Miracle-Ear Franchise

Financing Details

Miracle-Ear does not guarantee a franchisee's obligations to third parties but may offer direct financing at its discretion for various purposes including acquisitions, start-up costs, working capital, relocations, renovations, expansions, and conversions. For new territory or location acquisitions, Miracle-Ear may finance up to 100% of the initial franchise fee or the purchase price for assets, typically over 60 months at a 6% annual percentage rate (APR), though other rates and terms may apply. New franchisees with hearing instrument experience may qualify for a loan to cover up to four months of working capital or to finance renovations. Existing franchisees may also receive loans for relocations or new center openings. Financing is provided through a Financial Assistance Agreement or an Acquisition Program Agreement, accompanied by a promissory note, personal guarantee, and security agreement. The Acquisition Program Promissory Note, specifically for converting existing competing businesses, may offer five or ten annual installments at a fixed rate equal to the then-current mid-term Applicable Federal Rate (4.46% in March 2025), with potential for interest and principal forgiveness if certain unit sales targets are met. All loans require a security interest in the franchised business's assets and a personal guarantee from the owners. Miracle-Ear reserves the right to sell or assign these financing instruments in the future, though it is not current practice.

Litigation Summary

Miracle-Ear has a historical legal record that includes two governmental actions involving its predecessor, Dahlberg, Inc. In 1994 and 1995, Dahlberg, Inc. settled two related Federal Trade Commission (FTC) lawsuits concerning advertising claims for its "Clarifier" product, resulting in $2.75 million in civil penalties. Additionally, in 1994, Dahlberg, Inc. reached a voluntary compliance agreement with 36 State Attorneys General, paying $700,000 in fees and agreeing to restrictions on advertising claims for the "Clarifier" product. More recently, in 2020, a class-action lawsuit was filed against NTY Franchise Company, LLC, and its officers, including Pete Palmisano and Laura Tober, who are now Miracle-Ear personnel but were involved with NTY at the time. This lawsuit alleged misrepresentations in a business plan and false terms in a franchise agreement, which was settled in August 2021 for $400,000. Miracle-Ear itself has no pending litigation or ordinary litigation with franchisees in the last year.

Renewal Conditions

To renew their franchise agreement, Miracle-Ear franchisees must provide written notice of their intent to renew no less than 180 days and no more than 365 days before the agreement expires. If they fail to provide timely notice, they will receive a reminder, and if they still fail to respond within 30 days of the reminder, they will be considered to have elected not to renew, possibly incurring a late notice fee of up to $5,000 per week. Franchisees must also renovate and modernize their centers to meet current brand standards, cure any outstanding defaults, be in substantial compliance with the agreement, and satisfy all financial obligations to Miracle-Ear and its affiliates. They may be required to agree on a development schedule for any underdeveloped areas in their territory and sign Miracle-Ear's then-current franchise and ancillary agreements, which may have different terms (though no new initial franchise fee will be charged). Finally, franchisees must complete any required refresher training and execute a general release of claims against Miracle-Ear.

Staffing Notes

Miracle-Ear requires that each center be supervised by at least one Miracle-Ear Certified hearing care professional during all operating hours. Owners, managing principals (for entities), and designated general managers must successfully complete Miracle-Ear's initial training program. Additionally, all Front Office Associates (FOA) and Hearing Consultants who directly interact with customers are required to complete Miracle-Ear Certification training within 90 days of hire and renew it annually through an online learning management system. Miracle-Ear emphasizes compliance with staffing policies to ensure high customer service standards.