Wireless Zone Franchise

Financing Details

Wireless Zone LLC offers indirect financing in the form of extended payment terms for inventory and other services, potentially up to 65 days without interest if paid on time, following a credit review. For transfers and new locations, initial inventory orders may require advance electronic payment. Depending on sales and payment performance, adjusted credit terms might require an upfront prepayment for wireless devices, with the remaining balance due on the first day of the second month after the order. Failure to comply can lead to reduced credit or an interest rate of 1.5% per month on late payments. To secure these obligations, Wireless Zone LLC requires a first-priority security interest in the franchisee's assets, including equipment, inventory, and the franchise business. Wireless Zone LLC also has a referral relationship with Ascentium Capital LLC, a third-party lender, which offers equipment finance agreements (EFAs) with terms from 12 to 60 months. Rates for these EFAs range from 8.5% to 10.50% depending on the franchisee's credit profile and chosen term. No down payment is typically required, but one or more payments in advance may be. EFAs can be prepaid with a 1%-5% fee. Late payments incur a 10% fee. In default, Ascentium can declare all payments due, take possession of assets, and charge 18% interest on past-due amounts. Litigation for EFAs would be in Jefferson County, Alabama, with a waiver of jury trial. Wireless Zone LLC does not receive payments for placing this third-party financing.

Litigation Summary

Wireless Zone LLC has two concluded litigation cases reported. The first, Family Wireless #1, LLC et al. v. Automotive Technologies, Inc., was filed in 2015 by 32 franchisees who claimed Wireless Zone LLC breached their franchise agreements by taking royalties on certain amounts that were not considered commissions. This case was settled in 2016, with Wireless Zone LLC agreeing to pay plaintiffs an average of $48,440 per location and revising its royalty reduction incentive program. The second case, Tel Group, LLC et al. v Automotive Technologies, Inc., was brought in 2016 by two franchisees with 25 stores, making similar allegations and adding claims about wrongful refusal to honor renewal rights. This case was settled in September 2016, with Wireless Zone LLC paying $1,250,000 collectively, revising its multi-store royalty reduction program, and creating a reconciliation process for trade-in device costs. There is no other litigation required to be disclosed.

Renewal Conditions

To renew their franchise, Wireless Zone LLC franchisees must provide written notice of their interest between nine and six months before the current term expires. They must be in good standing, meaning they have no material defaults, owe no money to Wireless Zone LLC or its affiliates, and are current on all other obligations, including their lease. They must also have not received three or more default notices during the current term. Franchisees need to secure approval to continue as a sub-agent of Wireless Zone LLC's Provider, renovate and modernize their store to meet current design criteria, and upgrade their computer hardware and point-of-sale system to meet prevailing specifications. Finally, they must pay a $1,000 renewal fee and sign a general release of all claims against Wireless Zone LLC and its affiliates.

Staffing Notes

Wireless Zone LLC does not require the franchisee to personally operate the store full-time; however, if the franchisee (or an owner with at least a 20% equity interest) does not devote at least 40 hours per week to the business, a designated general manager must be appointed. This general manager, or the actively involved owner, must devote full-time attention (estimated at a minimum of 40 hours per week) to managing, operating, and developing the store's business. All general managers and owners with significant equity must meet Wireless Zone LLC's educational and experience standards and complete mandatory new franchisee training and all future mandatory training programs. Franchisees are responsible for recruiting, hiring, training, supervising, disciplining, and terminating all employees, and for maintaining a sufficient number of properly trained managers and other employees to service customers and ensure compliance with the Wireless Zone LLC System and Provider requirements. All personnel must also complete any mandatory training programs from the Provider.