIAL PERFORMANCE REPRESENTATIONS ................................................................ 35
ITEM 20. OUTLETS AND FRANCHISEE INFORMATION ......................................................................... 35
ITEM 21. FINANCIAL STATEMENTS ............................................................................................................. 37
ITEM 22. CONTRACTS ...................................................................................................................................... 38
ITEM 23. RECEIPTS ........................................................................................................................................... 38
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EXHIBITS
EXHIBIT A STATE SPECIFIC ADDENDUM
EXHIBIT B LIST OF STATE ADMINISTRATORS AND AGENTS FOR SERVICES OF PROCESS
EXHIBIT C FORM OF FRANCHISE AGREEMENT
EXHIBIT D TABLE OF CONTENTS FROM MANUAL
EXHIBIT E ROSTER OF FRANCHISEES
EXHIBIT F FINANCIAL STATEMENTS
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ITEM 1. THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS,
AND AFFILIATES
To simplify the language in this disclosure document, “Crowning Touch,” “we,” “us” or
“our” means Crowning Touch Senior Moving Services®, Inc., the franchisor. “You”
means the individual, corporation, or other entity that buys a Crowning Touch franchise.
CROWNING TOUCH, ITS PARENTS, PREDECESSORS AND AFFILIATES
Crowning Touch, a Virginia corporation, was incorporated on August 17, 1999, with its
principal place of business located at 6704 Williamson Road NW, Roanoke, Virginia
24019. We and our affiliates do business under the names Crowning Touch, Crowning
Touch USA, Crowning Touch Estate Shoppe, Crowning Touch Auction House, and
Crowning Touch Senior Moving Services®, Inc. and Crowning Touch Real Estate
Services®.
Crowning Touch is an affiliate of Crowning Touch Group, Inc. (“CTGI”), a Virginia
corporation, whose principal address is also 6704 Williamson Road NW, Roanoke,
Virginia 24019. CTGI was incorporated in August 1999, and serves as an intellectual
property holding company. CTGI licenses to Crowning Touch the service marks and
other intellectual property used as part of the Crowning Touch System (collectively, the
“Crowning Touch IP”).
We are affiliated with Premiere Relocation Services, Inc. (“Premiere”), a Virginia
corporation, which was founded in April of 1996 by our President, Linda Balentine.
Premiere is also currently located at 6704 Williamson Road NW, Roanoke, VA 24019.
Premiere offers services similar to those offered by Crowning Touch Franchised
Businesses, and its Roanoke office is the model upon which the Crowning Touch System
is built. It does business as Crowning Touch Senior Moving Services®.
AGENT FOR SERVICE OF PROCESS
Our agents for service of process are listed in Exhibit B to this disclosure document.
OUR BUSINESS OPERATIONS
We offer and grant Franchised Businesses to qualified candidates for the operation of a
Crowning Touch business. We do not currently operate a business of the type being
franchised; however, our affiliate, Premiere, has operated a business of the type being
franchised since 1996. We are not presently engaged in business activities other than the
development of the Crowning Touch System and the offer, sale and support of
Franchised Businesses.
We have entered into an exclusive worldwide license with CTGI to use and license others
to use the service mark Crowning Touch Senior Moving Services® as well as the
Crowning Touch System.
WAI-3175240v6 2
Neither our parents, predecessors, affiliates nor us have offered franchises in other lines
of business.
THE CROWNING TOUCH FRANCHISED BUSINESS
As a franchisee, you will establish and operate a Crowning Touch business specializing
in the moving and storage needs of senior citizens. Certain services offered by the
Franchised Business will also be appropriate for young families and commercial
accounts, allowing you to capture a full range of clientele.
You will be licensed to use the Crowning Touch service mark and logo as well as related
trademarks, service marks, logos, and slogans (the “Proprietary Marks”) and the
proprietary operating system (“System”) developed by us and CTGI for the operation of a
Franchised Business in a Designated Territory. You will also be licensed to utilize our
confidential operations and procedures manual (the “Manual”), which sets forth the
standards and specifications for the management and operation of the Franchised
Business.
THE CROWNING TOUCH SYSTEM
The System encompasses procedures for providing a comprehensive package of moving
and storage needs to clientele. More specifically, Franchised Businesses will offer the
following services:
Consultations to review clients’ moving options;
Computerized furniture placement (fitting a client’s
existing furniture into a new floor plan);
Careful and efficient packing and unpacking of everything
from basement to attic;
Local and long distance moving of all household goods;
Disconnection and reconnection of electronics;
Estate purchasing, consignment and auction services;
Cleaning services for vacated residences;
Storage of household goods;
Mirror and picture hanging services; and
Real estate sales and services
Our retail components, the consignment shop open 6 days a week, the auction house,
featuring monthly auctions, and the real estate division are the hallmarks of our franchise
and set us apart from our competition within the moving industry. Our expanded service
menu rounds out the traditional moving calendar, providing work and improved cash
flow all year round. Most seniors are downsizing and need to disperse their assets. We
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provide 2 separate options so that between the consignment shop and the auction house
we can sell almost anything they no longer want and split the proceeds with them 50/50.
Our auction house utilizes our proprietary, copyrighted software and features an auction
system without an auctioneer. Clients bid in house or bid online, utilizing our convenient
Browse & Bid™ system, which saves the expense of an auctioneer. This service helps
offset the cost of a client’s move and is a real stress reliever. The real estate services
dimension provides the important and convenient “one stop shop” approach to a senior
move. We specialize in selling homes “as is”, relieving the senior of the additional
pressure to modify a home for sale while they are living in it. For the sake of convenience
and accountability, the entire move is then strategized under one umbrella, from the pack
and move, to selling the items they no longer want, to cleaning the home and finally
selling the residence. The marketplace has never had such a seamless, all inclusive
approach to moving before, available from one moving company.
THE MARKET
Crowning Touch services are offered to the general public for their home and business
use. Franchised Businesses will serve rapidly expanding markets as the general
population ages. You may provide services to any market segment, including the general
public, residential families and commercial businesses. We do not require that you
provide services to any market segment other than senior citizens, but it is highly
recommended as a means of increasing total sales volume. Other sources of revenue for
your business are described in detail in the Manual.
REGULATORY MATTERS
There are no direct federal or state regulations that affect the operation of the business to
be conducted by Crowning Touch franchisees; however, franchisees may be subject to
certain labor rules, auction house licenses, and trucking licensing requirements applicable
to moving businesses (which may vary from jurisdiction to jurisdiction). Franchised
Businesses are subject to federal, state and local rules and safety regulations applicable to
businesses in general. Please check with a reputable source, your lawyer or state
regulatory department, for specific laws and regulations that apply to your Designated
Territory.
The United States enacted the “Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001” (the “USA
Patriot Act”). We are required to comply with the USA Patriot Act. To help us comply
with the USA Patriot Act, we ask you in the Franchise Agreement to confirm for us that
neither you nor your directors, officers, shareholders, partners, members, employees, or
agents are suspected terrorists or persons associated with suspected terrorists or are under
investigation by the U.S. government for criminal activity. You may review the Patriot
Act and related regulations at: http://www.treasury.gov/offices/enforcement/ofac/sdn.
WAI-3175240v6 4
COMPETITION
Your competitors will include other moving companies (local and national in size) as
well as local casual laborers, such as “do-it-your-selfers.” As of the date of this
disclosure document, we are not aware of any other moving company offering the
comprehensive services offered by Crowning Touch Franchised Businesses.
PRIOR EXPERIENCE
We do not currently operate a business of the type being franchised; however, our
affiliate, Premiere, has operated a business of the type being franchised since 1996. We
have built our System and business model around the experience and expertise of our
affiliate, Premiere.
CORPORATE ENTITY
If you are a business entity, you must be a newly organized corporation, limited liability
company, or partnership and your operating agreement or corporate bylaws must at all
times state that your activities are confined exclusively to developing and operating
Franchised Businesses according to the Franchise Agreement. However, if you do not
satisfy these requirements when you sign the Franchise Agreement, then you must assign
the Franchise Agreement and all of your rights to a corporate entity within two (2)
months from the date of the Franchise Agreement.
DEFINITIONS
As used in the Franchise Agreement and in this disclosure document the term “Owner”
means any person or entity holding a direct or indirect, legal or beneficial ownership
interests in you, as specified in the applicable agreement. The term “Owner” also refers
to any person who has any other direct or indirect property rights in you, the Franchise
Agreement, or the Franchised Business.
Certain provisions of the Franchise Agreement apply only to certain Owners who are
designated as “Principal Owners.” A Principal Owner is an Owner having an equity
ownership interest in you, of 10% or more, regardless of whether the Owner is entitled to
vote, and any other Owner who is designated in the Franchise Agreement as a Principal
Owner.
Certain provisions of the Franchise Agreement and other agreements restrict you and/or
your Principal Owners from participating in certain “Competing Businesses.” As used in
those agreements and in this Disclosure Document, a “Competing Business” is a business
other than a Franchised Business that: (a) provides moving or relocation services in a
business format similar to the Crowning Touch System that includes retail and real-estate
services; or (b) grants or has granted franchises or licenses or establishes or has
established joint ventures for the development and/or operation of such a business; or (c)
WAI-3175240v6 5
whose method of operation or trade dress is similar to that employed in the System. For
avoidance of doubt, if you already operate a moving or relocation business, your business
is not a “Competing Business” so long as you do not add to your business format our
proprietary services contained within the Crowning Touch System, such as our retail and
real-estate services.
ITEM 2. BUSINESS EXPERIENCE
LINDA J. BALENTINE, PRESIDENT
Linda Balentine has served as President of Crowning Touch since its inception in August
1999. She is also the founder and, since 1996, the President of our affiliate, Premiere
Senior Relocation Services d/b/a Crowning Touch Senior Moving. As President she has
been recognized by the Chamber of Commerce as Small Business Person of the Year and
led Crowning Touch to 12 Gold and Platinum Awards for Best Moving Company. She is
also the recipient of the National Enterprise Award from the American Moving and
Storage Association in 2011. Prior to this, from February 1992 until April 1996, Ms.
Balentine was President of Woodpecker Products Inc. in Roanoke, Virginia. As head of
product development she formulated a process that she successfully patented. She holds a
U.S. utility patent that was the basis for a plant established in China to manufacturer
product for a wood products manufacturer that licensed her technology. During the
previous 12-year period from ’80-’92 she served as a national sales manager with
Woodpeckers Ltd., a manufacturer of mailboxes and lampposts, with over 165
representatives in the continental United States reporting to her. She was responsible for
storewide programs with Lowes, Home Depot, Hechinger, Price Club, Costco etc. She
supervised packaging design and in-store displays as well as developed all of the
promotional material. She championed her products at National Hardware shows
winning Best in Show at McCormick Place in Chicago for both her booth and her Trac-
mailbox system. She supervised an all-encompassing catalog sales program with Plow
and Hearth, Orvis, Gander Mt., John Deere, Southern States, etc. She eventually sold
that company to the Solar Group, the largest mailbox manufacturer in the U.S. She is a
graduate of Duke University and a former English teacher.
