Risk Score
Pending analysis
Investment Range
$191,015 - $255,415
Franchise Fee
$40,500
Total US Locations
29
Business Summary
Spray-Net Inc. offers and awards franchises for independently owned and operated businesses that provide proprietary and other spray painting and coating services for the exterior and interior of homes and residential buildings, including doors, windows, masonry, and sidings. Spray-Net Inc. uses its designated proprietary marks and a system of business operations, including a 'Mobile Services Unit' trailer with specific equipment and tools, as a unique renovation solution.
Corporate History
Spray-Net Inc. was incorporated in Delaware on September 13, 2016. While it first issued a Disclosure Document in 2016, Spray-Net Inc. only began actively offering franchises in the United States in late 2019, choosing first to focus on developing and supporting its franchise network and System in Canada. Its parent company, Spray-Net International, Inc., is a Canadian corporation formed on February 3, 2016. Other affiliates include SN Franchisor Canada (incorporated November 2013, offering Canadian franchises), SN Quebec (incorporated March 2010, operating a similar business in Quebec and licensing marks), SN Distribution Inc. (incorporated March 2016, distributing paint products and equipment), and Groupe Spray-Net, Inc. (incorporated November 2013, parent company to several Spray-Net affiliates).
Financial Overview
Investment Range
$191,015 - $255,415
Franchise Fee (Low)
$40,500
Franchise Fee (High)
$54,500
Royalty %
7%
Marketing %
2%
Equipment Costs (Low)
$27,000
Equipment Costs (High)
$50,000
Working Capital
$35,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
The financial statements of Spray-Net Inc. reflect a financial condition that raises questions about Spray-Net Inc.'s ability to provide ongoing services and support to its franchisees. Additionally, several states require initial fees and payments to be deferred until Spray-Net Inc. completes its pre-opening obligations to franchisees, indicating further concerns about the franchisor's financial position.
Financing Details
Spray-Net Inc. does not offer any direct or indirect financing to its franchisees. Spray-Net Inc. also does not guarantee any franchisee's notes, leases, or other obligations.
Performance Metrics
Total US Locations
29
Franchised Units
29
Corporate Units
0
Franchising Since
2016
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
1
Litigation Summary
Spray-Net Inc. has one ongoing arbitration proceeding involving its Canadian affiliate, SN Canada. This proceeding, commenced around February 2019 by a former franchisee, alleges that SN Canada's Franchise Disclosure Document was materially deficient and seeks rescission and damages. SN Canada is actively defending against these claims, stating they are without merit, and the parties are currently awaiting an arbitrator assignment.
Bankruptcy History
Spray-Net Inc. has no bankruptcy information to disclose.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Spray-Net Inc. franchisees must: have no uncured material defaults (including monetary defaults); sign Spray-Net Inc.'s then-current franchise agreement (which may have different terms); pay a $10,000 renewal fee; complete any required refresher training; sign a general release of claims against Spray-Net Inc.; have participated in and supported operational procedures; and re-image, renovate, refurbish, and modernize their Approved Vehicles and Franchised Business to meet current brand standards within a specified timeframe.
Training & Support Program
Franchisor Assistance
Before opening, Spray-Net Inc. assists with territory designation, provides access to the Operations Manual, and supplies initial business materials like a Marketing Kit, Production Supplies Kit, and Sales Kit. It also offers specifications for equipment, including the Mobile Services Unit, and guidelines for opening inventory. Initial training includes a blend of online learning (E-Learning Network) and in-person sessions at headquarters or other designated facilities, along with sales and production training conducted at the franchisee's location. Spray-Net Inc. also provides pre-opening marketing and advertising recommendations and general business guidance. Ongoing support from Spray-Net Inc. includes advisory assistance in operations, updates on new products, services, or suppliers, and access to representatives via phone or email for discussions. Spray-Net Inc. may develop new offerings, host workshops, seminars, and provides mandatory call center services. It also administers the Brand Development Fund and can offer pricing guidelines. Franchisees are required to attend annual conventions and regional meetings.
Initial Training Hours
138
Training Location
Online/virtual and within the franchisee's Designated Territory
Ongoing Support
After opening, Spray-Net Inc. provides ongoing advice and consultation on business operation and management, and makes information about new products, services, suppliers, or updated business methods available. Franchisees can receive support via telephone or email from Spray-Net Inc. representatives during normal business hours. Spray-Net Inc. may also develop and make available new services, products, and offerings. Additionally, Spray-Net Inc. may conduct national, regional, or local workshops and seminars, and provides mandatory call center services. Spray-Net Inc. administers a Brand Development Fund and offers guidelines on pricing for approved products and services. Franchisees must attend mandatory annual conventions and regional meetings.
Franchise Requirements
Ideal Candidate Profile
Spray-Net Inc. expects franchisees to personally participate in the direct management and operation of their business on a full-time basis, especially during the first year. If a Designated Manager is appointed, they must successfully complete initial training and, within one year, either own at least 10% equity in the franchise or be granted a compensation package that provides for 10% equity within a reasonable timeframe. The franchisor also seeks qualified franchisees for multi-territory development.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
Hands-On
Territory Type
Non-Exclusive
Territory Size Requirements
Spray-Net Inc. defines a standard Base Territory as a geographic area containing approximately 75,000 qualified single-family households with an annual household income exceeding $60,000. Franchisees can purchase additional Designated Territories, each also comprising around 75,000 qualified single-family households. These household numbers are determined in aggregate using raw data, without specific demographic or age considerations.
Staffing Notes
Spray-Net Inc. requires that if the franchisee or their Designated Manager is not physically present at a customer job site, at least one 'SN Specialist' must be present. SN Specialists are individuals who have completed specific training components, signed a confidentiality agreement, and received written authorization from Spray-Net Inc. to provide Approved Services, especially those involving proprietary products. Franchisees have sole authority over hiring, firing, training, and other employment decisions, and are responsible for ensuring employees are properly trained on the System. Spray-Net Inc. maintains that no employer or joint employer relationship exists between itself and the franchisee's personnel.