Safeguard Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$11,080 - $65,160
Franchise Fee
$1,530
Min Cash Required
$6,000
Total US Locations
45
Business Summary
Safeguard Business Systems operates as a distributorship where its distributors solicit orders for a wide array of Safeguard products and services. These offerings include printed business forms, one-write accounting and financial systems, non-financial one-write systems (like gift certificates), computer forms, checks, envelopes, tax forms, software, records management, full-color printing, business apparel, promotional products, office supplies, web and design services, and other related business supplies. Distributors also solicit orders for approved ancillary products. All orders are subject to acceptance by Safeguard Business Systems, Inc. (SBS), which then makes the sale directly to the customer, and the distributor earns a commission on these sales. Safeguard Business Systems distributors can operate their business from a home office or a commercial facility.
Corporate History
Safeguard Business Systems, Inc. (SBS), an affiliate of Safeguard Franchise Sales, Inc. (SFS), has been manufacturing and selling business products and services, primarily to small businesses, since 1956. SFS itself was incorporated in Texas on September 26, 2014, as a result of a corporate restructuring. Prior to SFS, another affiliate, Safeguard Franchise Systems, Inc. (SF Systems), operated as the franchisor for Safeguard Business Systems distributors from May 2, 2007, until April 30, 2014. SFS officially began offering distributorships on January 9, 2015. The immediate parent of SFS is Safeguard Holdings, Inc., with Deluxe Corporation as the ultimate parent. In the past, Safeguard Acquisitions, Inc., another affiliate, ran a "Redevelopment Program" where it acquired independent businesses, converted them to Safeguard Businesses, and then sold them to third parties or existing Safeguard distributors; however, this program is no longer in operation.
Financial Overview
Investment Range
$11,080 - $65,160
Franchise Fee (Low)
$1,530
Franchise Fee (High)
$1,530
Minimum Cash Required
$6,000
Equipment Costs (Low)
$2,500
Equipment Costs (High)
$31,000
Working Capital
$13,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Safeguard Franchise Sales, Inc.'s auditors issued an Unqualified opinion on its financial statements, indicating that they present the company's financial position fairly. However, the auditor's report includes an "Emphasis of Matter" note highlighting that the company engages in significant transactions with related parties, although this does not modify the opinion itself. The FDD also includes a special risk disclosure indicating that "the franchisor's financial condition, as reflected in its financial statements (see item 21), calls into question the franchisor's financial ability to provide services and support to you." Notes in the financial statements detail that Safeguard Franchise Sales is dependent on its affiliate, Safeguard Business Systems, for accounting, information services, legal, and other administrative services. The company's revenues are primarily generated from referral fees through an agreement with Safeguard Business Systems, where it receives 15% of revenue from referred customers and pays 14% back to Safeguard Business Systems. Furthermore, there's a note receivable from its parent company, Safeguard Holdings, Inc., for $100,000, on which no principal or interest payments have been made and which is recorded as a reduction of stockholder's equity.
Financing Details
Safeguard Franchise Sales, Inc. or its affiliates may offer financing to distributors. One option is a cash advance, which may be offered by Safeguard Business Systems (SBS) to distributors facing significant commission chargebacks. The terms for these cash advances include an interest rate ranging from 8% to 10% based on SBS's corporate borrowing rate, with repayment periods from 3 to 6 months depending on the amount, and only one cash advance can be outstanding at a time. For instance, a $6,000 cash advance might be collected over 3 months, and a $12,000 advance over 6 months. Additionally, Safeguard Franchise Sales, Inc. may finance up to 100% of the total purchase price when a franchisee acquires an existing Safeguard Business. The amount of the down payment for such acquisitions can vary. This type of financing typically requires the acquired assets, the purchaser's current assets, and ownership interests in the purchasing entity to be offered as security, and the principal owners may need to personally guarantee the loan. A loan modification fee, equal to 3% of the outstanding principal, may be charged for any refinancing or other modifications requested on these loans. While other financing arrangements are not generally offered, the franchisor refers to these specific cash advance and business acquisition financing options.
