Openworks Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$4,250 - $134,480
Franchise Fee
$2,250
Total US Locations
414
Business Summary
OpenWorks grants franchises for commercial janitorial service businesses. OpenWorks secures cleaning contracts with commercial clients and then assigns these contracts, or 'accounts,' to its franchisees. Franchisees receive exclusive rights to service these accounts using OpenWorks' trademarks and system. OpenWorks handles the monthly billing for these clients, deducts its fees, and then remits the balance to the franchisees. OpenWorks also provides initial training and equipment. Franchisees are also encouraged to find their own clients, for which OpenWorks provides administrative support.
Corporate History
O.P.E.N. America, Inc., known as OpenWorks, was incorporated in Arizona on June 5, 1987. Initially, it operated under various names including O.P.E.N. America, O.P.E.N. Cleaning Systems, O.P.E.N. of Arizona, O.P.E.N. of California and O.P.E.N. of Washington. In March 2000, the company started using the name OpenWorks. The company began operating the specific janitorial service business model it now franchises on January 1, 1999. OpenWorks first offered franchises through a former subsidiary in 1988, then briefly offered janitorial franchises under O.P.E.N. Cleaning Systems in 1995, and resumed offering them in early 1998. It also offered master franchises at various times between 1987 and 2016, though none were ever sold. OpenWorks has not offered any other types of franchises.
Financial Overview
Investment Range
$4,250 - $134,480
Franchise Fee (Low)
$2,250
Franchise Fee (High)
$87,000
Royalty %
15%
Marketing %
2.5%
Equipment Costs (High)
$19,000
Working Capital
$17,500
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
OpenWorks has substantial franchisee receivables, which include notes for initial fees, but a significant portion of these, totaling approximately $3.6 million, are in non-accrual status and $3.1 million are past due as of December 31, 2024. As a result, OpenWorks recorded a large provision for credit losses on these receivables, amounting to $3.8 million in 2024. The company also holds two notes receivable from its stockholder, totaling over $8.6 million in 2024, which are for personal non-business matters and are recorded as a reduction in stockholder's equity. In 2024, OpenWorks was notified by the State of Washington Department of Revenue that it owes approximately $1.4 million related to a sales excise tax audit from 2019-2022. OpenWorks has appealed this assessment, and the final financial impact is currently uncertain, with no amount accrued in its financial statements. OpenWorks recently took on a new $5.5 million note payable to MidFirst Bank.
Financing Details
OpenWorks offers direct financing for a portion of the marketing fee and for equipment purchases. For the marketing fee, OpenWorks may finance a portion at a 12% annual interest rate, repayable over up to two years. A minimum 20% down payment is required, and the loan is secured by personal guarantees from the franchisee's principals and their spouses, but no other collateral. OpenWorks can accelerate the loan if a default occurs. For equipment, OpenWorks can finance the entire purchase price at a 12% annual interest rate, with 12 equal monthly payments, secured by the equipment itself. OpenWorks does not offer any other direct financing or guarantee third-party loans. However, OpenWorks does recommend third-party lenders, such as Guidant Financial (from which it receives a $1,000 referral fee per agreement) and LENDZEE (from which it receives a 9% rebate on the invoiced rate).
