Sculpture Hospitality Franchise

Financing Details

Sculpture Hospitality may offer to finance a portion of the initial franchise fee, up to a maximum of 50% of the fee, for a term of up to 3 years. The financed amount is repaid in monthly installments, with an 8% annual interest rate. Sculpture Hospitality does not take any security interests for this financing. Franchisees can pay off the promissory note early without penalty for remaining months, but any interest already earned is retained by Sculpture Hospitality. If a franchisee is an entity, its owners must personally guarantee the financing. In case of default on the note, Sculpture Hospitality can declare the entire unpaid balance immediately due and may terminate the Franchise Agreement. Sculpture Hospitality does not currently sell or assign financing arrangements to third parties, and it does not offer or arrange financing for computer hardware, software systems, or supplies, nor does it guarantee third-party leases or obligations.

Litigation Summary

Sculpture Hospitality itself has no ongoing or pending litigation. However, its immediate predecessor, Sculpture Hospitality, LLC, was involved in a lawsuit in 2015 with Florida franchisees who alleged wrongful non-renewal and termination, seeking $300,000 in damages. Sculpture Hospitality filed a counter-demand for breach of non-competition. This case was settled in 2017, with the predecessor paying the former franchisees $126,123. An earlier predecessor, Bevinco American Bar Systems, Ltd., was also subject to a Maryland Attorney General's Consent Order in 2005 for selling franchises before its registration was effective, requiring an offer of rescission and compliance training.

Renewal Conditions

To renew their Sculpture Hospitality franchise, franchisees must notify Sculpture Hospitality in writing at least nine months before the current agreement ends. They must be in good standing, meaning they have not defaulted on the agreement or any other related agreements, and have met all monetary obligations and minimum client evaluation requirements in the final year of the term. Franchisees will need to sign Sculpture Hospitality's then-current Franchise Agreement, which may have different terms such as higher royalty fees, increased minimum requirements for the Inventory Control System, a potentially smaller territory, and additional fees. They must also pay a renewal fee equal to 10% of the then-current initial franchise fee for their territory size, including the training fee. However, if minimums are exceeded for at least six consecutive months prior to renewal, the renewal fee will be reduced by 50%. Additionally, the franchisee's designated manager and any other required owners or employees must attend and successfully complete any mandated training programs. Franchisees and owners must also sign a general release of claims against Sculpture Hospitality. If renewed, the minimum monthly Client Evaluations may increase by 10% annually starting in the fourth year.

Staffing Notes

Sculpture Hospitality requires individual franchisees to devote their full-time efforts to managing and operating the business. If the franchisee is a corporation or other entity, a majority owner must be appointed as the manager and directly supervise operations. All executive personnel, including owners, must sign a Confidentiality Agreement and Covenant Not to Compete, while other employees and independent contractors must sign a Confidentiality Agreement to protect proprietary information. All employees of Sculpture Hospitality franchisees are required to use a designated @sculpturehospitality.com email address for business communications. Franchisees are solely responsible for the terms and conditions of their employees' employment.