L. DAWN SHAW, CONSIGNMENT MANAGER
Dawn has been extensively involved in all aspects of company retail sales since 2005.
She has managed the consignment store and the auction house since that time. Dawn is
currently responsible for the management and oversight of both running operations. She
directs the flow of consignment merchandise between both profit centers. Additionally,
Dawn has more than 30 years of experience in retail management and antique sales and is
well versed in Crowning Touch’s accounting practices as well as HR procedures.
KARI L ROHS, OPERATIONS MANAGER
Kari Rohs has been an employee at Crowning Touch Senior Moving for 8 years. She has
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served Crowning Touch in every capacity and position available. She is a trained packer,
moving coordinator, office manager, consignment shop assistant, and adjunct staff
member at the auction house. Kari has a firm understanding of Crowning Touch and how
each profit center works in tandem. Kari has authored many of the policies and
procedures that Crowning Touch uses today and has been instrumental in the growth of
the business. In addition to the foregoing, she also serves as an ambassador at various
shows and conferences on the eastern seaboard.
ANDREW GENTILUOMO, FRANCHISE DEVELOPMENT CONSULTANT
Andrew Gentiluomo is an experienced financial professional at National Financial
Services, a full-service financial services firm. His years of experience in the financial
services industry have included a special focus on comprehensive wealth management,
estate, and business planning strategies. Andrew will be providing strategic planning
assistance as we develop our franchise operation. Prior to becoming a financial
consultant, Andrew served as a business development executive for The Egg Factory,
LLC, a technology research and development firm. He is also credited with founding a
successful e-commerce business and managing the international side of a $40 million
packaging firm with clients in Asia, Europe and Latin America. Andrew earned a BS
degree in industrial engineering from Hofstra University in Long Island, NY, and a
Masters of Engineering Management degree and MBA from Christian Brothers
University in Memphis, TN.
ITEM 3. LITIGATION
No litigation is required to be disclosed in this disclosure document.
ITEM 4. BANKRUPTCY
No bankruptcy information is required to be disclosed in this disclosure document.
ITEM 5. INITIAL FRANCHISE FEE
The initial base franchise fee for the right to operate a single Crowning Touch Franchised
Business is $26,000. The total franchise fee is dependent upon the general population of
the designated territory, as well as the population of the clientele most likely to use your
services. The total franchise fee is calculated as follows: 1 cent per capita for the general
population up to age 64, plus 30 cents per capita for the population aged 65 and over.
See Item 12 of this disclosure document for more information regarding designated
territories.
EXAMPLE:
A prospective franchise owner wishes to open a Crowning Touch franchise for the
Virginia territories of the City of Richmond and its adjoining counties of Henrico and
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Chesterfield. These areas have population demographics (based on the 2010 U.S.
Census) as follows:
General Population (to 64 yrs.) Over 65 yrs.
City of Richmond 239,488 22,619
Henrico County 365,334 37,924
Chesterfield County 380,711 32,878
985,533 93,421
x .01 x .30
$9,855.33 $ 28,026
The demographically calculated portion of the franchise fee in this example is $37,881.33
for an area of more than 1 million people. Add that amount to the base franchise fee of
$26,000 for a total franchise fee of $63,881.33.This pricing structure reflects our intent to
assure that the Franchisee’s territory has a viable market. THE DEMOGRAPHICS
OUTLINED ABOVE AND IN THE CALCULATION OF FRANCHISE FEES
SHOULD NOT BE CONSTRUED AS A DIRECT OR INDIRECT GUARANTEE
OF SUCCESS.
If you are already a Crowning Touch franchisee, and you wish to obtain an additional
Franchised Business, the initial franchise fee for that additional Franchised Business may
be reduced by $1,000 per Franchised Business already operated by you. This reduced
initial franchise fee will only be available if you (1) are in full compliance with all
existing agreements with us, our affiliates and/or suppliers, (2) meet the then-current
annual gross volume goals set by us and (3) meet certain other qualifications for
franchisees that we periodically set.
If you are already a Crowning Touch franchisee, and you wish to add on additional
protected territories adjacent to your existing designated territory, the License
Modification Fee of $1,000 shown in Item 6 herein will apply, in addition to the
calculation of additional population criteria stated above. The requirements of full
compliance, gross volume achievement, and other qualifications noted above would also
have to be met. We reserve the right to withhold granting of additional territories if, in
our sole judgment, such grant would provide undue advantage or disadvantage to the
parties involved.
The non-refundable initial franchise fee is (1) payable in full upon the execution of the
Franchise Agreement (attached as Exhibit A to this disclosure document) and (2) deemed
fully earned by us upon receipt.
ITEM 6. OTHER FEES
WAI-3175240v6 8
Name of Fee
Amount Due Date Remarks
(Note 1)
Royalty Fee 6% of Gross
Revenues
(Note 2)
Due biweekly All payments will be made by
electronic funds transfer
(“EFT”). Royalty may be
reduced at certain sales
performance thresholds, as
determined by Franchisor, in
our sole discretion.
Advertising and
Promotion Fund
1% of Gross
Revenues
Same as Royalty Fee See Item 11 “Advertising” for
full details.
Technology Fee Estimated to be
$1,000 to $1,500
per month
Prior to opening To pay for the use of
Franchisor-provided
software, such as the POS
System and access to the
Crowning Touch Intranet
system, Crown Net.
Transfer Fee $10,000 plus our
reasonable legal
fees and our out-of-
pocket expenses.
Before transferring Due if you or your Owner
transfers an interest in you,
the Franchise Agreement, or
the Franchised Business as
permitted in the Franchise
Agreement (Note 3).
Transfer
Commission
10% of gross
purchase price
Before transferring This commission is due,
where allowed by law, if we,
directly or indirectly, through
one of our representatives or
another franchisee, refer to
you the purchaser of your
business.
Start-Up Training
Fee for Additional
Attendees
$1,000 per
additional
permitted attendee
Before attendance at
training
This fee is charged for
attendees permitted at Start-
Up Training in excess of you
and one additional
manager/employee.
Additional Training
Fee
$500 per day per
person
Prior to training This fee is charged for
training programs (other than
Start-Up Training) we may
provide either on-site or at
our designated facility; these
programs may be mandatory,
up to 2 per year.
Franchise Renewal
Fee
$1,000 Upon execution of new
Franchise Agreement
Due only if you elect to
renew the Franchise
Agreement and meet all other
pre-conditions for renewal.
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Name of Fee
Amount Due Date Remarks
(Note 1)
License
Modification Fee
$1,000 Upon execution of
modification
This fee is due if you request,
and we accept, changes to the
Franchise Agreement
Restocking Fee 15% of invoice
price, plus shipping
and handling
Due upon return of
merchandise
We reserve the right to charge
this fee for returned
equipment or other items
purchased from us.
Referral Fee Up to 15% of gross
invoice charge to
customer
As agreed We reserve the right to charge
this fee for any
moving/storage job we refer
to you that is located outside
of your Designated Territory.
An additional 20% may be
charged, if we provide the job
estimate or manage the job.
Territory Policy
Violations/
Liquidated
Damages
$500 to $5,000 per
violation
Due only if violations
occur
In addition to any other rights
we have, we reserve the right
to charge these fees in our
discretion for each violation
of our policies or of service
outside your Designated
Territory.
Audit Fee Cost of the audit Upon receipt of
invoice
Due if audit is required due to
your failure to submit
required reports or
information, or if the audit
indicates an underpayment of
more than 5%.
Interest on Late
Payments
(1) the highest rate
permitted by
applicable law, not
to exceed 18%
Annual Percentage
Rate (compounded
monthly); and (2)
an administrative
fee not to exceed
5% of the amount
owed
As incurred Due on any amount you owe
us that is not received when
due, regardless of the reason
or if payment is in dispute.
Replacement Fee
for Manual
$1000 per volume As incurred Due only if the Manual is
lost, stolen, damaged, etc.
Note 1. All fees in this Item 6 are imposed by and are payable to us. All fees are
nonrefundable.
Note 2. “Gross Revenues” are defined as all sales generated through the Franchised
Business including fees for any products or services sold, whether for cash or credit (regardless of
WAI-3175240v6 10
ability to collect), and income of every kind or nature related to the Franchised Business. Gross
Revenues does not include any sales tax or other taxes collected from customers by you for
transmittal to the appropriate taxing authority.
Note 3. If the transfer is to an entity in which you or your Owners have a 51% or greater
ownership interest; and the transfer will not result in any change in the daily operational control of
the Franchised Business, or if the transfer is part of a family trust, and if you have obtained our
written approval as the Franchise Agreement requires, then you must reimburse us only for our
reasonable legal fees and expenses.
ITEM 7. ESTIMATED INITIAL INVESTMENT
YOUR ESTIMATED INITIAL INVESTMENT AS THE PROPOSED OPERATOR OF A
FRANCHISED BUSINESS WITHOUT AN
EXISTING MOVING SERVICE BUSINESS
Type of Expenditure Amount Method of
Payment
When Due To Whom
Payment is Made
Franchise Fee Approx. $50,000
- $60,000
Lump Sum Upon Execution
of Franchise
Agreement
Us
Office Space and Real
Estate
(Note 1)
$100,000 to
$200,000
As Incurred Prior to Opening Landlord
Equipment and Opening
Inventory
(Note 2)
$10,000 to
$20,000
As Incurred Prior to Opening Us or Approved
Suppliers
Office Supplies and
Equipment
(Note 3)
$10,000 to
$20,000
As Incurred Prior to Opening Us or Approved
Suppliers
Vehicles and Signage
(Note 4)
$15,000 to
$50,000
As Incurred Prior to Opening Suppliers
Sales Tax and Business
Licenses
(Note 5)
$12,000 to
$25,000
As Incurred Prior to Opening Local authorities
Insurance
(Note 6)
$30,000 to
$50,000
As Incurred As Incurred Insurer
Advertising and
Promotions
(Note 7)
$25,000 to
$50,000
As Incurred As Incurred Supplier
Technology
(Note 8)
$1,000 to $1,500 As Incurred As Incurred Us or Suppliers
WAI-3175240v6 11
Type of Expenditure Amount Method of
Payment
When Due To Whom
Payment is Made
Additional Funds – 3
months
(Note 9)
$50,000
(minimum)
As Incurred Prior to Opening
and as Incurred
Suppliers
TOTAL ESTIMATE:
(Note 10)
$303,000 to
$526,500
AT THIS TIME, WE DO NOT OFFER DIRECT OR INDIRECT FINANCING TO
FRANCHISEES FOR ANY OF THESE ITEMS, EXCEPT FOR FRANCHISES WHOSE
INITIAL FRANCHISE FEE EXCEEDS $50,000 AS CALCULATED IN ITEM 5. THE
TERMS OF ANY FINANCING WILL VARY. YOU SHOULD REVIEW THESE
FIGURES CAREFULLY WITH A BUSINESS ADVISOR BEFORE MAKING ANY
DECISION TO PURCHASE.
