Risk Score
Pending analysis
Investment Range
$77,000 - $490,500
Franchise Fee
$13,500
Min Cash Required
$5,000
Total US Locations
51
Business Summary
iCode offers STEAM-based educational courses for children and adults through two primary programs: iCode School and iCode Reach. iCode School franchisees operate a dedicated physical school location and also have the option to provide classes at various external venues like public schools, private schools, STEM/STEAM centers, churches, and libraries within a defined Protected Area. iCode Reach franchisees, on the other hand, operate without a fixed school, offering all classes exclusively at such external venues within their Protected Area.
Corporate History
iCode Franchise, Inc. was formed as a Texas corporation on June 23, 2016. The iCode brand itself was founded in June 2015 by Abid Abedi. iCode Franchise, Inc. operates under its corporate name and the trade name ICODE, focusing on franchising STEAM-based educational courses for children and adults. The company began offering iCode School program franchises in June 2016 and expanded to offer iCode Reach program franchises in January 2021. While the franchisor has never operated businesses of the type it franchises, its affiliates have owned and operated iCode Schools since May 2015.
Financial Overview
Investment Range
$77,000 - $490,500
Franchise Fee (Low)
$13,500
Franchise Fee (High)
$40,000
Minimum Cash Required
$5,000
Royalty %
12%
Marketing %
2%
Equipment Costs (Low)
$50,000
Equipment Costs (High)
$339,000
Working Capital
$27,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
iCode Franchise, Inc.'s financial statements indicate that the company has experienced ongoing losses from its operations and currently has a deficit in its capital. However, the company's management believes that its primary owner and related companies have sufficient funds and have historically provided cash to support and maintain iCode Franchise, Inc.'s business operations. Therefore, management does not anticipate that these financial conditions will significantly prevent the company from meeting its obligations. Additionally, iCode Franchise, Inc. has a substantial amount of deferred franchise fee revenue, approximately $1,625,000 as of December 31, 2022, which is expected to be recognized as revenue in future periods.
Financing Details
iCode Franchise, Inc. does not offer any direct or indirect financing to its franchisees, nor does it guarantee any of their loans, leases, or other financial obligations.
Performance Metrics
Total US Locations
51
Franchised Units
47
Corporate Units
4
Avg Square Footage
1,900
Franchising Since
2016
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
1
Litigation Summary
iCode Franchise, Inc. was involved in one litigation case. On May 23, 2022, a franchisee, Code Utah, LLC, filed a lawsuit alleging violations of the Texas Deceptive Trade Practices Act, unfair competition, fraudulent inducement, unjust enrichment, mutual mistake, and negligent misrepresentation. The franchisee claimed their leasehold improvement costs would exceed the amount stated in the FDD based on a construction bid. The franchisee sought to cancel their franchise agreement and receive back all amounts paid, plus legal fees. The case was settled on January 29, 2024, with iCode Franchise, Inc. paying $14,000 and its insurer paying an additional $85,000 to the plaintiff, and the franchise agreement was terminated.
Bankruptcy History
iCode Franchise, Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
iCode Franchise, Inc. franchisees can renew their agreement for one additional 10-year term. To do so, they must notify the franchisor in writing between 6 to 12 months before their current agreement expires. Franchisees must also be in full compliance with their existing agreement and all brand standards, pay a renewal fee equal to 50% of the then-current initial franchise fee, possess the right to continue occupying their business premises, and sign a general legal release in favor of the franchisor. For iCode School franchisees, they must also renovate or refurbish their school to match the current look and feel of new iCode Schools. Additionally, franchisees will be required to sign the franchisor's then-current franchise agreement, which may contain significantly different terms than their original agreement.
Training & Support Program
Franchisor Assistance
iCode Franchise, Inc. provides comprehensive support to its franchisees. Before opening, the franchisor conducts initial training for the Operating Principal and Director, grants digital access to its Manual and marketing playbook, shares information about approved vendors, and assists with site approval and lease term approval for iCode School locations. Pre-opening consultation and advice are also provided regarding development, building layout, furnishings, equipment, purchasing, and inventory control. After opening, iCode Franchise, Inc. offers additional training programs (such as workshops and seminars), provides ongoing consultation and advice (including new product development, operational guidance, advertising, marketing, and financial/accounting advice), conducts periodic quality assurance inspections, and continues to share information about approved vendors. Monthly virtual training for instructors is also a requirement.
Initial Training Hours
72
Training Location
Corporate headquarters in Frisco, TX
Ongoing Support
iCode Franchise, Inc. provides ongoing support to its franchisees through various means. This includes offering additional training programs in formats like workshops and seminars. Franchisees' instructors are required to attend ongoing monthly virtual training. The franchisor also offers continuous consultation and advice on new product development, business operations, management, advertising, marketing, and financial and accounting matters. Furthermore, iCode Franchise, Inc. conducts regular quality assurance inspections of iCode School premises or other venues where services are provided. Information about approved vendors is also communicated to franchisees on an ongoing basis.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
Full-Time
Territory Type
Protected
Territory Size Requirements
For iCode School programs, the Protected Area is defined by a specific radius, map, or cross streets forming a circular perimeter. A typical Protected Area is three miles, but the minimum size can be as small as an office or retail building in densely populated urban areas, or larger in less populated suburban areas. The size depends on factors like potential student population, income levels, home values, and population growth. For iCode Reach programs, the Protected Area is mutually agreed upon before signing the franchise agreement and is identified by geographical or political boundaries, requiring a minimum population of 250,000 and approximately eight feeder schools. This Protected Area for iCode Reach programs will generally not exceed 25 miles from the franchisee's place of business.
Staffing Notes
iCode requires each franchised business to have an Operating Principal and a Director. The Director must supervise the business on-premises full-time and cannot engage in other businesses. The Operating Principal, if not also the Director, must own at least 51% of the franchisee entity and have authority to act on its behalf. Both the Operating Principal and Director must successfully complete iCode's initial training program. iCode may also require franchisees to retain additional managers and other personnel as deemed necessary, and all such staff must meet iCode's training, educational, and other criteria. Instructors are required to attend ongoing monthly virtual training provided by iCode. Franchisees are responsible for ensuring all their instructors and employees are properly trained to follow iCode's systems and standards.