Performance Metrics
Total US Locations
414
Franchised Units
414
Corporate Units
0
Franchising Since
1988
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
9
Litigation Summary
OpenWorks has been involved in several legal disputes. As of the FDD issuance date, there is one pending lawsuit in Texas where a franchisee is alleging breach of contract and seeking damages, with OpenWorks attempting to compel arbitration. Additionally, there was a prolonged dispute with a former Colorado franchisee, Vontray Nubine, who filed a complaint in 2021 for breach of contract. This case proceeded to arbitration where OpenWorks won, and the franchisee was ordered to pay OpenWorks attorney fees. Despite this, Mr. Nubine continued to file additional unsuccessful motions in both Maricopa County Superior Court (Arizona, ruled vexatious litigant in October 2023, case no longer active) and US District Court of Colorado (2023 case, dismissed with prejudice in September 2024 with OpenWorks allowed to seek attorney fees). Other recent concluded actions include a 2024 breach of contract lawsuit from a Texas franchisee that was moved to arbitration but not pursued by the plaintiff, a 2023 small claims complaint in Washington by a former franchisee that settled for $1,200, and a 2021 breach of contract case with a Missouri franchisee that settled in 2022 for $9,000 plus debt dissolution. A Texas franchisee's allegations from 2019-2020 for breach of contract were resolved through mediation in 2022, resulting in a $10,000 payment and debt dissolution. Older cases include a 2019 California breach of contract claim settled in 2020, a 2018 class action from Colorado alleging labor law and fraud violations that settled in 2019 and 2020, and a 2015 labor dispute involving an employee of an OpenWorks franchisee that settled in 2017.
Bankruptcy History
OpenWorks has no bankruptcy history to report for itself or its executives.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their OpenWorks franchise, franchisees must be in good standing, provide OpenWorks with six months' advance notice, and sign a new franchise agreement along with a general release of claims. The new agreement may have significantly different terms and conditions compared to the original, potentially including higher royalty fees, advertising contributions, or additional fees.
Training & Support Program
Franchisor Assistance
Before opening, OpenWorks provides franchisees with an initial training program called FirstWorks®, an equipment and supply list, and an initial equipment and supply kit (for all but the OW P package). OpenWorks also offers cleaning accounts to franchisees to meet their purchased initial monthly account volume within a specified fulfillment period. During operations, OpenWorks continues to offer accounts, handles billing and collections for all accounts, and offers a limited cash flow protection service for initial accounts for the first 90 days. OpenWorks may offer additional accounts and replacement accounts under certain conditions. Franchisees can also consult with OpenWorks personnel. OpenWorks administers an advertising fund for marketing and branding, and provides a manual with operational methods, safety, and policies. Franchisees are required to maintain their own technology systems, including email, computer, smart phone, and internet access, but OpenWorks does not directly support these.
Initial Training Hours
35
Training Location
Remote classroom settings and various determined on-site locations for hands-on training.
Ongoing Support
OpenWorks offers ongoing support to its franchisees through various channels. This includes providing consultation from its personnel upon request, administering an advertising fund for marketing and branding efforts, and offering continuing education classes, which can be optional or mandatory and may incur a fee. OpenWorks also regularly revises and updates its Operations and Safety Manual, distributing these updates to franchisees. Additionally, OpenWorks provides continuous billing and collection services for all accounts, and under specific circumstances, may offer additional or replacement cleaning accounts.
Franchise Requirements
Ideal Candidate Profile
OpenWorks is looking for franchisees who are committed to the daily management of their janitorial service business. The ideal candidate, or their designated manager, must dedicate full-time effort to operating the franchise and be fluent in English to effectively communicate with clients and maintain OpenWorks' brand image. Candidates will be evaluated on their aptitude for operating the business and their fit within the OpenWorks system. While the franchisee is encouraged to hire personnel, the designated manager must be actively involved and complete OpenWorks' training program.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Home-Based
Owner Participation
Full-Time
Territory Type
Non-Exclusive
Territory Size Requirements
For most OpenWorks franchise packages (excluding OW P and OW GrOW), the territory is defined as a 60-mile radius from the franchisee's listed business address. For the OW P and OW GrOW packages, the territory encompasses the entire continental United States.
Staffing Notes
OpenWorks franchisees are required to hire and maintain a staff of trained employees sufficient to perform janitorial services according to OpenWorks' standards. Franchisees are responsible for all employee wages, benefits, and payroll processing. It is explicitly stated that franchisees may not use independent contractors or subcontract any services. All cleaning crew members must wear OpenWorks-approved uniforms. At least one principal and the designated manager must be fluent in English for effective client communication and to uphold the brand's professional image. The designated manager is expected to manage the business full-time and must successfully complete OpenWorks' initial training program.