NOTES:
The above table is your estimated initial investment as the proposed operator of a
Franchised Business. We are unable to calculate the exact investment required for a
Franchised Business due to the many factors that influence the total project costs, such as
location, amount of space leased, amount of remodeling needed, fleet additions and so
forth. Your initial investment will also vary considerably depending upon the method and
amount of financing that you use or particular leasing arrangements. All fees that are
payable to us in this Item 7 are nonrefundable. Refunds by third parties depends on the
terms and arrangements made between the franchisee and the third party.
1. Site specifications and requirements for office space are described in the
Manual. Other than an office, additional space for the consignment shop,
auction house and storage will be required. It is best if everything is located
under one roof or in adjacent buildings, with a minimum suggested square
footage requirement being 30,000 sq. feet.
2. You will be required to purchase initial packaging and related materials, as
needed, from us or an approved supplier. A minimum start-up package includes
corrugated boxes, paper, tape and bubble wrap. It also includes miscellaneous
furniture blankets, dollies, an appliance cart, furniture straps, tool and first aid
kits and a piano board. Specifications of moving supplies are described in the
Manual. We reserve the right to charge a Restocking Fee (as described in Item
6) for any returned equipment or other items purchased from us.
3. At minimum, you must have a desk, fax machine, copier (with 11 x 17
enlargement and reduction capability), telephone, computer, printer and
software as specified by us (see Items 8 and 11 for more details). You must also
purchase uniforms, which consist of shirts, hats, sweatshirts and jackets. To
maintain a consistent appearance across the System, all uniforms must be
purchased exclusively from us.
4. You must, at a minimum, purchase or lease both a 15-16 feet cube van as a pack
truck, a 26-32 feet straight moving truck, and have each lettered according to
our design and color specifications. Both vans must be and outfitted with
packaging, dollies, tape guns, tool kit, furniture bands, blankets etc.
Specifications for signage are described in the Manual.
WAI-3175240v6 12
5. Each state and locality has specific legal requirements relating to the payment of
sales tax, business licenses and related regulatory approvals. You must check
with local officials and your legal advisors to determine your specific
requirements, licenses and costs.
6. You must obtain worker’s comprehensive insurance, commercial liability and
other types of insurance to cover vehicles, cargo, and business assets prior to
starting operations. We must have copies of all insurance certificates on file in
our office prior to opening (see Item 8 for more details).
7. Advertising and promotional costs include the purchase of the marketing
package, described in the Manual, by you from us as well as local media
placement expenses.
8. You must establish Internet and WiFi access at the site. You will also be
required to pay for the use of Franchisor-provided software, such as the POS
System and access to the Crowning Touch Intranet system, Crown Net.
9. The estimate of additional funds includes items such as packaging, moving
supplies, vehicles expenses, travel expenses, but does not include salaries or
benefits to any employees. Additional cash may be required in the first 3 months
or longer, depending upon many factors. Your need for additional funds could
vary substantially based upon the scope of your operation, economic conditions,
competition and other factors. This estimate cannot take into account unique
factors pertaining to your individual financial situation, resources, experience or
potential for success as a Crowning Touch franchisee.
10. 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 closely you follow our methods; your management skills,
experience, and business acumen; the local market for the services; the
prevailing wage rates; your competition; and the sales achieved during the initial
period. You should review these figures carefully with a business advisor
before making any decision to purchase the franchise.
ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
REQUIRED PURCHASES
You must purchase certain equipment, inventory and supplies from us or from approved
suppliers, as specified in the Manual.
You must purchase Crowning Touch uniforms (consisting of shirts, hats, sweatshirts and
jackets) and all advertising and promotional materials exclusively from us. In order to
maintain the reputation, goodwill, high standards, quality, and uniformity of the System,
you must purchase certain other equipment, inventory and supplies in accordance with
our specifications, as described in the Manual.
WAI-3175240v6 13
APPROVED SUPPLIERS
You may not purchase Crowning Touch uniforms or advertising and promotional
material from any other source except us. You must purchase certain other equipment,
inventory and supplies include packaging materials, blankets, dollies, hand trucks,
signage, and any other packing and moving supplies, as specified in the Manual, only
from approved suppliers.
You must also purchase or own computers, office equipment, and office supplies in
compliance with specifications in the Manual. Our specifications are designed to
maintain a consistently high level of performance and appearance. Our specifications are
created by our management team and may be modified periodically.
If you want to buy any specified items from an unapproved supplier, you must submit to
us a written request for our approval. Before we will approve a supplier, we have the
right to inspect the supplier’s facilities and ask that samples from the supplier be
delivered to us or to an independent laboratory that we designate for testing. The supplier
may have to pay a charge, not to exceed the reasonable cost of the inspection and the
actual cost of the test. We may also require that the supplier comply with other
requirements as we may deem appropriate, such as payment of reasonable continuing
inspection fees and administrative costs. We reserve the right, at our option, to
periodically re-inspect the facilities and products of any approved supplier and to revoke
our approval if the supplier fails to continue to meet any of our criteria. We are not
required to approve any particular supplier, and we are not required to make available to
prospective suppliers or to you the standards and specifications for products that we deem
confidential.
We formulate criteria in order to maintain the highest level of quality and may revise our
criteria periodically. Our criteria for supplier approval are set out in our internal
specifications and are not communicated to our franchisees.
Depending upon the type of product for which approval is sought, or for which a new
approved supplier is proposed, we anticipate providing our response to the request within
one week after receipt of the request and the accompanying information. Notice of our
approval may take up to 90 days depending on the nature of the inspection of facilities,
testing of samples and other due diligence we require.
REVENUE FROM FRANCHISEE PURCHASES
Because we have only recently begun to offer franchises in the U.S., neither we nor our
affiliates have sold products to franchisees, nor have we or they derived any revenue or
other material consideration from these activities. However, we reserve the right to
derive revenue from Crowning Touch uniforms, advertising and promotional material,
and any other items you are required to purchase from us.
WAI-3175240v6 14
We and our affiliates also have not received, and currently have no arrangements in place
to receive, any payments from designated and approved suppliers or manufacturers on
account of franchisee purchases of required and approved items from those suppliers
directly or through us, however, we may in the future establish these arrangements,
depending upon the manufacturer or distributor except as described above.
The cost of equipment, inventory, and supplies purchased from us or in accordance with
our specifications will represent approximately 60% to 70% of your total purchases in
establishing the Franchised Business and 60% to 70% of your total ongoing purchases
during the operation of the Franchised Business.
There are no approved suppliers in which any of our officers owns an interest.
We do not have any purchasing or distribution cooperatives.
We do not negotiate purchase arrangements, including price terms, with any of your
direct suppliers for your benefit, however, we do intend to negotiate purchase
arrangements with our Product suppliers, which may benefit you indirectly.
We do not provide material benefits to you (for example, renewal or granting additional
franchises) for purchasing particular products or services or using particular suppliers.
INSURANCE
You must obtain and maintain at your own expense the insurance coverage that we and
your landlord (if applicable) periodically require and you must meet the other insurance-
related obligations in the Franchise Agreement. Currently, we require you to maintain
the following coverages:
1) comprehensive general liability insurance for bodily injury, death and property
damage caused by your operation of the Franchised Business, including
employment practices liability coverage, contractual liability coverage, and
coverage for vehicles, cargo and business assets (not less than $1,000,000 for
bodily injury or death and not less than $100,000 property damage; deductible or
self-insured retention equal to or less than $5,000);
2) all risk property and casualty insurance, including fire coverage;
3) business interruption insurance in sufficient amounts but not less than $100,000;
4) worker’s compensation insurance and all other insurance required by law;
5) commercial umbrella liability insurance with limits which bring the total of all
primary underlying coverages (comprehensive general liability, business
interruption, products liability and employers liability) to not less than $3,000,000
total limit liability. This umbrella liability will provide at a minimum those
WAI-3175240v6 15
coverages and endorsements required in the underlying policies; and
6) other coverages as specified in the Manual, with such limits as are specified in the
Manual or required by law.
Insurance coverage must be obtained from an insurer that is rated A+ or better by A.M.
Best & Company. We may require you to obtain insurance coverage for other risks or
increase the required amount of coverage and require different or additional insurance
during the Franchise Agreement term. Premiums will depend upon the insurance
carrier’s charges, terms of payment and your loss history. Each insurance policy must:
(1) name us and our affiliates as an additional named insureds and contain a waiver of all
subrogation rights against us; (2) provide for 30 days’ prior written notice to us of any
material modification, cancellation, or expiration of the policy; (3) provide that coverage
applies separately to each insured against whom a claim is brought; (4) contain no
provision which limits coverage in the event of a claim by a party who is indemnified
under the Franchise Agreement; (5) be primary; and (6) extend to and provide indemnity
for all obligations assumed by you under the Franchise Agreement. You must obtain our
approval of your insurance carriers and provide evidence of coverage as and when we
may require.
ITEM 9. FRANCHISEE’S OBLIGATIONS
THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE
FRANCHISE AGREEMENT AND OTHER AGREEMENTS. IT WILL HELP
YOU FIND MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS
IN THESE AGREEMENTS AND IN OTHER ITEMS OF THIS DISCLOSURE
DOCUMENT.
