In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Spray-Net franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Spray-Net franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Spray-Net franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Spray-Net outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Spray-Net’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average gross sales, gross bookings, and gross sales during the 4-month Exterior Period (June 1, 2020 to September 30, 2020) for the 8 existing Canadian Spray-Net franchised businesses operating within a geographical area comparable to 2 designated territories, and the 9 existing Canadian Spray-Net franchised businesses operating within a geographical area comparable to a single designated territory

• 2020 year-to-date gross bookings generated as of February 28, 2021, March 31, 2021, and April 30, 2021 for each of the 5 existing US Spray-Net franchised businesses operating over the applicable 2021 period

Section I – Background Information

13 Things You Need to Know About the Spray-Net Franchise

Hires New Director of Franchise Development

1.  In mid-November 2020, Spray-Net announced that it had hired a new director of franchise development, Jennifer Robinson. New to the United States (with a massive footprint already in Canada), Spray-Net’s mission is to use chemistry and software to deliver the best renovation solutions to homeowners. Jennifer Robinson is the company’s first fully remote hire, working out of Toronto. In her role, Robinson will prospect for conversion and new development opportunities within U.S. and Canada territories and will also negotiate and execute new franchise agreements.

2.  Robinson brings a wealth of franchise experience to the team. She started her franchise career at Freshii (a healthy food franchise with over 500 locations). In this franchise training role, she opened 26 locations across Canada and the US. After that, she moved into development, then operations, with another franchisor called SpinCo. Robinson said, “I love helping people live out their dreams of owning their own businesses through franchising.”

3.  Thanks to its patented weather-adjustable paint process and proprietary chemistry, Spray-Net delivers a factory finish on aluminum and vinyl siding, stucco, brick, wood, and even surfaces that aren’t traditionally painted on-site, like front and garage doors, windows, and kitchen cabinets. The durable, streak-free factory finish instantly transforms the look of a home for a fraction of the cost of brand-new siding, doors, and windows.

4.  Spray-Net’s patented systems provide homeowners with a highly customized painting solution for painting these tough-to-paint surfaces, which includes weather-adjusting the coating on-site for optimal application and finish.

Awards 15 New Territories Across North America

5.  At the beginning of February 2021, Spray-Net announced that it has awarded 15 new territories all over North America (United States and Canada) over the past 90 days. This includes five new US territories in Houston, two in St. Louis, two in Atlanta, two in the Suncoast area of Florida, and others in North Jersey and Northern Dallas. Spray-Net has also opened locations in Canada in Peterborough, Ontario; Granby, Quebec; and Drummondville, Quebec.

6.  Spray-Net’s mission is to use chemistry and software to deliver the best renovation solutions to homeowners. The painting franchise already has two locations open in Columbus, Ohio and Chattanooga, Tennessee. CEO Carmelo Marsala said, “Our company is extremely unique as we paint surfaces that most other painters don’t, like aluminum, vinyl, and windows. We are looking forward to providing this service all over the US and Canada, by way of our franchisees.”

7.  The company is currently offering franchise opportunities to qualified candidates throughout the United States. Qualified applicants who are awarded the opportunity to own and operate a franchise will be provided with an exceptional business model, extensive training, and consistent, ongoing support from senior management. Marsala added, “By bringing the factory painting experience on-site, we give homeowners a new way to paint their homes and our franchise partners a unique home-improvement franchise opportunity.”

Company History

8.  Spray-Net was founded in 2010 by Carmelo Marsala in Canada. Spray-Net is a premium painting franchise that uses custom proprietary coatings and a patented process to deliver better results than traditional brush-and-roller painting.

9.  Before starting Spray-Net, Marsala was a College Pro Student Painting franchisee while he attended university. During one of his jobs, Marsala’s customer asked him if he could paint the customer’s vinyl windows. Limited to off-the-shelf products and a brush and roller, he couldn’t. Marsala knew the finish would look streaky and would eventually peel and chip. He knew there had to be a way to bring permanent, factory quality results to homeowners.

