Signal Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$126,950 - $5,093,300
Franchise Fee
$114,000
Min Cash Required
$3,000
Total US Locations
1,059
Business Summary
Signal 88 operates a security-services business that specializes in security patrols, onsite and off-site surveillance, executive security services, security consulting, and training in personal safety, risk avoidance, and threat management. Signal 88 franchisees primarily serve business customers needing site surveillance and security consulting, but also provide executive protection and safety training for individuals and businesses.
Corporate History
Signal 88's concept began with Signal 88 Security Group, LLC, which was formed on July 16, 2003, and operated a security-services business in Omaha, Nebraska. This entity did not offer franchises. Signal 88 Franchise Group, Inc. was formed on November 13, 2007, and began offering franchises of the security-services concept from January 1, 2008, until December 31, 2014. During this period (2009-2014), Signal 88 Franchise Group, Inc. also operated company-owned security businesses and acquired the assets of Signal 88 Security Group, LLC in June 2013. The current franchisor, Signal 88, LLC, was formed on December 11, 2014. On January 1, 2015, the entire Signal 88 franchise system, including company-owned outlets, was transferred to Signal 88, LLC following an investment transaction. By February 2018, Signal 88, LLC had sold all its company-owned outlets to franchisees. In June 2020, Reed Nyffeler became the sole owner of the common stock of Signal 88 Franchise Group, Inc. The brand name for the franchise was changed from various 'Signal 88' names to simply 'Signal' in January 2022. An affiliate, Signal 88 Security Canada, Inc., has offered franchises in Canada since February 2015.
Financial Overview
Investment Range
$126,950 - $5,093,300
Franchise Fee (Low)
$114,000
Franchise Fee (High)
$5,000,000
Minimum Cash Required
$3,000
Royalty %
4%
Equipment Costs (Low)
$2,250
Equipment Costs (High)
$56,150
Working Capital
$6,500
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Signal 88, LLC has received an unqualified audit opinion for its financial statements, indicating that they present the company's financial position fairly. However, management has identified that Signal 88, LLC is not in compliance with certain capital expenditures covenants on a refinanced note payable to a financial institution as of December 31, 2023, though a waiver for this covenant has been obtained. Additionally, Signal 88, LLC demonstrates a high level of economic dependency on a single customer, Walmart, which accounted for 28% of its total revenues and 27% of its accounts receivable from franchisee contracts in 2023.
Financing Details
Signal 88 offers financing for initial franchise fees and for ordinary, reasonable, and necessary business expenses. For initial franchise fees, Signal 88 provides two loan types: the SignalAssist Loan and the Revenue-Based Territory Purchase Loan. The SignalAssist Loan requires a down payment ranging from $2,500 to $10,000, depending on territory population, and finances the remaining franchise fee over 36 months at the Prime Rate plus 375 basis points. Payments can be equal monthly installments, or equal installments with a balloon payment, or a single balloon payment. The Revenue-Based Territory Purchase Loan also requires a down payment of $2,500 to $10,000 and finances the remaining fee, with monthly payments equal to 10% of monthly Gross Revenues. This loan's term is revenue-based, with a maximum of three years, and an interest rate of Prime Rate plus 275 basis points. Franchisees taking the Revenue-Based loan must meet a revenue target of $24,000 per month by the twelfth month of operation or risk the full loan amount becoming due. For ordinary operating expenses, Signal 88 offers an Operations Line of Credit up to 90% of uncollected Gross Revenues (less than 91 days old). This line of credit has no down payment and must be repaid within 60 days of each advance. The interest rate for this line of credit varies based on the percentage of outstanding balance relative to eligible gross revenues, ranging from Prime Rate plus 275 basis points to Prime Rate plus 1165 basis points. All loans from Signal 88 have no prepayment penalty and are secured by substantially all of the franchisee's assets, with personal guarantees from the franchisee's principals. Default on any financing can lead to accelerated debt, collection costs, and franchise termination.