Performance Metrics
Total US Locations
45
Franchised Units
34
Corporate Units
11
Franchising Since
2015
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
5
Litigation Summary
Safeguard Franchise Sales, Inc. (SFS), the franchisor, explicitly states that it was not a party to any of the five litigation cases disclosed in Item 3. All cases involved Safeguard Business Systems, Inc. (SBS), an affiliate of SFS, and/or other affiliates: 1. Jeff Haulbrook and Jeff Haulbrook, Inc. v. Safeguard Business Systems. Inc. (filed May 21, 2021, settled September 15, 2022): A pre-existing distributor, Haulbrook, sued SBS for alleged breach of contractual obligations, including incorrect commission tracking and tortious interference with business acquisitions. Haulbrook sought damages for breach of contract, duty of loyalty, good faith, fraud, negligence, civil theft, and a violation of the South Carolina Unfair Trade Practices Act. SBS counterclaimed. The parties reached a confidential settlement, which included SBS purchasing Haulbrook's exclusive commission rights and terminating the distributor agreement. 2. Safeguard Forms & Systems, Inc. v. Safeguard Business Systems, Inc. (filed August 15, 2019): A pre-existing distributor alleged SBS breached an Asset Purchase Agreement by misrepresenting the value of a business and failing to deliver promised sales. The plaintiff sought actual damages, attorneys' fees, and costs. The parties settled confidentially, and SBS agreed to expand the business base sold to the plaintiff under a prior settlement. 3. T3 Enterprises, Inc. et al. v. Safeguard Business Systems, Inc. et al. (filed August 26, 2014): Two pre-existing distributors alleged that SBS and its affiliates breached their contracts and committed other wrongful acts by allowing an acquired business to sell to the plaintiffs' customers. T3's claims against SBS went to arbitration, resulting in an award of over $1.4 million in damages and over $2.8 million in attorneys' fees to T3. A separate jury trial in the state court action found SBS liable to Thurston Enterprises for over $1.6 million in actual damages and $4.75 million in punitive damages. SBS paid both judgments and costs in full. 4. United Safeguard Distributors Association, Inc. et al v. Safeguard Business Systems, Inc. and Deluxe Corporation (filed May 27, 2015): An association of Safeguard distributors and two individual distributors sued SBS and its ultimate parent, Deluxe Corporation, alleging breach of contract, unfair sourcing, pricing requirements, and un disclosed rebates from suppliers. The claims by the association were dismissed. The individual distributors settled, with SBS purchasing certain assets from them for over $3 million. 5. Safeguard OKC, Inc. et al. v. Safeguard Business Systems, Inc. et al. (filed January 7, 2015): Two pre-existing distributors alleged that SBS and an affiliate made false or negligent representations regarding two Oklahoma businesses purchased under a Redevelopment Program. The plaintiffs sought compensatory, consequential, and exemplary damages, among other remedies. The parties settled, with the plaintiffs returning one of the purchased businesses and extinguishing related debt.
Bankruptcy History
Safeguard Franchise Sales, Inc. has no bankruptcy history to disclose.
Agreement Terms
Initial Term
10 years
Training & Support Program
Franchisor Assistance
Safeguard Franchise Sales, Inc. (SFS) provides various forms of assistance to its Safeguard Business distributors. Before opening, SFS provides access to or loans copies of the operations manuals. On an ongoing basis, SFS uses commercially reasonable efforts to assist distributors in soliciting orders and ensuring customer satisfaction, and it takes sole responsibility for customer billing and account collection. SFS also provides initial and ongoing training programs. The franchisor administers commission payments and offers indemnification for trademark use (if compliant) and for product defects (via its affiliate, SBS). For marketing, SFS may provide advertising and marketing materials, and it requires pre-approval for any advertising developed by the distributor, including social media posts. The franchisor may also engage in sales promotions and digital marketing campaigns. Technologically, SFS requires distributors to use its proprietary Customer Management System (CMS) for order entry and customer information, providing monthly support for CMS (including upgrades and technical support) and access to an intranet called "24/7" for business operations and communication.
Initial Training Hours
137
Training Location
Online/virtual via Safeguard Learning Center and live webinars
Ongoing Support
After opening, Safeguard Franchise Sales, Inc. (SFS) offers ongoing support to its Safeguard Business distributors. SFS continuously uses commercially reasonable efforts to help with order solicitation and ensure customer satisfaction, working with distributors on customer complaints. It maintains sole responsibility for customer billing and collecting accounts receivable, with distributor cooperation. SFS provides ongoing training programs, including an encouraged (but not required) "Ongoing Development Training" through classroom instruction, conferences (The Exchange, The Connexion), e-learning tutorials, and webinars/conference calls related to new products and marketing campaigns. Fees may apply for these. SFS also provides monthly support for the Customer Management System (CMS), covering upgrades, revisions, and technical issues, and offers assistance for non-CMS technical support at an hourly rate. Distributors have access to the "24/7" intranet, a primary resource for managing and operating their business, including marketing materials and sales tools. SFS may provide optional sales and marketing services, and it employs digital marketing campaigns. Distributors are encouraged, but not required, to attend national and regional network meetings (The Exchange and The Connexion), for which travel expenses and sometimes registration fees apply. SFS also offers periodic and optional staff sales training and continuing education programs through e-learning or regional classroom sessions, with varying costs.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
Hands-On
Territory Type
Non-Exclusive
Territory Size Requirements
Safeguard franchisees do not receive an exclusive territory. Instead, they are granted the right to solicit orders for Authorized Safeguard Products and Services anywhere in the United States, with the exception of specific exclusive territories held by other Safeguard distributors, or protected accounts belonging to other distributors or company-owned businesses. There are no size requirements for a Safeguard franchisee's territory, as the model is open and non-exclusive, defined by where others do not already have protected rights.
Staffing Notes
Safeguard Franchise Sales, Inc. requires an individual Safeguard franchisee to personally direct the operation of their Safeguard Business. If the business operates through a legal entity, the franchisee must designate an approved individual, referred to as the Principal Owner, to personally oversee operations. This Principal Owner must maintain at least a 51% ownership stake in the entity. Safeguard franchisees have the option to appoint an approved manager to supervise daily operations; however, the franchisee and Principal Owner remain fully accountable for the manager's performance. Any designated managers, along with all employees and agents, are required to sign confidentiality and non-compete agreements and successfully complete initial training.