10.  Marsala built a team and met with paint chemists and formulators to figure out how to deliver a factory finish outside the controlled environment of the factory. The team developed paint for a bunch of exterior surfaces beyond doors and windows. The concept was a success from the start and Marsala knew that he eventually wanted to franchise Spray-Net.

11.  In 2013, Spray-Net launched its proprietary line of exterior paints and coatings and serviced more than 500 homes. Franchising started the following year. Two years later, Spray-Net appeared on Dragon’s Den (Canada’s version of Shark Tank) and Marsala secured a record-breaking deal with Boston Pizza’s Jim Treliving. This fueled Spay-Net’s growth in Canada and several new franchises were signed.

12.  After nearly selling-out all of its available territories in Canada, Marsala aimed for expansion in the United States. Spray-Net first tried to enter the U.S. market in 2017 in New Jersey, Pennsylvania, and Ohio. However, this was unsuccessful and Marsala paused the expansion. In 2020, Spray-Net launched an international franchise program and more than 15 franchises were awarded in the U.S. Currently, Spray-Net is focusing on its footprint in the U.S.

Entrepreneur’s Franchise 500

13.  Spray-Net did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Spray-Net franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Detailed information on Spray-Net’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  2
• Net Change:  +2

Company-Owned

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• Spray-Net’s affiliate, SN Canada, has offered and sold franchises for the right to own and operate Businesses that are (a) operated in a substantially similar manner to the Franchised Business being offered in the current Disclosure Document utilizing the same or substantially similar Proprietary Marks and System that Spray-Net licenses to you under your Franchise Agreement, and (b) provided initial and ongoing training and other assistance that is substantially similar to the training and support you will be entitled to receive under your Franchise Agreement in connection with your Franchised Business (each, an “Existing CN Business”).

• In light of the foregoing, there is a reasonable basis to include certain historical financial information regarding the Existing CN Businesses that were actively owned and operated throughout the relevant measurement periods and meet certain other System criteria as set forth in the Disclosure Document.

• Whenever “Gross Sales” and “Gross Bookings” are disclosed in this Item 19, they are disclosed in Canadian Dollars because: (i) that is how the sales were reported to Spray-Net by its affiliate or its affiliate’s franchisees; and (ii) the currency exchange rate between United States currency (the U.S. Dollar or “USD”) and Canadian currency (the Canadian Dollar or “CDN”) is constantly in flux such that the rate as of the Issue Date may not be the same rate at the time you are disclosed with the Disclosure Document and/or purchase franchise rights from Spray-Net.

Part 1 – Existing CN Businesses – Gross Sales, Applicable Margin, and Gross Bookings Information Over 2020 Calendar Year and Over “Exterior Season”

• In Part I of this Item 19, Spray-Net discloses certain historical performance information regarding the 17 Existing CN Businesses that were open and operating for a period of one year as of the start of the 2020 calendar year (the “Disclosed CN Businesses”).

• Specifically, these Charts disclose the following information:

• (i) the Gross Sales generated by the provision of the Approved Services by each of these Businesses operating in Canada over (a) the 2020 calendar year, and (b) the four month period commencing June 1, 2020 and ending September 30, 2020 that comprised the “Exterior Season” for the 2020 calendar year given certain government orders and/or other restrictions due to the COVID-19 pandemic that limited the operations of these Businesses operating in Canada (the “4-Month Period”);

• (ii) the amount of Gross Sales that each such Business in Canada booked in connection with Client Projects (referred to in Parts 1 and 2 as “Gross Bookings”) over (a) the 2020 calendar year, and (b) the 4-Month Period; and

• (iii) the Applicable Margin generated by each Business over the applicable measurement period(s) noted above.

• Please note that, based on the experience of Spray-Net’s affiliate (SN Canada) and the Existing CN Businesses, the “Exterior Season” in Canada spans over a five to six month period each calendar year. The Exterior Season was shortened/truncated in 2020 due to COVID-19 regulations and the limiting impact it had on relevant operations and ability to provide the Approved Services.

