Frequently Asked FDD Questions

Transcription

2 FRANCHISE FEE & WHAT IS INCLUDED? $15,000 is the normal Franchise Fee - currently we are offering to all CFN participants that execute a New Franchise Agreement a 25% discount reducing the fee to $11, Included in that fee is the Controller (dedicated desktop computer) which communicates between your site and Pacific Pride to transfer information back and forth. Also included in the fee is Pacific Pride software and a 4 x 10 Pacific Pride Sign. A $1,500 sign credit will be given to you once you provide Pacific Pride with an Invoice marked Paid from the sign installer to verify installation of the required 4 x 10 internally lit sign or approved canopy striping. WHAT IS THE FRANCHISE TERM AND WHAT DETERMINES THE RENEWAL FEE? We have one of the lowest Franchise Fee s in the franchise industry and also one of the lowest renewal fee rates of any franchise. Renewal Fees are a minimum of $1,000 and a maximum of $10,000. The initial Franchise Fee of $15,000 covers 3 years. The first 3 year renewal is $1, All renewals thereafter are based on a formula of foreign purchases out in the network and foreign sales at your site, the sum equal to $.006 for each gallon of your Foreign Sales (other franchisee s cards at your sites) and $.012 for each gallon of your Foreign Purchases (your cardholder s purchases out in the Pacific Pride & WEX network) for the highest month in the twelve (12 months) preceding the renewal. Minimum of $1, and maximum of $10,000. WHAT DETERMINES THE AMOUNT OF SECURITY REQUIRED AND WHY IS IT REQUIRED? A minimum of $10,000 security is required in the form of a LOC, Bond or Cash Deposit. The credit department will determine the amount of security required at the time of review and approval of the Franchise Application & Financials. If you have a current card deck that you will be converting to Pacific Pride a larger amount is usually required to cover the purchases your converted customers will make out in the network. The security is required to ensure that when we switch monies between franchisees on the 8th and 23rd of each month that we have security in place to ensure franchisees are paid for your customers fuel purchases. WHAT ARE PACIFIC PRIDE MONTHLY MINIMUM FEES AND ALL OTHER FEES? $80.00 per month - $40.00 Debited on the 8th and 23rd of the month during the switch for controller and software maintenance and support - All Initial fees are outlined in Item 5 of the FDD - All other fees are outlined in Item 6 of the FDD. DO YOU OFFER CONVERSION FINANCING? Pacific Pride does not offer financing however all our Equipment Vendors have relationships with Finance and Leasing Companies - The equipment vendor you chose to work with will provide you with their contacts that can help you finance all equipment & much of the soft costs involved in a conversion such as signage, billing software purchase or upgrades, canopy branding, card plastic conversion, etc. EXPLAIN THE OPPORTUNITY FOR $6,000 REBATE OF INITIAL FRANCHISE FEE The FDD explains that if we record a total of 10,000 transactions done by your customers at your sites (Local Sales) or out in the Pacific Pride Network or WEX Universal Network (Foreign Purchases) in 6 months of opening your sites we will credit your account $6,000 of the initial franchise fee. Rev Pacific Pride Services, LLC. All rights reserved. Page 1