Obligation Section in Franchise
Agreement
Disclosure Document
Item
a. Site selection and
acquisition/lease
Sections 6.2 & 6.3 Item 11
b. Pre-opening purchases/leases Section 6.3 Items 5, 7 and 8
c. Site development and other
pre-opening requirements
Sections 6.2 & 6.3 Items 5, 7 and 11
d. Initial and ongoing training Sections 6.5 & 6.6 Item 11
e. Opening Section 6.4 Item 11
f. Fees Section 5 Items 5 and 6
g. Compliance with standards
and policies/operating manual
Sections 8 & 6.10 Item 11
h. Trademarks and proprietary
information
Sections 7, 8 & 9 Items 13 and 14
WAI-3175240v6 16
Obligation Section in Franchise
Agreement
Disclosure Document
Item
i. Restrictions on
products/services offered
Sections 6.9, 6.10 & 6.11 Item 16
j. Warranty and customer
service requirements
Section 6.20 None
k. Territorial development and
sales quotas
Section 2.2 Item 12
l. Ongoing product/service
purchases
Sections 6.10 & 6.11 Item 8
m. Maintenance, appearance and
remodeling requirements
Section 6.10 None
n. Insurance Section 12 Items 7 and 8
o. Advertising Section 11 Items 6 and 11
p. Indemnification Section 19.2 None
q. Owner’s participation/
management/staffing
Section 6.7 Items 11 and 15
r. Records and reports Section 10 Item 17
s. Inspections and audits Section 10.4 Items 6 and 11
t. Transfer Section 13 Items 6 and 17
u. Renewal Sections 3.2 & 3.3 Items 6 and 17
v. Post-termination obligations Section 15 Item 17
w. Non-competition covenants Section 16 Item 17
x. Dispute resolution Section 27 Item 17
ITEM 10. FINANCING
We do offer direct financing only to new franchisees whose initial franchise fee exceeds
$50,000. Our financing options are meant to cover only that portion of the franchise fee
in excess of $50,000. We are not financing anything other than a portion of the franchise
fee. We do not guarantee your notes, leases or any other obligations. We reserve the
right in the future to offer financing programs for our franchisees either directly or
through an affiliate, and to earn fees or other revenues from these financing programs, as
and when implemented. We also reserve the right to deny financing if, in our sole
judgment, circumstances dictate the transaction to be unacceptable to us.
ITEM 11. FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER
SYSTEMS, AND TRAINING
WAI-3175240v6 17
Except as listed below, we are not required to provide you with any assistance.
Before you open the Franchised Business:
1. We will provide you with guidelines and specifications for the operation and
management of the Franchised Business that you must adopt, including moving
and storage service procedures, consignment shop and auction house procedures,
best real estate practices, advertising and promotional techniques, and staffing
(Section 4.1.A of the Franchise Agreement);
2. We will consult with you regarding the location of a site for the Franchised
Business, basing our guidance on such factors as visibility, ease of access,
location within the Designated Territory, and future growth potential. ANY
ASSISTANCE WE PROVIDE IN FINDING AND SETTING UP THE SITE IS NOT A
GUARANTY OR WARRANTY THAT THE SITE WILL BE SUCCESSFUL (Section 4.1.B
of the Franchise Agreement);
3. We will provide Start-Up Training (as described in more detail below) in the
establishment and operation of the Franchised Business (Section 4.1.C of the
Franchise Agreement);
4. We will loan you a copy of the Manual as updated, revised or amended
periodically, which will include standards and specifications for policies and
procedures, management, and operation of the Franchised Business (Section
4.1.D of the Franchise Agreement);
5. We will provide a final evaluation of business systems, marketing plans, and
business plans, to ensure your Franchised Business is properly set up in
accordance with our specifications (Section 4.1.E of the Franchise Agreement);
and
6. We will provide you with assistance in obtaining your initial equipment,
inventory and supplies (Section 4.1.F of the Franchise Agreement).
During the operation of the Franchised Business:
1. We will provide as much general advisory assistance as we believe, in our sole
discretion, will be helpful to you in the ongoing operation, advertising and
promotion of the Franchised Business, via telephone, facsimile, Internet, Intranet,
or on-site. (Section 4.2.A of the Franchise Agreement);
2. We will provide you with updates, revisions and amendments to the Manual
(Section 4.2.B of the Franchise Agreement);
WAI-3175240v6 18
3. We will administer the national advertising program, and provide periodic
reconciliation reports to the franchise network (Section 4.2.C of the Franchise
Agreement);
4. We will provide you with periodic promotional materials, newsletters and similar
items to update you on current trends in the industry and developments in the
System (Section 4.2.D of the Franchise Agreement);
5. We will continue our efforts to establish and maintain high standards of quality,
customer satisfaction and service. To that end, we will on a periodic basis,
conduct, as we deem advisable, inspections of the Franchised Business and its
operations and will evaluate the methods and the staff employed at the Franchised
Business. You will be required to sign an operations report in connection with
each visit by our field support staff (Section 4.2.E of the Franchise Agreement);
and
6. We will provide an annual conference for Crowning Touch franchisees (which
you are urged to attend) as well as other optional and mandatory ongoing
programs or seminars as we deem appropriate. There is no admission charge for
your attendance at each annual conference; however, you will be solely
responsible for your expenses, including the cost of travel, lodging and meals.
Other expenses may include items purchased from the company store such as logo
apparel, novelties and new supply items. You may bring key employees with you
to the annual conference, provided you pay, in advance, the then-current fee for
additional attendees. You will be solely responsible for the expenses of additional
attendees (Section 4.2.F of the Franchise Agreement).
ADVERTISING
Use of Promotional and Marketing Materials
All promotional and marketing materials that you use to market your Franchised
Business will be supplied to you exclusively by us, as described in the Franchise
Agreement.
Advertising and Promotion Fund
We will establish and maintain an advertising and promotion fund (the “Fund”). After
your first twelve months of operations (beginning with your first reported sales), you
must pay to the Fund a continuing non-refundable fee equal to 1% of Gross Revenues.
The Fund will be the sole advertising fund that we administer and will be used primarily
for the design, production and placement of advertising materials and campaigns on a
regional or national basis. No percentage of the Fund will be used for the solicitation of
franchisees, however, our advertising and marketing material may contain contact
numbers for obtaining information about Crowning Touch franchises. The Fund will be
allocated to the following media: direct mail, newspaper, radio, television, and the
WAI-3175240v6 19
Internet and will be placed by our advertising department. These funds will be applied
towards the promotion of the System and there is no guarantee when funds will be
applied to your particular area. All media coverage will be designed to strengthen overall
franchise awareness – regionally, nationally and possibly internationally.
The sums you pay to the Fund will be maintained in a separate account. Upon your
request, we will annually account for the advertising funds expended, including a
reasonable allocation for our overhead expenses associated with the administration and
management of the Fund. It is understood and agreed that we will allocate advertising
funds, as we deem appropriate. We will, as conditions warrant, seek input from all
participants as to suggested expenditures, but our determination as to the final allocation
of Fund expenditures may not be challenged or contested.
Other than receiving a reasonable allocation of our overhead associated with the Fund,
we do not receive payment for providing goods or services to an advertising fund. We
are not required to spend any amount on advertising in the area where your Franchised
Business will be located. If all of the advertising fees are not spent in the fiscal year in
which they accrue, they remain in the Fund for use in the following year.
We reserve the right to terminate the Fund in our sole discretion. The Fund will not be
terminated, however, until all monies have been expended for advertising and/or
promotional purposes, or returned pro-rata to participating franchises. We may establish
such other policies and procedures for the administration of the Fund as we, in our sole
discretion, may deem necessary.
Local Advertising Councils
We do not currently have an advertising council composed of franchisees and do not
currently require that you participate in a local or regional advertising cooperative and/or
council. We reserve the right to do so in the future.
Telephone Number and Directory Listings
You must, at your own expense, maintain a working business telephone (with voice
mail), telephone listings, and advertisements in relevant local directories under the
categories and using the templates provided in the Manual.
COMPUTER REQUIREMENTS
You must purchase, equip, install and utilize in your Franchised Business a point-of-sale
system (“POS System”) and hardware and software obtained from us or our designated
suppliers. Your software purchase requirements includes access to Crown Net, the
Intranet system over which business will be conducted between us, and other software in
accordance with our System, including the software associated with the POS System, and
any other technology such as inventory, accounting, production and workflow
WAI-3175240v6 20
management, franchise management, and customer relationship management systems we
may, now or in the future, prescribe.
You are responsible for all maintenance costs associated with the POS System and other
computer hardware and software. You will arrange for broadband Internet service with a
minimum of 10 Mbps of download and upload speeds to facilitate electronic
communication between us and you, at your sole cost. You will provide all assistance we
require to bring your computer system on-line and integrate your computer system with
our computer system at the earliest possible time. You agree to give us, and
acknowledge that we shall have, the free and unfettered right to retrieve any data and
information from your computers as we deem appropriate, including electronically
polling the daily sales and other data of the Franchised Business. Crowning Touch will
provide and administer all email addresses in order to allow us to communicate with you
electronically and maintain an extra level of security for all data.
You must keep your computer system in good maintenance and repair at your expense
and make such additions, changes, modifications, substitutions and replacements to your
computer hardware, software, telephone and power lines or other computer-related
facilities as we may direct, and on the dates and within the times we specify. Upon
termination or expiration of the Franchise Agreement, any computer software, disks,
drives and other storage media we provide must be returned to us in good condition,
excepting normal wear and tear.
Website
We will make available to you a fully functional customized Crowning Touch website to
advertise, market and promote the Franchised Business (“Your Website”). You may not
use any other Internet site or web pages in connection with the Franchised Business or
otherwise containing or displaying the Proprietary Marks.
We or our affiliates maintain a website to advertise, market and promote Crowning
Touch and our business worldwide, as well franchise opportunities (the “Corporate
Website”). We periodically may update and modify the Corporate Website, including
links to Your Website. We have final approval over all content and information on the
Corporate Website and Your Website.
We have the right to designate the URLs, domain names, website addresses, meta-tags,
links, key words, e-mail addresses and any other means of electronic identification or
origin (“e-names”) used in connection with Your Website and your Franchised Business.
You will be responsible for maintaining Your Website and for local information on Your
Website. We will provide you with style guidelines for use in development of Your
Website, as well as content updates. We will provide you hosting and support services
for Your Website. You may not use another hosting service for Your Website and you
may not develop, maintain, or authorize any website that mentions or describes you or the
Franchised Business or displays any of the Proprietary Marks other than Your Website.
WAI-3175240v6 21
You must: (1) comply with any rules and requirements we establish pertaining to the
Corporate Website and Your Website; (2) maintain current and accurate information on
Your Website at all times; and (3) pay all fees and charges for the maintenance and
support of Your Website. We will own (or have rights superior to yours in) all
intellectual property and other rights in the Corporate Website and Your Website and all
information they contain (including, the domain name or URL for Your Website, the log
of “hits” by visitors, and any personal or business data that visitors supply, but excluding
your proprietary information).
We will only maintain hosting and support services for Your Website while you are in
compliance with the Franchise Agreement and our System standards. If you are in
default of any obligation under the Franchise Agreement or our System standards, then,
in addition to our other remedies, we may cause Your Website to be taken down until you
fully cure the default. We may cause Your Website to be permanently removed from the
Internet upon the expiration or termination of the Franchise Agreement.