Average for Existing CN Businesses Operating Within a Geographical Area Comparable to Two Designated Territories (8 Franchisees)

• 2020 Gross Sales (CDN):  $676,996
• 2020 Gross Bookings (CDN):  $827,409
• Gross Sales Generated as of June 1, 2020 (CDN):  $106,133
• Gross Sales Generated as of October 1, 2020 (CDN):  $599,682
• Gross Sales Generated Over Applicable 4-Month Period (CDN):  $493,549
• Average Monthly Gross Sales Over 4-Month Period (CDN):  $123,387
• Applicable Margin:  60.7%

Average for Existing CN Businesses Operating Within a Geographical Area Comparable to a Single Designated Territory (9 Franchisees)

• 2020 Gross Sales (CDN):  $440,941
• 2020 Gross Bookings (CDN):  $527,215
• Gross Sales Generated as of June 1, 2020 (CDN):  $76,296
• Gross Sales Generated as of October 1, 2020 (CDN):  $412,322
• Gross Sales Generated Over Applicable 4-Month Period (CDN):  $336,027
• Average Monthly Gross Sales Over 4-Month Period (CDN):  $84,007
• Applicable Margin:  60.3%

• In Part 1 above, the term “Gross Sales” means all revenue generated by the Disclosed CN Businesses, as applicable, over the Exterior Season. The term “Gross Sales” does not include (a) tips paid to subcontractors or other personnel that is not remitted to the Existing CN Business operations, or (b) sales tax that is collected directly from customers and paid to the appropriate taxing authority.

• “Gross Sales” as set forth in Part 1 is from the offer, provision, and sale of the Approved Products and Approved Services that Spray-Net’s System franchisees in the United States are authorized to offer.

• “Gross Bookings” is the amount of Gross Sales that each Franchised Business booked in connection with Client Projects.

• The Applicable Margin associated with each Disclosed CN Business is calculated by:

• (a) taking the Gross Sales generated by that Business over the relevant measurement period;

• (b) subtracting the amounts that the Existing CN Business incurred in connection with (1) paint, inventory/supplies, and other items that the owner of that Business characterized as “Cost of Goods Sold” or “COGS”, and (2) compensation/payments made in connection with the engagement of direct labor (whether subcontractors or personnel) to perform the Approved Services and purchase Approved Products, as reported to Spray-Net by that Business owner; and

• (c) taking that resulting figure and dividing it by the Gross Sales generated by that Business over the relevant measurement period.

Part 2 – Monthly Cumulative Gross Bookings Generated by Each Existing US Franchised Business Over the Applicable 2021 Period (Reported in U.S. Dollars or “USD”)

Franchisee 1

• Number of Designated Territories:  2
• YTD Gross Bookings Generated as of February 28, 2021:  N/A
• YTD Gross Bookings Generated as of March 31, 2021:  $50,726
• YTD Gross Bookings Generated as of April 30, 2021:  $90,276

Franchisee 2

• Number of Designated Territories:  1
• YTD Gross Bookings Generated as of February 28, 2021:  N/A
• YTD Gross Bookings Generated as of March 31, 2021:  $5,530
• YTD Gross Bookings Generated as of April 30, 2021:  $18,761

Franchisee 3

• Number of Designated Territories:  2
• YTD Gross Bookings Generated as of February 28, 2021:  N/A
• YTD Gross Bookings Generated as of March 31, 2021:  $0
• YTD Gross Bookings Generated as of April 30, 2021:  $49,030

Franchisee 4

• Number of Designated Territories:  2
• YTD Gross Bookings Generated as of February 28, 2021:  $24,695
• YTD Gross Bookings Generated as of March 31, 2021:  $73,555
• YTD Gross Bookings Generated as of April 30, 2021:  $176,295

Franchisee 5*

• Number of Designated Territories:  2
• YTD Gross Bookings Generated as of February 28, 2021:  N/A
• YTD Gross Bookings Generated as of March 31, 2021:  $30,315
• YTD Gross Bookings Generated as of April 30, 2021:  $104,410
• *This Franchisee opened in 2020, however, it did not actively solicit clients until March 2021.

• Some outlets have sold (and/or generated/booked) this amount. Your individual results may differ. There is no assurance you will sell as much.

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