Alair Homes Franchise

Financing Details

Alair Homes offers financing for a portion of the initial franchise fee. Specifically, $150,000 of the initial franchise fee can be financed and is payable in 120 monthly installments of $1,250. However, Alair Homes retains 50% of the 'Net Payments' (royalties) due to the franchisee, crediting these amounts against the monthly installment payments. Additionally, $25,000 from each 'Net Franchise Fee' payable to the franchisee is retained and credited against the final installment payments. The outstanding principal balance for this financed portion of the fee bears 0% interest per annum. Should a franchisee fail to make a payment on time or otherwise breach their obligations under the Promissory Note, the interest rate will increase to 18% per annum, compounded annually. The franchisee's obligations under this financing arrangement are secured by all of their assets, including accounts receivable, and are guaranteed by the franchisee's Principals. Franchisees have the option to prepay any outstanding amount at any time without incurring penalties. If a franchisee defaults, Alair Homes reserves the right to demand immediate payment of all outstanding amounts, enforce its rights under the security agreement, and/or terminate the franchise agreement. Alair Homes does not offer any other direct or indirect financing for other aspects of the business, nor does it guarantee any other financial obligations of the franchisee.

Litigation Summary

Alair Homes has disclosed two ongoing litigation cases. The first case, Bolahood v. Alair Enterprises Canada Ltd., et al., was initially filed in November 2016 by a subcontractor against homeowners, a former Alair Canada franchisee, and Alair Canada. The homeowners subsequently filed a cross-claim against Alair Canada for $350,000, alleging that the franchisee abandoned the project and that Alair Canada was negligent. Alair Canada, in turn, filed a cross-claim against its former franchisee and their spouse for breaches of the franchise agreement. While the original claim was settled by the homeowners, the cross-claims and a third-party claim are continuing. Alair Canada denies liability, stating no prior contact or contract with the homeowners. The plaintiff has not taken further steps in over two years, but the cross-claims remain active. The second case, Mark Egan v. 2457662 Ontario Inc. c/o/b as Alair Homes, et al., commenced in December 2020 by a sub-trade seeking payment for work done on a homeowner's property by an Alair Canada franchisee. The claim was amended in April 2021 to include Alair Enterprises Canada Ltd. The homeowners have cross-claimed against the franchisee. Alair Canada filed a defense in August 2022, asserting it had no direct dealings or agreements with the sub-trade. The status indicates that a dismissal against Alair Canada is pending.

Renewal Conditions

Alair Homes Master Franchisees do not have a right to renew their initial agreement. However, they may have the option to sign successor Master Franchise Agreements for two additional successive 10-year terms, provided Alair Homes is still offering franchises in their state. The terms of these successor agreements will generally align with those offered to new franchisees at that time, though they will not be required to pay the initial franchise fee or attend the Master Franchise Training Program. Successor agreements will include additional development requirements. To exercise this right, Alair Homes Master Franchisees and their representatives must have fully performed all obligations under their current agreement, the Operations Manual, and other related agreements, without a history of repeated breaches (defined as three or more breaches within any rolling 24-month period). The managing principal must attend any requested training programs or refresher courses. Additionally, at the time of signing a successor agreement, Alair Homes Master Franchisees must pay a $15,000 fee and execute a general release of claims against Alair Homes and its affiliates. If Alair Homes is not offering new franchises or is in the process of updating its disclosure documents, it may offer to renew the existing agreement or extend it on a week-to-week basis.

Staffing Notes

Alair Homes Master Franchisees must personally and directly manage the day-to-day operations of their Master Franchise. If the franchisee is an entity, a Managing Principal, owning at least a 25% equity interest, must manage the Master Franchise full-time. While Alair Homes permits the Manager to operate one or more Alair Homes Unit Franchises, it encourages Master Franchisees to hire qualified employees or sell their Unit Franchises after the Master Franchise Commencement Date. Alair Homes Master Franchisees are responsible for hiring, training, and supervising efficient, competent, and courteous employees or independent contractors for their Master Franchise. Staff whose duties involve contact with Alair Homes Unit Franchisees must have sufficient literacy and fluency in English. Master Franchisees bear sole responsibility for all aspects of employee management, including hiring, termination, compensation, and ensuring compliance with operational standards and legal obligations.