Internet, E-Commerce and Social Media
We have the right to designate, approve, control or limit all aspects of your Franchised
Business that you conduct over the Internet (“e-commerce”), including, use of e-names,
e-mail, home pages, bulletin boards, social media, chat rooms, linking, framing, on-line
purchasing cooperatives, marketplaces, barter exchanges, and related technologies,
methods, techniques, registrations, networking, and any electronic communication,
commerce, computations, or any means of interactive electronic documents contained in
a network of computers or similar devices linked by communications software or
hardware. You must follow all of our policies and procedures for the use and regulation
of e-commerce and for its use with your Franchised Business and our System.
All e-commerce activity will be conducted through the Corporate Website.
TRAINING
We provide an initial training program (“Start-Up Training”) which you are required to
attend and successfully complete. Start-Up Training consists of three phases. Phase One
will consist of your own review of training materials prior to attending training in
Roanoke, Virginia. Phase Two will be a combination of hands-on training and
classroom training at our corporate headquarters in Roanoke, Virginia. Phase Three will
take place on-site at your Franchised Business location within the first 90 days of the
Franchised Business’ operations.
Start-Up Training, including the materials, is free to you and one additional employee.
You may bring additional employees to the Start-Up Training if you pay us our fee in
advance, which is currently estimated to be $1000 per employee. You will be
responsible, however, for all travel and living expenses incurred by you and your
employees while attending Start-Up Training. If you do not complete the Start-Up
WAI-3175240v6 22
Training to our satisfaction, we can terminate the Franchise Agreement. We reserve the
right to require you or your employees to attend additional training programs and/or
refresher courses during the term of the Franchise Agreement (as may be required) and to
charge a fee, as described in Item 6.
Subject Hours of
Classroom
Training
Hours of
On-the-Job
Location
PHASE ONE
Self Review of Training Materials 0 0 N/A
PHASE TWO
Orientation, Marketing,
Estimating, Floor Plans,
Scheduling, Etc.
4 40 At our headquarters.
Management & Accounting 40 40 At our headquarters.
Packing & Unpacking 8 8 At our headquarters.
Truck Loading & Unloading,
Furniture Handling & Storage
2 16 At our headquarters.
Truck Safety 2 8 At our headquarters.
Consignment Shop Operations 0 40 At our headquarters.
Auction House Operations 0 40 At our headquarters.
Real Estate Training (for
Experienced Agent)
0 96 Between franchise
location and
headquarters.
PHASE THREE
Compliance Training –
Management Review
0 16 At your Franchised
Business location.
Compliance Training – Labor
Review
0 16 At your Franchised
Business location.
WAI-3175240v6 23
SITE SELECTION
We will work with you in finding an appropriate site for your Franchised Business.
Specifications for the location and features of an appropriate site for your Franchised
Business are found in the Manual.
You must submit to us a form of the lease to be executed in order to obtain our written
approval of the approved site. A condition to approving the lease is the execution of the
Addendum to the Lease Agreement (attached to the Franchise Agreement) by you and the
landlord. We will not unreasonably withhold our approval of a site that meets the
minimum criteria for your business premises.
Our approval of your site is not a guarantee or warranty that the Franchised Business
will be successful.
OPERATIONS MANUAL
The Table of Contents from the Crowning Touch Manual is attached as Exhibit D to this
disclosure document. The Manual is confidential and remains our property. We may
modify the Manual periodically, but these modifications will not alter your status and
rights under the Franchise Agreement. There are approx. 150 total pages in the Manual.
OPENING
You may not open the Franchised Business until you and your staff (as required) have
completed Start-Up Training and satisfied all of the other pre-opening obligations,
including, securing all required licenses and insurance, hiring sufficient staff, ordering
and receiving your initial inventory, and distributing advertising and marketing materials
pursuant to your promotional plan for the grand opening, and any other terms and
conditions specified in the Manual. You must complete Start-Up Training and be ready
to open within 8 months of the signing of the Franchise Agreement unless we agree to a
later date in writing. This is the typical length of time required to open a Franchised
Business. Your ability to obtain a lease, financing, or building permits; zoning and local
ordinances; or delayed build-out may also affect when you open the Franchised Business.
We may require you to obtain a loan commitment for a working capital line of credit in
an amount to support your Franchised Business as described in your business plan. If we
impose this requirement, you must provide documentation that the loan commitment has
been secured at least 30 days prior to opening.
ITEM 12. TERRITORY
You will be granted the exclusive right and license to operate one Franchised Business in
the territory and at the site described in the Site Selection and Fee Addendum (attached to
the Franchise Agreement) (“Designated Territory”). The exclusive territory will be
organized as follows: complete county/city boundaries, then zip codes within a “broken”
WAI-3175240v6 24
county/city, and finally by other means if zip codes are not clearly conducive to the
creation of a territory that makes business sense. We reserve the right to determine the
Designated Territory, which, in our sole determination, will be fair to all parties involved.
Our aim is that all franchised territories will include a minimum population of 1,000,000
people, and a senior population (>65) that exceeds the state average.
You are allowed to operate one Franchised Business in the Designated Territory.
However, in the Franchise Agreement you acknowledge that this exclusivity in no way
limits our rights to engage in national marketing. You do not own the Designated
Territory. The Franchise Agreement only grants you the right to operate the Franchised
Business solely within the Designated Territory under our Proprietary Marks and System.
We will not establish additional Franchised Businesses or company-owned units within
your Designated Territory as long as you (1) comply with the terms of the Franchise
Agreement and all other agreements signed with us, our affiliates and/or suppliers, and
(2) meet your current annual gross volume goals (as described below).
If you are the first Franchisee in a new market, and that market is considered large
enough to support more than one franchise, you will enjoy the right of first refusal to
invest in additional franchises in your market as they become available.
We reserve the right, in our sole discretion, to designate a territory and grant a franchise
in an area within a market that has a population of less than 1,000,000 people, if we
determine that the demographic characteristics of that area will support a franchise.
You may not solicit, advertise or perform services outside of your Designated Territory
without our prior written approval. A job that either originates or ends in your Designated
Territory is considered to be serviceable by you. A job that neither begins nor ends in
your Designated Territory cannot be serviced by you without prior approval from us. If
you wish to perform services in another franchisee’s territory, we may require, as a
condition of our approval, that you pay that franchisee a commission based on a
percentage of the gross billed price of the job (provided you perform work in another
franchisee’s territory). If we refer a job to you that is located outside your Designated
Territory we may charge you a Referral Fee as described in Item 6.
We reserve the right to settle any territorial disputes, in our sole discretion, as reasonably
and fairly as possible. All judgments in this regard will be considered final.
In addition, you are expressly prohibited from creating or maintaining a site on the
Internet, conducting e-commerce, or having any Internet presence, including social
media, in connection with the operation of the Franchised Business, except as described
in Item 11.
We reserve the right to establish as many company-owned units, or to license as many
franchisees to establish Franchised Businesses, as we wish, at any site outside the
Designated Territory regardless of the proximity to the boundaries of the Designated
Territory
WAI-3175240v6 25
Annual Gross Volume Goals
You must meet and maintain a minimum annual Gross Revenue volume of $1,500,000 in
order to keep your exclusive Designated Territory and your Franchise Agreement. This
goal must be met in your third 12 months of operation, i.e. 24 to 36 months from the date
you opened. If you do not meet or maintain the minimum, we reserve the right to
establish company-owned units or license other franchisees to establish Franchised
Businesses within your Designated Territory, or, at our option, to terminate the Franchise
Agreement, or both.
THE MINIMUM ANNUAL GROSS REVENUE VOLUME GOALS SHOULD NOT BE CONSTRUED
AS A DIRECT OR INDIRECT REPRESENTATION OF SALES OR EARNINGS.
Territory Policy Violations/Liquidated Damages
In addition to any other rights we may have, we reserve the right to impose a penalty, in
our sole discretion, for each violation of our territory policies as set forth in the Manual,
as updated, revised or amended periodically. See Item 6 for further details.
Other than as set forth above, there are no other circumstances that permit us to modify
your territorial rights. We reserve the right to operate or franchise the operation of any
Franchised Business or other channel of distribution selling or leasing similar products or
services under the same and/or different trademarks.
ITEM 13. TRADEMARKS
In the Franchise Agreement, we grant you the right and license to operate a Franchised
Business using the System and Proprietary Marks. CTGI has licensed to us through a
license agreement (the “License Agreement”) the exclusive worldwide right and license
to use and to license others to use the System and the Proprietary Marks, including the
service mark Crowning Touch Senior Moving Services®. CTGI has registered the
Proprietary Marks with the United States Patent and Trademark office (USPTO).
Proprietary Marks Serial Numbers Date of Filing Place of
Registration
CROWNING TOUCH
SENIOR MOVING
SERVICES
86303254 June 7, 2014 Principle Register
of the USPTO
CROWNING TOUCH
REAL ESTATE
SERVICES
86407953 September 27, 2014 Principle Register
of the USPTO
AUCTIONEASE 85651083 June 13, 2012 Principle Register
of the USPTO
BROWSE & BID 85778661 November 14, 2012 Supplemental
Register USPTO
WAI-3175240v6 26
CTGI is the exclusive owner of the Proprietary Marks. In addition, CTGI has established
certain common law rights to the Proprietary Marks acquired by virtue of continuous,
exclusive and extensive use and advertising. The Proprietary Marks are not registered in
any state.
You may not contest (directly or indirectly) CTGI’s or our ownership, title, right or
interest in the name or marks, trade secrets, methods, procedures and advertising
techniques which are part of the System or contest our right to register, use or license
others to use these names, marks, trade secrets, methods, procedures or techniques.
The License Agreement we have signed with CTGI grants us the exclusive license to use
the System and the Proprietary Marks directly or indirectly associated with the
Franchised Business and the right to license others to operate a Crowning Touch
Franchised Business. This License Agreement conveys to us the sole and exclusive
worldwide right to award Franchised Businesses and continues in perpetuity. The
License Agreement can only be canceled if we: (1) become insolvent or file a petition in
bankruptcy; (2) cease to do business; (3) transfer our rights or obligations under the
License Agreement without CTGI’s prior written consent; or (4) maintain or willfully
submit to CTGI false books or records.
Except as set forth herein, there are no currently effective material determinations of the
United States Patent and Trademark Office, the Trademark Trial and Appeal Board, the
trademark administrator of any state or any court, nor are there any pending infringement,
opposition or cancellation proceedings or material litigation involving the Proprietary
Marks. There are no agreements currently in effect which significantly limit our right to
use or license the use of the Proprietary Marks in any manner material to you.