3 WHAT EQUIPMENT IS REQUIRED AT THE PACIFIC PRIDE SITES AND WHAT IS THE COST? We currently have Two Equipment Options and a Third in Development - Fiscal Systems is currently the only certified system available for purchase today - Comdata Smart Site is in beta testing and we expect it to be certified and available for purchase soon. OPW has a system in development that they say will be available for beta testing in coming months. The approximately cost of 1 system is $15,000 - $17,000. Each site requires 1 site controller and that is included in 1 full system. Additional Outdoor Payment Terminals heads can be added for approximately $ Other equipment may be required depending on the type of dispensers at your site. Maintenance and support fees will be charged by the equipment vendor monthly and varies depending on equipment provider. A price sheet will be provided for your review when you are evaluating the different equipment options. Contacts information for all equipment providers will be supplied by your sales representative so you can make contact and determine which equipment option would be best to meet yoru needs. Internet Service and Cellular backup will be required for communications at the sites. ONCE I BECOME A PACIFIC PRIDE/CFN DUAL MARKETER - WILL I BE ABLE TO ISSUE BOTH PACIFIC PRIDE CARDS AND CFN CARDS TO MY CUSTOMERS IF I FEEL THAT IS THE BEST SOLUTION FOR THE CUSTOMER. WILL I HAVE TO ASK MY CUSTOMER IF THEY ALREADY HAVE PACIFIC PRIDE CARDS FROM ANOTHER FRANCHISEE BEFORE I ISSUE MY CUSTOMERS PACIFIC PRIDE CARDS? You can either issue Pacific Pride cards in addition to your CFN cards to all of your existing customer base at the time of conversion/implementation of your new franchise or as you evaluate your existing carddeck you may issue Pacific Pride PrideLock cards or PrideComplete Universal cards to those customers you feel need to be able to use Pacific Pride cardlock sites or PrideComplete Universal cards for the extended WEX network. At the time of conversion/implenetation you can issue cards to your customers whether they already have Pacific Pride cards from another franchisee or not you do not have to ask. You will need to ask new customer prospects going forward. WHEN I AM MARKETING TO NEW PROSPECTS AM I REQUIRED TO ASK IF THEY CURRENTLY HAVE PACIFIC PRIDE CARDS? WHAT IF I AM APPROACHED BY A CUSTOMER THAT WANTS TO DEAL WITH MY COMPANY INSTEAD OF THEIR CURRENT CARD ISSUER? The exclusivity around card holders has changed in the 2013 FDD however until all existing franchisee s Franchise Agreements renew for their next 3 year period through 2015 you will have to ask. If they currently have Pacific Pride cards you are not to issue cards to them. The customer does have the right to go through a Formal or Informal Bid Process. In the case of the informal bid they would need to try to work it out with the franchisee that issued the cards and hopefully the franchisee would release the customer and allow them to deal with another franchise if they are unhappy for whatever reason. In the case of a formal bid the account would submit a formal bid to the franchises they are considering doing business with to give everyone franchise that receives the bid the opportunity to respond with their offer. ARE THERE ANY LIMITATIONS ON WHERE I CAN MARKET PACIFIC PRIDE? You can market anywhere in the United States. The FDD states however that marketers that add new sites to the network including your new sites have the right to exclusively market around their sites for the first 90 days. This is difficult to monitor and enforce however it is considered a violation if another franchisee markets your sites the first 90 days. Pre-marketing your sites and doing aggressive marketing campaigns as soon as your sites are up and running are strongly encouraged. The Inter Company Analysis Reports that are provided in the FDD under Item 19 gives a good representation of which franchisees are aggressively marketing and which do not. This is a good way to determine areas where there might be marketing opportunities outside of your sites. Rev Pacific Pride Services, LLC. All rights reserved. Page 2