Performance Metrics
Total US Locations
1,059
Franchised Units
1,059
Corporate Units
0
Franchising Since
2008
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
5
Litigation Summary
Signal 88 has been involved in several legal matters. Currently, Signal 88 is a defendant in a lawsuit filed in August 2022 by Liberty Mutual Fire Insurance Company, which alleges breach of contract and unjust enrichment, claiming damages over $500,000. Signal 88 denies these allegations and plans a vigorous defense. In September 2023, Signal 88 filed a lawsuit against a franchisee and individuals seeking a declaratory judgment for proper termination of a Franchise Agreement, damages for lost royalties and past due loan amounts, and unjust enrichment. The defendants have counterclaimed, alleging fraudulent misrepresentation and violations of the Nebraska Franchise Practices and Consumer Protection Acts, which Signal 88 also denies. In past actions, Signal 88 was involved in a dispute with a software vendor, Lyconic, LLC, filed in 2016. While an arbitrator ruled in Signal 88's favor on a declaratory judgment, a counterclaim from Lyconic for misappropriation of trade secrets resulted in a $25,000 judgment against Signal 88 in 2019. A related order adding a $109,666.67 liability was later overturned by the Nebraska Supreme Court in February 2022. Another case, filed in September 2016 by Colorado Security Consultants, alleged breach of contract, unjust enrichment, and independent contractor misclassification. Signal 88 counterclaimed, and the parties settled in July 2017 for a $43,000 payment from Signal 88 and mutual releases. In a regulatory action in 2018, Signal 88 Franchise Group, Inc. (a predecessor) surrendered its Indiana security agency license, paid a $2,500 fine, and agreed to a five-year ban on applying for a new license due to allegations of license misuse and displaying an expired license.
Bankruptcy History
Signal 88, LLC has no bankruptcy information to report, meaning neither the company nor its key personnel have been involved in any bankruptcy proceedings that are required to be disclosed.
Agreement Terms
Initial Term
3 years
Renewal Term
3 years
Renewal Conditions
To renew their franchise agreement, Signal 88 franchisees must provide written notice of their intent to renew between 180 and 240 days before the current term ends. They must sign a new agreement or renewal addendum (which may have materially different terms), meet established sales goals and performance standards, pay a renewal fee of $0.25 per capita (unless specific sales goals of $200,000 in year 1, $500,000 in year 2, and $1,000,000 in year 3 are met, in which case the fee is waived), complete a renewal application, sign a general release (unless superseded by state law), renew any lease, make necessary capital expenditures as deemed by Signal 88 to reflect the current brand image, and not be in breach or default of any existing agreements with Signal 88.
Training & Support Program
Franchisor Assistance
Before opening, Signal 88, LLC provides several key forms of assistance. This includes designating a protected territory, granting access to its proprietary System, trademarks, and promotional materials. Signal 88 provides an initial training course for the franchisee and up to two designated managers, covering fundamental aspects of establishing and operating the business. Franchisees also receive electronic access to Signal 88's confidential Franchise Performance Manual, which contains mandatory operating procedures, and Signal 88 cooperates in the registration of the business name in the franchisee's state if required. After opening, Signal 88 provides ongoing advisory support, offering periodic advice and materials on new sales and marketing developments, operational techniques, and problem-solving. It also makes standard specifications available for fixtures, furnishings, and signs. Crucially, Signal 88 offers billing and collection services to franchisees and reviews any advertising materials they create. Additional training programs and refresher courses are made available as deemed appropriate. For franchisees required to establish a physical office, Signal 88 reviews proposed leases and modifications. Ongoing virtual training and consultation are provided via phone, email, and web conference, requiring regular attendance, and franchisees are given web access to various resource materials.
Initial Training Hours
98
Training Location
Omaha, Nebraska
Ongoing Support
After opening, Signal 88, LLC provides ongoing advisory support to assist franchisees, offering periodic advice and materials on new sales and marketing developments, operational techniques, and problem-solving. Signal 88 also issues bulletins regarding the System. It makes additional training programs and refresher courses available as it deems appropriate. Franchisees' advertising is reviewed by Signal 88. Periodic and ongoing virtual training and consultation are provided via phone, email, and web conference, requiring regular attendance, and franchisees receive web access to various resource materials. Franchisees are also required to attend Signal 88's annual convention, with a fee charged if they fail to attend.
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
full-time
Territory Type
exclusive
Territory Size Requirements
Signal 88 territories are typically defined by ZIP codes and generally encompass an area with approximately 100,000 people. For franchises located within Metropolitan Statistical Areas (MSAs) with populations under 250,000, Signal 88 franchisees may acquire a territory with fewer than 100,000 people.