Your right to use the Proprietary Marks is derived solely from the Franchise Agreement
and is limited to your development and/or operation of the Franchised Business in
compliance with the applicable agreement and all applicable standards, specifications and
operating procedures we prescribe during the term of the applicable agreement. Any
unauthorized use of the Proprietary Marks by you constitutes a breach of the applicable
agreement and an infringement of our rights in and to the Proprietary Marks. Your use of
the Proprietary Marks and any goodwill established by this use will inure to our benefit
and the benefit of CTGI. The Franchise Agreement confers no goodwill or other interests
in the Proprietary Marks on you. All provisions of the Franchise Agreement applicable
to the Proprietary Marks will apply to any other trademarks, service marks, commercial
symbols and trade dress we authorize in writing for use by and licensed to you after you
sign the applicable agreement.
You must use the Proprietary Marks as the sole trade identification of the Franchised
Business and must identify yourself in the form we prescribe as the independent owner of
the Franchised Business. You may not use any Proprietary Mark or variation thereof as
part of any corporate or trade name or with any prefix, suffix, or other modifying words,
terms, designs, or symbols, or in any modified form. You may not use any Proprietary
WAI-3175240v6 27
Mark or any variation of it in connection with the performance or sale of any
unauthorized services or products, as part of the domain name or address of any website
other than Your Website, or in any other manner we have not expressly authorized in
writing. You must display the Proprietary Marks prominently in the manner we
prescribe. You must give notices of trademark and service mark registrations that we
specify and obtain business name registrations as required under applicable law.
You must immediately notify us of any apparent infringement of or challenge to your use
of any Proprietary Mark or claim by any person of any rights in any Proprietary Mark.
You may not communicate with anyone except us and our counsel with respect to any
infringement, challenge or claim. We will have sole discretion to take action as we deem
appropriate in connection with any infringement, challenge or claim, and the sole right to
exclusively control any litigation or other proceeding arising out of any infringement,
challenge or claim relating to any Proprietary Mark. You must sign any and all
instruments and documents, give assistance, and do any acts and things as may in the
opinion of our counsel be necessary or advisable in order to protect and maintain our
interests in any litigation or proceeding or otherwise to protect and maintain our interests
in the Proprietary Marks. We will reimburse you for the reasonable out-of-pocket
expenses you incur and pay in complying with these requirements; except if any action
we take with respect to any claim or proceeding results in any monetary recovery for you
which exceeds your costs, then you must pay your own costs and share pro-rata in our
costs up to the amount of the monetary recovery.
The Franchise Agreement does not require us to take affirmative action when notified of
any infringements of or challenges to the Proprietary Marks. We have the right to control
any litigation or administrative proceedings involving the Proprietary Marks. We will
indemnify you against and reimburse you for all damages for which you are held liable in
any proceeding arising out of your use of any Proprietary Mark according to and in
compliance with the applicable agreement, and for all costs you reasonably incur in the
defense of any claim in which you are named as a party, if you have timely notified us of
the claim, have given us sole control of the defense and settlement of any claim and have
otherwise complied with the applicable agreement. If any action taken by us with respect
to any claim or proceeding results in any monetary recovery for you which exceeds your
costs, then you must pay your own costs and share pro-rata in our costs up to the amount
of the monetary recovery.
If it becomes advisable at any time in our sole judgment for you to modify or discontinue
the use of any Proprietary Mark and/or for the Franchised Business to use one or more
additional or substitute trade or service marks, you must immediately comply with our
directions to modify or otherwise discontinue the use of the Proprietary Marks and/or to
use one or more additional or substitute trademarks, service marks, logos or commercial
symbols or substitute trade dress after our notice to you. Neither we nor our affiliates
have any obligation to reimburse you for any expenditure you make in connection with
any discontinuance or modification.
As of the date of this disclosure document, we are not aware of either superior prior
WAI-3175240v6 28
rights or infringing uses that could materially affect your use of the principal trademarks
in any state.
ITEM 14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION
We do not claim rights in any patents that are material to our business.
We claim common law copyrights in the Manual, advertising and promotional materials,
any computer works, the Corporate Website, Your Website and similar items used in
operating the Franchised Business. We have not registered these copyrights with the
United States Registrar of Copyrights.
There currently are no effective determinations of the United States Patent and
Trademark Office, United States Copyright Office or any court regarding any of the
copyrighted works. No agreement limits our right to use or license the copyrighted
works except to the extent they include trademarks licensed to us by CTGI. We do not
know of any infringing uses which could materially affect your use of the copyrighted
works in any state. No agreement requires us to protect or defend the copyrighted works
or Confidential Information (defined below), although we intend to do so when the action
is in the best interests of our System. No agreement requires us to indemnify you for
your expenses or damages if you are a party to an administrative or judicial proceeding
involving the copyrighted materials.
According to the Franchise Agreement, you acknowledge and agree (1) that we may
authorize you to use certain copyrighted or copyrightable works in our discretion, (2) that
the copyrighted works are our valuable property and of which we are the owner, and
(3) that the rights granted to you are solely on the condition that you comply with the
terms of the Franchise Agreement. You must acknowledge and agree that we own or are
the licensee of the owner of the copyrighted works and will further create, acquire or
obtain licenses for certain copyrights in various works of authorship used in connection
with the operation of Franchised Businesses. The copyrighted works include the Manual
and may include all or part of the Proprietary Marks, trade dress and other portions of the
System. We intend that all works of authorship related to the System and created in the
future will be owned by us and copyrighted.
Your right to use the copyrighted works is derived solely from the Franchise Agreement
and is limited to the use of the copyrighted works according to and in compliance with
the Franchise Agreement and all applicable standards, specifications, and operating
procedures we prescribe. You must ensure that all copyrighted works used bear an
appropriate copyright notice under applicable copyright laws as we may prescribe in the
Manual specifying that we are the owner of the copyright. The Franchise Agreement
confers no interest in the copyrighted works upon you, other than the right to operate the
Franchised Business in compliance with the Franchise Agreement.
You must immediately notify us of any actual or apparent infringement of or challenge to
WAI-3175240v6 29
any of the copyrighted works or claim by any person of any rights in the copyrighted
works, and may not communicate with any person other than us and our counsel in
connection with any infringement, challenge or claim. We shall have the sole discretion
to take any action as we deem appropriate and the right to control exclusively any
settlement, litigation, arbitration or administrative proceeding arising out of any alleged
infringement, challenge or claim or otherwise relating to the copyrighted works.
If it becomes advisable at any time in our sole judgment for you to modify or discontinue
use of any of the copyrighted works and/or for you to use one or more additional or
substitute copyrighted or copyrightable items, you agree to immediately comply with our
directions to modify or otherwise discontinue the use of the copyrighted materials and/or
to use one or more substitute materials.
Confidential Information
We possess and will further develop and acquire certain confidential and proprietary
information and trade secrets including, but not limited to, the following categories of
information, methods, techniques, procedures and knowledge we, our affiliates, or our
franchisees have developed or will develop (the “Confidential Information”) including:
(1) methods, techniques, specifications, standards, policies, procedures, information,
concepts and systems relating to and knowledge of and experience in the development,
operation, and franchising of the Franchised Business; (2) marketing and promotional
programs for the Franchised Business; (3) methods of providing services related to
packing, moving, and storage; (4) knowledge of specifications for and knowledge of
suppliers of certain materials, equipment and supplies for the Franchised Business;
(5) operating results and financial performance of the Franchised Business; (6) the
Manual; and (7) the terms of the Franchise Agreement.
Under the Franchise Agreement, we will disclose to you parts of the Confidential
Information as are required for the development and operation of the Franchised Business
during training and in the course of any guidance or assistance furnished to you. You
may learn or otherwise obtain from us additional Confidential Information during the
term of the Franchise Agreement. You must agree to disclose the Confidential
Information to your Owners and employees only to the extent reasonably necessary.
You and your Owners must acknowledge and agree that the Confidential Information is
confidential to and a valuable asset of us and our affiliates, is proprietary, includes trade
secrets of us and our affiliates and is disclosed to you on the condition that you and your
Owners and employees who have access to the Confidential Information agree that
during and after the term of the applicable agreement you: (1) will not use the
Confidential Information in any other business or capacity; (2) will maintain the absolute
confidentiality of the Confidential Information; (3) will not make unauthorized copies of
any portion of the Confidential Information disclosed in written or other tangible form;
(4) will adopt and implement all reasonable procedures we prescribe to prevent
unauthorized use or disclosure of the Confidential Information; and (5) will require all
Principal Owners and all employees and Owners who have access to the Confidential
WAI-3175240v6 30
Information to sign confidentiality and non-competition agreements in the form we
prescribe and provide us, at our request, with signed copies of each agreement. Nothing
contained in the Franchise Agreement will be construed to prohibit you from using the
Confidential Information in connection with the operation of other Franchised Businesses
according to a Franchise Agreement or other Agreements with us.
If you have obtained our prior written consent, the restrictions on the disclosure and use
of the Confidential Information shall not apply to the following: (a) information,
methods, procedures, techniques and knowledge which are or become generally known in
the business of moving services, other than through deliberate or inadvertent disclosure
by you; and (b) the disclosure of the Confidential Information in judicial or
administrative proceedings to the extent that you are legally compelled to disclose
information, provided you have notified us prior to disclosure and used your best efforts
to obtain, and afforded us the opportunity to obtain, an appropriate protective order or
other assurance satisfactory to us of confidential treatment for the information required to
be so disclosed.
You must agree to disclose to us all ideas, concepts, promotional materials, methods,
techniques and products relating to the development and operation of the Franchised
Business conceived or developed by you or your employees during the term of the
applicable agreement. You must grant to us and agree to procure from your affiliates,
Owners or employees a perpetual, non-exclusive and worldwide right to use these
intangibles in all the Franchised Businesses or other businesses operated by us, our
affiliates and franchisees. We have no obligation to make any payment with respect to
any idea, concept, method, technique or product. You agree that you will not use, nor
will you allow any other person or entity to use, any concept, method, technique or
product without obtaining our prior written approval.
ITEM 15. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION
OF THE FRANCHISED BUSINESS
The Franchise Agreement requires you to exert your full time best efforts to develop and
expand the market for services offered by the Franchised Business and to cooperate with
us to accomplish the purposes of the Franchise Agreement. In that regard, you must not
engage in any other business or activity that conflicts with your obligations under your
Franchise Agreement. You must operate your Franchised Business in accordance with
our System standards of service, advertising, promotion and management. You must
comply with all our business policies, practices and procedures, including the operating
times of your Franchised Business, as we prescribe in the Manual, or otherwise in writing
from time to time.
An Operating Manager will be responsible for the day-to-day management and operation
of your Franchised Business and the supervision of your Franchised Business personnel
(“Operating Manager”). If you are an individual, you must serve as the Operating
Manager; however, if you are a business entity, you must appoint as the Operating
Manager an individual acceptable to us and who must be identified in an exhibit to the
WAI-3175240v6 31
Franchise Agreement and must at all times during the term of the Franchise Agreement
own at least a 10% equity interest in you. The Operating Manager shall be available to
be contacted by us at all reasonable times. The Operating Manager must have
satisfactorily completed Start-Up Training.
