Risk Score
Pending analysis
Investment Range
$262,394 - $618,706
Total US Locations
79
Business Summary
ZEROREZ Franchising Systems operates a mobile business that provides residential and commercial cleaning services for carpets, tiles, fabrics, upholstery, and hard surfaces. ZEROREZ franchisees also offer optional services such as air duct cleaning, air filter services, wood floor cleaning, and limited restoration. The services utilize ZEROREZ's proprietary technology and equipment, including an electrolyzed reduced water generator, all contained within distinctive cargo vans. Franchisees also sell approved cleaning products and supplies to their customers.
Corporate History
ZEROREZ Franchising Systems, Inc. was initially organized as a Nevada corporation on February 26, 2001, operating under the name Aqua Care, Inc. until 2002. The company began offering ZEROREZ franchises in 2003. In August 2022, as part of a sale and reorganization, ZEROREZ Franchising Systems was acquired by Zerorez, Inc. and converted to a Delaware corporation, with Zerorez, Inc. becoming its parent company. ZEROREZ Franchising Systems previously offered regional developer franchises from 2013 to 2020, but no longer does so.
Financial Overview
Investment Range
$262,394 - $618,706
Franchise Fee (High)
$60,000
Royalty %
6%
Marketing %
1%
Equipment Costs (Low)
$72,024
Equipment Costs (High)
$178,131
Working Capital
$165,750
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
ZEROREZ Franchising Systems' parent company, Zerorez, Inc., has reported net losses of $11,547,976 in 2023 and $8,927,431 in 2024. Despite these losses, the independent auditor did not issue a going concern qualification, indicating that they do not have substantial doubt about the Company's ability to continue operations. Additionally, Zerorez, Inc. provides an absolute and unconditional guarantee to fulfill ZEROREZ Franchising Systems' obligations to its franchisees, which helps mitigate financial risk for franchisees.
Financing Details
ZEROREZ Franchising Systems does not offer direct or indirect financing to franchisees. However, it has an arrangement with a preferred third-party lender and receives a 1% compensation for assisting franchisees in obtaining financing through this lender. The specific terms of any financing, including approval and interest rates, are solely determined by the third-party lender based on its own criteria. ZEROREZ Franchising Systems does not guarantee any note, lease, or other obligation incurred by the franchisee with this lender.
Performance Metrics
Total US Locations
79
Franchised Units
57
Corporate Units
22
Avg Square Footage
1,500
Franchising Since
2003
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
ZEROREZ Franchising Systems has faced two litigation matters. In December 2011, ZEROREZ entered into a Consent Order with the Minnesota Commissioner of Commerce due to an alleged violation of state law for selling a franchise without prior registration. This resulted in a cease and desist order, an offer of rescission to the affected franchisee, and a $1,000 penalty. More recently, in April 2024, ZEROREZ filed for arbitration against Todd Hall and several affiliated entities. This ongoing dispute concerns a failed regional developer agreement in Canada, where ZEROREZ seeks a declaratory judgment of termination, while the franchisee has counterclaimed for lost profits and other damages.
Bankruptcy History
ZEROREZ Franchising Systems has no bankruptcy history to report in Item 4 of its Franchise Disclosure Document.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their ZEROREZ franchise, franchisees must be in good standing and in substantial compliance with all terms of their franchise agreement throughout the entire term. They must provide written notice of their intent to renew between six and twelve months before the current term expires. Franchisees are also required to satisfy all financial obligations owed to ZEROREZ, including a renewal fee of $10,000, and must sign ZEROREZ's then-current franchise agreement, which may contain materially different terms. Additionally, they must comply with ZEROREZ's current qualifications and training requirements.
Training & Support Program
Franchisor Assistance
ZEROREZ Franchising Systems provides extensive support to its franchisees. Before opening, ZEROREZ helps by designating an exclusive operating territory, connecting franchisees with an electrolyzed reduced water generator (ERW) vendor, and supplying lists of approved vendors for equipment and supplies. It also provides access to confidential brand standards manuals, permits use of its trademarks and system, and offers initial training for two individuals, including access to a management training library. After opening, ongoing assistance includes continued access to approved vendors and manuals, marketing and pricing advice (except for company-acquired accounts), an annual franchisee conference, access to a digital asset manager for advertising materials (Brandworks), management of the national advertising program, protection of its trademarks, and updates to its manuals and Zr Academy online learning system. ZEROREZ also offers additional specialized training at a daily fee plus expenses.
Initial Training Hours
89
Training Location
Corporate training center in American Fork, UT and Go-Live Week at the franchisee's location.
Ongoing Support
After opening, ZEROREZ Franchising Systems provides ongoing support through marketing and pricing advice, manages the national advertising program, and protects its trademarks. Franchisees receive periodic updates to the confidential brand standards manuals and have access to a management training library and Zr Academy. ZEROREZ also hosts an annual conference for franchisees, with no charge for up to four attendees, though travel and lodging are the franchisee's responsibility. Franchisees can request additional specialized training for a daily fee plus expenses, and are required to complete new product, service, or advanced specialized training when directed. ZEROREZ also supports a toll-free telephone number and several internet sites.
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
Absentee Allowed
Territory Type
exclusive
Territory Size Requirements
ZEROREZ territories are exclusive geographic regions, the size of which varies based on factors such as regional location, median income, home values, number of single-family dwellings, specific locale, and potential business accounts. A standard territory includes up to 60,000 households, as determined by the U.S. Census. Franchisees can also purchase territories with less than 30,000 households, known as 'Hometown Markets', or expand into additional increments of 30,000 households.
Staffing Notes
ZEROREZ Franchising Systems requires a minimum of two managers to directly supervise the business, both of whom must successfully complete ZEROREZ's initial training program. All new or successor general managers must complete this initial training. ZEROREZ franchisees are exclusively responsible for hiring all employees, including clerical, sales, and service personnel. All employees with access to confidential information must sign a confidentiality agreement. Additionally, ZEROREZ requires at least two IICRC certified Carpet Cleaning Technicians (CCTs) on staff, and all cleaning technicians and customer service representatives (CSRs) must complete specific courses in Zr Academy for their respective fields. Employees are subject to criminal background checks.