Steamatic Franchise

Financing Details

Steamatic does not offer any direct or indirect financing to its franchisees. This means that franchisees will need to secure all necessary funding, including loans or leases, through third-party lenders or other financial institutions.

Litigation Summary

Steamatic recently faced a lawsuit filed on June 10, 2022, by W.R.S. Investments, Inc., Natty Flat, Inc., and William R. Sims. These parties, referred to as the WRS Parties, sued Steamatic and Johns Lyng Group, Limited for claims related to an asset purchase agreement. The WRS Parties alleged that Steamatic's parent company, Johns Lyng Group, breached the agreement by failing to sell franchises during an earn-out period, seeking lost payments and damages. Steamatic counterclaimed, asserting that the WRS Parties misrepresented the condition of the Steamatic franchise network at the time of acquisition, claiming it was not marketable and required significant resources. Both sides alleged breach of contract, fraud, and fraudulent inducement. The case was resolved through a confidential settlement. Under the terms, Johns Lyng Group agreed to pay the WRS Parties $1,140,000, and a franchise agreement with an affiliate of the WRS Parties was terminated. The WRS Parties and their affiliates agreed to cease any affiliation with the Steamatic brand, and Johns Lyng Group gained the right to purchase certain assets from the terminated business. Additionally, the WRS Parties were relieved of their covenant not to compete, and both sides signed general releases, leading to the dismissal of the case with prejudice. No other litigation is required to be disclosed.

Renewal Conditions

To renew their Steamatic franchise agreement, franchisees must be in good standing, having substantially complied with the franchise agreement and all other agreements, and satisfied all monetary obligations. They must give Steamatic written notice of their intent to renew between 90 and 180 days before the agreement expires. Franchisees or their designated manager must complete any new training or refresher programs Steamatic reasonably requires. They also need to ensure their vehicles and any additional equipment comply with current System Standards, which may involve remodeling or replacement, or securing approved substitutes. Additionally, franchisees must execute a general release of claims against Steamatic (unless prohibited by state law) and sign Steamatic's then-current franchise agreement and related documents, which may have materially different terms and potentially higher fees. A $5,000 renewal fee is due when the notice of intent to renew is submitted. Steamatic reserves the right to refuse renewal if the franchisee has received three or more notices of default during the term, even if those defaults were subsequently cured.

Staffing Notes

Steamatic requires franchisees to either directly operate their business or appoint an approved Designated Manager who will be responsible for day-to-day operations. If the franchisee is an entity, an Operating Principal must be designated, holding at least a 51% equity interest and overseeing daily activities. Both the Operating Principal and any Designated Manager must successfully complete Steamatic's initial training program. Franchisees are generally expected to have 1-2 additional employees for whom payroll is estimated. Steamatic also requires background checks for all employees who enter customer premises and mandates that all employees wear clean, approved uniforms. Staffing levels, roles, qualifications, training, and appearance must comply with Steamatic's System Standards.