If you are a business entity and your relationship with the Operating Manager terminates,
you must promptly designate a replacement with prior experience performing the
requirements of this position who shall satisfy the above requirements and, at your
expense and subject to our then-current charges, satisfactorily complete training. You
must hire and maintain an adequate number and level of management and other personnel
required for the conduct of the Franchised Business. You are responsible for ensuring
that your employees are properly trained to perform their duties. As described in
Item 14, we may require you to obtain confidentiality and/or non-competition agreements
from your Operating Manager and certain of your employees.
Furthermore, if you are a business entity, each Owner must personally guarantee your
obligations under the Franchise Agreement and also agree to be personally bound by, and
personally liable for the breach of, every provision of the Franchise Agreement according
to the Guaranty attached to the Franchise Agreement.
ITEM 16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
The Franchise Agreement provides that you must offer, and may only offer, the services
that we authorize in the Manual, as it may be updated periodically, or otherwise in
writing. You are prohibited from (a) offering or selling products and services not
authorized by us, (b) soliciting other franchisees either directly or indirectly for any other
business or investment activity, or (c) selling any products or services outside your
Designated Territory. We reserve the unlimited right to change the types of authorized
services and products.
In addition, if you decide to use facilities owned by a third party to operate and manage
the Franchised Business, you are free to use the premises for any purpose as long as such
activities have no harmful effect on the Franchised Business. There are no limitations
imposed by us on the persons or businesses to which you may provide products and
services, except such as are imposed by the nature of the System itself or by law.
ITEM 17. RENEWAL, TERMINATION, TRANSFER & DISPUTE
RESOLUTION
This table lists certain important provisions of the Franchise Agreement pertaining to
renewal, termination, transfer, or dispute resolution. You should carefully read these
provisions in the Franchise Agreement attached to this disclosure document.
WAI-3175240v6 32
Provision Section in Franchise
Agreement Summary
a. Length of the franchise
term Section 3.1 The term of the Franchise Agreement is 5
years.
b. Renewal or extension Section 3.2 The Franchise Agreement may be renewed
for an additional 5 year term, if certain
conditions are met. A renewal fee will be
charged.
c. Requirement for
franchisee to renew or
extend
Section 3.3 “Renewal” means signing an amendment to
your Franchise Agreement, which may
contain materially different terms, consistent
with our then current Franchise Agreement.
You may renew only if you have given
written notice of your election to renew,
comply with any required modifications to
the Franchised Business, are not default
under any agreement related to the
Franchised Business, have satisfied all
monetary obligations related to the
Franchised Business, have executed our
then-current form of Franchise Agreement
and pay a renewal fee, complete any training
required by us, have given a general release
of any claims against us (if state law allows),
have operated the Franchised Business in
compliance with the System, and are
maintaining all necessary licenses and
permits.
d. Termination by
franchisee Section 14.7 You may terminate upon 180 days written
notice to us or upon any grounds otherwise
available by law.
e. Termination by
franchisor without cause N/A We may not terminate the Franchise
Agreement without cause.
f. Termination by
franchisor with cause Section 14 We may terminate only if you or an Owner
commits one of several violations (see (g)
and (h) below).
g. “Cause” defined –
curable defaults Section 14.2 30 days for defaults not listed in (h) below,
or such longer period as applicable law may
require. Such defaults shall include: (1)
monetary defaults involving payments to us
or our affiliates, (2) failure to maintain any
of the standards or procedures prescribed by
us, (3) failure to comply with franchisee
duties such as pre-opening requirements,
training, compliance with the System,
purchase of materials, etc. (4) failure to
adequately promote the Franchised Business,
(5) failure to maintain or submit to use any
required reports, or (6) failure to complete
any required training.
WAI-3175240v6 33
h. “Cause” defined – non-
curable defaults Section 14.1 (1) You are insolvent or bankrupt, (2) you
cease or forfeit the right to do business in
your territory, (3) you tamper with our
proprietary materials, (4) there is a threat to
public safety, (5) you understate your Gross
Revenue, (6) you make a material
misrepresentation, (7) you engage in alcohol
or drug abuse, (8) you make unauthorized
use of the Proprietary Marks, (9) you are
convicted of a crime of moral turpitude, (10)
if there is a judgment against you involving
fraud, (11) you fail to obtain approval of any
advertising activity, (12) you make an
unpermitted transfer, (13) you fail to comply
with the non-compete and other covenants,
(14) you violate confidentiality obligations,
(15) you maintain false books or records,
(16) you engage in deceptive practices in
connection with the sale of products and
services, (17) you fail to comply with the
quality control standard in the Manual, (18)
if any other Franchise Agreement with you
is terminated, (19) you receive 3 or more
notices of default, (20) you fail to begin
operations within 8 months of execution of
the Franchise Agreement, (21) you offer an
unapproved product or service, (22) you
make unauthorized use of customer
information.
i. Franchisee’s obligations
on termination/non-renewal Section 15 Your obligations include cessation of
operations, complete de-identification, non-
competition (also see (r) below), adherence
to covenants, execution of release, payment
of amounts due, and return of materials.
j. Assignment of contract
by franchisor Section 13.1 No restriction on our right to assign.
k. “Transfer” by franchisee
defined Section 13.2 Includes transfer of contract or assets or
ownership change.
l. Franchisor approval of
transfer by franchisee Section 13.2.A We have the right to approve all transfers
but will not unreasonably withhold approval.
WAI-3175240v6 34
m. Conditions for
franchisor approval of
transfer
Section 13.2.A All your accrued monetary obligations to us
or our affiliates are paid in full; you are in
full compliance with the Franchise
Agreement; parties sign and deliver a release
and other required documents; transferee
enters into a written assignment and assume
all your obligations under the Franchise
Agreement; the transferee meets our criteria;
transferee signs our then-current form of
Franchise Agreement; you remain liable for
your obligations of non-disclosure, non-
competition, and indemnification;
completion of training by transferee;
transferee shall acknowledge receipt of the
disclosure document; payment of the transfer
fee and transfer commission, if applicable;
additional requirements for corporate
transferees.
n. Franchisor’s right of
first refusal to acquire
franchisee’s business
Section 13.4 We have the right to match offers from third
parties to buy an interest in the Franchise
Agreement, the Franchised Business, assets
of the Franchised Business or ownership
interests in you. o. Franchisor’s option to
purchase franchisee’s
business
Section 15.10 We have the right to purchase the assets of
the Franchised Business upon termination in
compliance with the Franchise Agreement
for cost or fair market value, whichever is
less. We also have the right to assume the
lease for your business premises.
p. Death or disability of
franchisee Section 13.5 Interest must be transferred to approved
party within 6 months.
q. Non-competition
covenants during the term
of the franchise.
Section 16.2 No involvement in a Competing Business
anywhere.
r. Non-competition
covenants after the
franchise is terminated or
expires
Section 16.3 No involvement in a Competing Business
for 3 years within 100 miles of the territory
of any Crowning Touch company-owned or
franchised business.
s. Modification of
agreement Section 17 No modifications unless in writing and
signed, but Manual subject to change. t. Integration/merger
clause Section 24 Only terms of this disclosure document and
the Franchise Agreement (including System
standards in the Manual) are binding
(subject to state law). Any other promises
outside of this disclosure document and the
Franchise Agreement may not be
enforceable. u. Dispute resolution by
arbitration or mediation Section 27 Except for certain claims, all disputes must
be arbitrated in Roanoke, Virginia
v. Choice of forum Section 26.2 Arbitration and litigation must take place in
Roanoke, Virginia
WAI-3175240v6 35
w. Choice of law Section 26.1 Virginia law applies (subject to state law
described in any applicable State Specific
Addendum in Exhibit A).
ITEM 18. PUBLIC FIGURES
We do not use any public figure at this time to promote our franchise.
ITEM 19. FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC’s Franchise Rule permits a franchisor to provide information about the actual or
potential financial performance of its franchised and/or franchisor-owned outlets, if there
is a reasonable basis for the information, and if the information is included in the
disclosure document. Financial performance information that differs from that included
in Item 19 may be given only if: (1) a franchisor provides the actual records of an
existing outlet you are considering buying; or (2) a franchisor supplements the
information provided in this Item 19, for example, by providing information about
possible performance at a particular location or under particular circumstances.
We do not make any representations about a franchisee’s future financial performance or
the past financial performance of company-owned or franchised outlets. We also do not
authorize our employees or representatives to make any such representations either orally
or in writing. If you are purchasing an existing outlet, however, we may provide you with
the actual records of that outlet. If you receive any other financial performance
information or projections of your future income, you should report it to the franchisor’s
management by contacting Linda Balentine, 6704 Williamson Road, NW, Roanoke, VA
24019, (540) 982-5800, the Federal Trade Commission, and the appropriate state
regulatory agencies.
ITEM 20. OUTLETS AND FRANCHISEE INFORMATION
System wide Outlet Summary
For years 2013 to 2015
Column 1
Outlet Type
Column 2
Year
Column 3
Outlets at the Start
of the Year
Column 4
Outlets at the End
of the Year
Column 5
Net Change
Franchised 2013 0 0 0
2014 0 0 0
2015 0 0 0
WAI-3175240v6 36
Column 1
Outlet Type
Column 2
Year
Column 3
Outlets at the Start
of the Year
Column 4
Outlets at the End
of the Year
Column 5
Net Change
Company- Owned* 2013 1 1 0
2014 1 1 0
2015 1 1 0
Total Outlets 2013 1 1 0
2014 1 1 0
2015 1 1 0
* We do not operate Crowning Touch franchises in the United States or anywhere in the
world; however, Premier owns and operates a Crowning Touch business in Roanoke,
Virginia.
Transfers of Outlets from Franchisees to New Owners (other than the Franchisor)
For years 2013 to 2015
Column 1
State
Column 2
Year
Column 3
Number of Transfers
All States 2013 0
2014 0
2015 0
Totals 2013 0
2014 0
2015 0
Status of Franchised Outlets
For years 2013 to 2015
State Year Outlets at
Start of
Year
Outlets
Opened
Termi-
nations
Non-
Renewals
Reacquired
by
Franchisor
Ceased
Operations-
Other
Reasons
Outlets at
End of
the Year
All States 2013 0 0 0 0 0 0 0
2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
Totals 2013 0 0 0 0 0 0 0
2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
WAI-3175240v6 37
Status of Company-Owned Outlets*
For years 2013 to 2015
State Year Outlets at
Start of
the Year
Outlets
Opened
Outlets
Reacquired
From
Licensee
Outlets
Closed
Outlets Sold
to Licensee
Outlets at
End of the
Year
Virginia 2013 1 0 0 0 0 1
2014 1 0 0 0 0 1
2015 1 0 0 0 0 1
Totals 2013 1 0 0 0 0 1
2014 1 0 0 0 0 1
2015 1 0 0 0 0 1
* We do not operate Crowning Touch franchises in the United States or anywhere in the
world; however, Premier owns and operates a Crowning Touch business in Roanoke,
Virginia..
