Risk Score
Pending analysis
Investment Range
$518,900 - $966,900
Franchise Fee
$35,000
Business Summary
American Freight Franchisor, LLC offers franchises for retail businesses that operate under the name AMERICAN FREIGHT. These American Freight Retail Businesses specialize in selling home furnishings, mattresses, and new and out-of-box appliances. They aim to provide customers with quality products at discount prices by buying directly from manufacturers and operating in a warehouse-style format. The businesses also offer ancillary products and services such as warranties, protection agreements, fabric protection, delivery, installation, and haulaway services.
Corporate History
American Freight Franchisor, LLC was established on October 13, 2020, with the specific purpose of offering franchises for American Freight retail businesses. The franchisor itself has not operated any American Freight retail businesses. The broader American Freight brand has a history dating back to 1994 through its affiliate, American Freight, LLC, which has owned and operated American Freight outlets since then. In September 2019, its indirect parent, Liberty Tax, Inc., changed its name to Franchise Group, Inc. (FRG). FRG acquired the Sears Outlet business in October 2019 and later converted those locations to the American Freight brand, specializing primarily in as-is appliances, which is a different model from the standard American Freight franchise. In February 2020, FRG acquired American Freight Group, Inc. (which later became American Freight Group, LLC). On August 21, 2023, FRG became a privately held company. Therefore, while American Freight Franchisor, LLC is a relatively new entity, it operates under the umbrella of Franchise Group, Inc. and leverages the established brand and operational experience of its affiliates.
Financial Overview
Investment Range
$518,900 - $966,900
Franchise Fee (Low)
$35,000
Franchise Fee (High)
$49,900
Royalty %
5%
Equipment Costs (Low)
$37,000
Equipment Costs (High)
$168,000
Working Capital
$125,000
Audited Financials
No
Offers Financing
No
Audit Opinion
Unqualified opinion
Performance Metrics
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
American Freight Franchisor, LLC's parent company, Franchise Group, Inc. (FRG), and its affiliates have been involved in two litigation matters. One pending arbitration case, filed on or about November 29, 2022, involves a former franchisee, MMS Group, LLC, alleging breach of contract, breach of good faith and fair dealing, and violation of Florida's Deceptive and Unfair Trade Practices Act. Buddy's, an affiliate of American Freight Franchisor, LLC, has filed counterclaims alleging the franchisee breached non-compete covenants and sold unapproved inventory. This matter is currently pending before an arbitration tribunal. The second case, a concluded matter from May 11, 2020, involved the Federal Trade Commission investigating Buddy's parent company, Buddy's Newco, LLC, and other rent-to-own operators for alleged antitrust violations related to reciprocal purchase agreements. Buddy's Newco, LLC agreed to settle these allegations without admitting guilt, agreeing to cease certain practices, implement antitrust compliance, and notify the FTC of governance changes.
Bankruptcy History
AMERICAN FREIGHT Franchisor, LLC has no bankruptcy history to disclose in Item 4.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew an American Freight franchise, franchisees must provide American Freight Franchisor, LLC with written notice of their intent to renew between 12 and 18 months before the current term expires. They must be in good standing, meaning they are not in default of their franchise agreement or any other agreements with American Freight Franchisor, LLC or its affiliates, and have fulfilled all their obligations in a timely manner. All monetary debts owed to American Freight Franchisor, LLC, its affiliates, or suppliers must be paid in full. If leasing, franchisees must show written proof of their ability to maintain possession of the business premises for the entire renewal term or secure an acceptable alternative site. They must also agree to make necessary capital expenditures to refurbish, replace, and modernize their American Freight Retail Business to meet current brand standards. A renewal fee, equal to 50% of the then-current initial franchise fee, is required. Franchisees will also need to sign American Freight Franchisor, LLC's then-current franchise agreement, which may have terms and conditions substantially different from the original agreement. They must also comply with current qualification, accreditation, and training requirements, including any assessments or examinations related to communication systems, and sign a general release of claims.
Training & Support Program
Franchisor Assistance
American Freight Franchisor, LLC provides various forms of assistance to its franchisees. Before an American Freight Retail Business opens, American Freight provides site selection guidelines and requirements for building and design. Franchisees receive lists of approved products, suppliers, and supplies, along with access to a Pre-opening Manual and Operations Manual. American Freight Franchisor, LLC also approves all grand opening promotional materials and provides an initial training program at no charge, though franchisees are responsible for their own expenses. After opening, American Freight Franchisor, LLC continues to support franchisees by maintaining a Marketing Fund and providing updates to the approved product and supplier lists. Representatives conduct periodic visits to American Freight Retail Businesses to offer consultation and guidance. Refresher training courses are provided as needed (franchisees cover their own expenses), and updated materials for the Operations Manuals are furnished. American Freight Franchisor, LLC may also offer optional retail, management, technology, accounting, and administrative services on a fee-for-service basis. The franchisor establishes and manages a System Website and provides a Software Package for the Computer System, while reserving the right to designate single sources for other Computer System components.
Initial Training Hours
80
Training Location
Remote and Franchisee's Retail Business location
Ongoing Support
American Freight Franchisor, LLC provides continuous support to its franchisees after their American Freight Retail Business opens. This includes maintaining a Marketing Fund for system-wide advertising and promotions, updating lists of approved products and suppliers, and making periodic visits to offer consultation and guidance. American Freight Franchisor, LLC also offers refresher training courses, which franchisees are required to attend at their own expense for travel and living. Franchisees receive updated and revised materials for the Operations Manuals. American Freight Franchisor, LLC recommends that franchisees spend at least 2% of their gross sales on approved local marketing and requires participation in promotional and customer loyalty programs. They also manage aspects of the Computer System, including providing the necessary software and potentially designating single sources for hardware, and have access to data for efficient management and operation of the American Freight Retail Business.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
limited
Territory Size Requirements
American Freight franchise territories are defined by applying density classes from Forum Analytics to the zip code of the Retail Business, which then determines a trade area radius using the Buxton Suggested Radius. For multi-unit development, the Development Area's size and scope are determined on a case-by-case basis, taking into account current and projected market demand, demographics, population, traffic patterns, the location of other American Freight Retail Businesses, and the developer's capabilities and the franchisor's development plans.
Staffing Notes
American Freight Retail Businesses must always be under the direct supervision of a General Manager. This General Manager, along with at least one other designated individual, must attend and successfully complete the franchisor's initial training program. If the General Manager is not a Principal Owner, express written permission from the franchisor is required. During any absence of the General Manager, the business must be supervised by a fully-trained manager who meets the franchisor's qualifications. Franchisees are responsible for maintaining a sufficient number of trained employees to efficiently service customers and must conduct background checks on all prospective employees. The franchisor reserves the right to prohibit the employment of individuals with criminal histories that could negatively impact the brand's image. Importantly, the franchisor emphasizes that it does not share or codetermine employment terms or activities, such as employee selection, promotion, termination, hours, pay, benefits, work assigned, discipline, grievances, or working conditions, as employees are solely the responsibility of the franchisee. Franchisees must inform their staff that the franchisee is their employer and obtain an acknowledgment to this effect. Managers and supervisory personnel, and other employees receiving training, may be required to sign non-disclosure and non-compete agreements.