Projected Openings
as of December 31, 2017
State Franchise Agreements
Signed But Outlet Not
Opened
Projected New
Franchised Outlets in
Next Fiscal Year
Projected New
Company-Owned
Outlets in Next Fiscal
Year
Florida 0 2 0
Georgia 0 0 0
Virginia 0 2 0
North Carolina 0 1 0
Totals 0 5 0
If you buy this franchise, your contact information may be disclosed to other
buyers when you leave the franchise system. Since we did not have any franchisees as of
the date of this disclosure document, during our last 3 fiscal years, none of our
franchisees has signed confidentiality clauses restricting their ability to speak openly
about their experience with the our system. There are currently no trademark-specific
franchisee organizations associated with our system.
ITEM 21. FINANCIAL STATEMENTS
Our audited financial statements as of December 31, 2015 are attached to this disclosure
document as Exhibit F. Our accounting year ends December 31.
WAI-3175240v6 38
ITEM 22. CONTRACTS
The Franchise Agreement and its attachments are included with this disclosure document
as Exhibit C. The Franchise Agreement and its attachments are the only contracts
proposed for use in conjunction with the offering of the Franchised Business. The
following forms are attachments to the Franchise Agreement:
Site Selection and Fee Addendum
Mandatory Addendum to Lease Agreement
Telephone Assignment Agreement
Guaranty
ITEM 23. RECEIPTS
Our and your copies of the disclosure document receipt are on Exhibit G of this
disclosure document.
WAI-3175240v6
EXHIBIT A
STATE DISCLOSURE ADDENDA
Many states have statutes that may supersede the Franchise Agreement and other related
agreements in your relationship with the Franchisor. These statutes may affect the enforceability
of provisions in the agreements related to termination; transfer; renewal; covenants not to
compete; choice of law; jurisdiction; venue selection; execution of waivers and releases of
claims under the statute; injunctive relief; waiver of rights to jury trial; punitive and liquidated
damage provisions, and other remedies; arbitration; and discrimination between franchisees.
Many states may have fair practice laws and other civil statutes affecting contracts and state and
federal court decisions that may also affect the enforcement of provisions in the Franchise
Agreement and other related agreements.
A provision in the Franchise Agreement which terminates the agreement upon your bankruptcy
may not be enforceable under 11 U.S.C. § 101 et seq.
WAI-3175240v6
STATE SPECIFIC ADDENDA
WAI-3175240v6
EXHIBIT B
LIST OF STATE FRANCHISE ADMINISTRATORS AND AGENTS FOR SERVICE OF
PROCESS Listed here are the names, addresses and telephone numbers of the state agencies having
responsibility for franchising disclosure/registration laws and for service of process. We may not
yet be registered to sell franchises in any or all of these states.
If a state is not listed, we are not required to appoint an agent for service of process in
that state in order to comply with the requirements of franchise laws. There may be states in
addition to those listed below in which we have appointed an agent for service of process. There
may also be additional agents appointed in some of the states listed.
State Franchise Administrator Agent for Service of Process
California Commissioner
California Department of Business
Oversight
320 West Fourth Street, Suite 750
Los Angeles, CA 90013-2344
866-275-2677
71 Stevenson Street, Suite 2100
San Francisco, CA 94105
415-972-8577
Commissioner
California Department of Business
Oversight
320 West Fourth Street, Suite 750
Los Angeles, CA 90013-2344
866-275-2677
1515 K. Street, Suite 200
Sacramento, CA 95814
866-275-2677
Hawaii Commissioner of Securities
Dept. of Commerce & Consumer
Affairs
Business Registration Division
335 Merchant Street, Room 205
Honolulu, HI 96813
808-586-2744
Commissioner of Securities
Dept. of Commerce & Consumer Affairs
Business Registration Division
335 Merchant Street, Room 205
Honolulu, HI 96813
808-586-2744
Illinois Office of the Attorney General
Franchise Bureau
500 South Second Street
Springfield, IL 62706
217-782-4465
Attorney General
500 South Second Street
Springfield, IL 62706
217-782-4465
Indiana Secretary of State
Securities Division
302 West Washington, Room E-111
Indianapolis, IN 46204
317-232-6681
Secretary of State
Securities Division
302 West Washington, Room E-111
Indianapolis, IN 46204
317-232-6681
Maryland Office of the Attorney General
Division of Securities
200 St. Paul Place
Baltimore, MD 21202-2020
410-576-6360
Maryland Securities Commissioner
200 St. Paul Place
Baltimore, MD 21202-2020
410-576-6360
Michigan Michigan Department of Attorney
General
Consumer Protection Division,
Franchise Section
Michigan Department of Commerce
Corporation and Securities Bureau
Consumer Protection Division
Franchise Section
WAI-3175240v6
525 West Ottawa Street
G. Mennen Williams Building, 1st
Floor
Lansing, MI 48933
517-373-7117
525 West Ottawa Street
G. Mennen Williams Building, 1st Floor
Lansing, MI 48933
517-373-7117
Minnesota Minnesota Department of Commerce
85 7th Place East, Suite 500
St. Paul, MN 55101
651-539-1500
Minnesota Commissioner of Commerce
85 7th Place East, Suite 500
St. Paul, MN 55101
651-539-1500
New York Bureau of Investor Protection and
Securities
New York State Department of Law
120 Broadway, 23rd Floor
New York, NY 10271
212-416-8236
Secretary of State
State of New York
One Commerce Plaza
99 Washington Avenue
Albany, NY 12231
518-473-2492
North Dakota North Dakota Securities Department
600 East Boulevard Avenue,
State Capitol, Fifth Floor
Bismarck, ND 58505-0510
701-328-4712
North Dakota Securities Commissioner
600 Boulevard Avenue,
State Capitol, Fifth Floor
Bismarck, ND 58505-0510
701-328-4712
Rhode Island Department of Business Regulation
Securities Division
1511 Pontiac Avenue, Bldg. 69-2
Cranston, RI 02920
401-462-9527
Director of Dept. of Business Regulation
1511 Pontiac Avenue, Bldg. 69-2
Cranston, RI 02920
Securities Division
401-462-9527
South Dakota Department of Labor and Regulation
Division of Securities
445 East Capitol Avenue
Pierre, SD 57501
605-773-4823
Director of Division of Securities
445 East Capitol Avenue
Pierre, SD 57501
605-773-4823
Virginia State Corporation Commission
Division of Securities and Retail
Franchising
1300 East Main Street, 9th Floor
Richmond, VA 23219
804-371-9051
Clerk of the State Corporation Commission
1300 East Main Street, 1st Floor
Richmond, VA 23219
804-371-9733
Washington Department of Financial Institutions
Securities Division – 3rd Floor
150 Israel Road, S.W.
Tumwater, WA 98501
360-902-8760
Director of Dept. of Financial Institutions
Securities Division – 3rd Floor
150 Israel Road, S.W.
Tumwater, WA 98501
360-902-8760
Wisconsin Office of the Commissioner of
Securities
Department of Financial Institutions
345 West Washington Avenue, 4th
Floor
Madison, WI 53703
608-266-1064
Commissioner of Securities
345 West Washington Avenue, 4th Floor
Madison, WI 53703
608-266-1064
WAI-3175240v6
EXHIBIT C
FRANCHISE AGREEMENT
WAI-3175240v6
EXHIBIT D
OPERATING MANUAL TABLE OF CONTENTS
WAI-3175240v6
EXHIBIT E
FRANCHISEE ROSTER
None.
WAI-3175240v6
EXHIBIT F
FINANCIAL STATEMENTS
WAI-3175240v6
EXHIBIT G
RECEIPTS
This disclosure document summarizes certain provisions of the Franchise Agreement and
other information in plain language. Read this disclosure document and all agreements carefully.
If Crowning Touch offers you a franchise, it must provide this disclosure document to
you 14 calendar-days before you sign a binding agreement with, or make a payment to,
Crowning Touch or an affiliate in connection with the proposed franchise sale.
If Crowning Touch does not deliver this disclosure document on time or if it contains a
false or misleading statement, or a material omission, a violation of federal law and state law
may have occurred and should be reported to the Federal Trade Commission, Washington, D.C.
20580 and the appropriate state agency identified on Exhibit B.
The name, principal business address, and telephone number of the franchise seller
offering the franchise is as follows: Linda Balentine, 6704 Williamson Road, NW, Roanoke, VA
24019, (540) 982-5800.
Issuance date: ______________________
We authorize the respective state agents identified on Exhibit B to receive service of
process for us in the particular states.
I received a disclosure document from Crowning Touch dated _______________ that
included the following Exhibits:
Exhibit A State Specific Addendum Exhibit B State Agencies and Agents for Service Of Process Exhibit C Franchise Agreement Exhibit D Operating Manual Table of Contents Exhibit E Franchisee Roster Exhibit F Financial Statements
Date Prospective Franchisee [Print Name]
(Date, Sign, and Return to us) Prospective Franchisee [Signature]
WAI-3175240v6
RECEIPTS
This disclosure document summarizes certain provisions of the Franchise Agreement and
other information in plain language. Read this disclosure document and all agreements carefully.
If Crowning Touch offers you a franchise, it must provide this disclosure document to
you 14 calendar-days before you sign a binding agreement with, or make a payment to,
Crowning Touch or an affiliate in connection with the proposed franchise sale.
If Crowning Touch does not deliver this disclosure document on time or if it contains a
false or misleading statement, or a material omission, a violation of federal law and state law
may have occurred and should be reported to the Federal Trade Commission, Washington, D.C.
20580 and the appropriate state agency identified on Exhibit B.
The name, principal business address, and telephone number of the franchise seller
offering the franchise is as follows: Linda Balentine, 6704 Williamson Road, NW, Roanoke, VA
24019, (540) 982-5800.
Issuance date: ______________________
We authorize the respective state agents identified on Exhibit B to receive service of
process for us in the particular states.
I received a disclosure document from Crowning Touch dated _______________ that
included the following Exhibits:
Exhibit A State Specific Addendum Exhibit B State Agencies and Agents for Service Of Process Exhibit C Franchise Agreement Exhibit D Operating Manual Table of Contents Exhibit E Franchisee Roster Exhibit F Financial Statements
Date Prospective Franchisee [Print Name]
(Date, Sign, and Return to us) Prospective Franchisee [Signature]