4 WHAT DOES THE FDD MEAN WHEN IT SAYS I CAN RESPOND TO A FORMAL OR INFORMAL BID FROM A PROSPECTIVE CUSTOMER? Formal Bid Account Holder submits to the card issuers and they respond. Informal Bid Account holder submits a letter to the existing Franchisee informing they want to go to another card issuer. Of course we hope it is the PP side of things. The Account Holder collaborates on documentation and discusses with prospective card issuing franchise. IF I DO RESPOND TO AN INFORMAL OR FORMAL BID DO HAVE THE RIGHT TO RESPOND AS A DUAL MARKETER WITH PACIFIC PRIDE OR CFN? If a franchise is CFN and PP they are not exclusive. They may go into bid with the most appropriate card offering PP or CFN of course we hope it is Pacific Pride. AM I ABLE TO ISSUE CARDS PRIOR TO THE OPENING OF MY SITE FOR A SMOOTH CONVERSION AND TRANSITION? We can make sure the controller arrives ahead of the site install and as long as IT is given the go ahead from Admin to turn on the allow to order cards flag they will be able to order cards. Security, insurance and EFT need to be in place before Admin gives the OK to allow card ordering. New Franchisee staff can have a few cards to test prior to opening to see how transactions flow through billing software. Franchisee will need to be trained and the site fully installed within a few days after issuance of cards. The franchise agreement states that franchisee must have at least one fuel site operational on the network prior to distributing cards to customers and allowing them to fuel in the network. We will work with your staff to coordinate and assist with card conversion to make the process as smooth as possible. WHAT INFORMATION IS ON THE PACIFIC PRIDE CARDS AND HOW ARE THEY ORDERED? The only information on the mag of a PrideLock/Blue card is the PPS ISO # (708426), the card host number, the card number and expiration date. The front of the card is hot stamped with a Marketer logo, the PPS ISO #, the card number and expiration date. All card production, encoding, and embossing is processed by Pacific Pride and/or our approved card vendor CPI. The PrideLock cards are ordered in blocks and you activate them when you issue them to the customer. PrideLock cards can be a two card or one card system. PrideComplete Universal Cards are ordered on a windows based online portal. These cards are a 1 card system designed to issue to the vehicle with floating pin # s. Cards are encoded with Account Name, Veh # and card # all other information is on the mag stripe. All of these cards are sent via U.S. Mail and takes 5-8 days. Options for Overnight delivery, next day first delivery, next day normal delivery time or ground. All expedited delivery options will be at franchisee expense. When the new Centralized Platform that is in development is in place all cards (PrideLock & PrideComplete) will be ordered via the online portal and at that time you will have the option of offering online access to view PrideLock transactions online and do self maintenance on accounts once they are tagged as Enhanced Service. EXPLAIN THE DIFFERENT PACIFIC PRIDE TRANSACTION TYPES? Local Sales (Your Customer at Your Sites) - You set the price for your customers and bill them. You pay.20 or.29 cents per transaction depending on the card type. Foreign Purchases (Your customers purchasing at other sites in Pacpride and/or WEX Universal network) - You set the price for your customers on foreign purchases as well and you bill them. You pay.20 or.29 cents per transaction depending on the card type issued, you also pay.006 per gallon royalty fee &.0015 per gallon Ad fund fee on these sales. Foreign Sales (Other Franchisees customers fueling at your sites) - You do not pay fees, you do not bill or service the cutomer, you are paid transfer price on these sales. Opis Avg. +applicable taxes and fees +.06 cents per gallon if Rev Pacific Pride Services, LLC. All rights reserved. Page 3

5 your site is a standard cardlock site or.04 cents per gallon if your site is classified as a PrideNet Site or Amerinet Site that do not meet the requirements of a standard cardlock. CAN I ACCEPT 3RD PARTY FLEET CARDS AT MY PACIFIC PRIDE SITE AND HOW DOES THAT WORK? The following 3rd Party Fleet Cards are automatically accepted at your site through the approved Pacific Pride Outdoor Payment Terminal- WEX, Voyager, Fleet One, TCH, T-Chek, EFS. You set a retail price for these sales in the controller. The default for these sales is Transfer Price (Opis+applicable taxes and fees +.06 cents) however you have the option of setting a margin on sales for these cards up to.30 cents per gallon above your cost. The interchange fee will be calculated and added to the customers price. Training will be provided to ensure that you understand how the margin you set will affect the customers price when they fuel at your sites. Comdata cards may also be taken at your sites with a Comdata Agreement and a one time fee paid to Comdata of $500 for up to 5 sites, $1,000 for 6-14 sites, $1,500 for 15 or more sites. Reimbursement for Comdata sales is transfer price only (cost +.06) you are not able to set an additional margin on these sales per our agreement with Comdata. WHAT IS THE DIFFERENCE BETWEEN BASIC TRANSACTIONS ($.20) AND ENHANCED TRANSACTIONS ($.29) AND ARE THERE ANY OTHER FEES ON THE TRANSACTIONS? Basic Transactions are transactions priced at.20 per trans and the customer does not have access to view their account and transactions online and they do not have the ability to do their own account management online. Basic Service is the only option for Blue Cards/PrideLock cards at this time until the new Centralized Platform that is in development is in place. Enhanced transactions are priced at.29 per transaction and the customers can be given online access to view and manage their account online. All Foreign Purchase Sales (Your customers purchasing at sites out in the Pacific Pride Network & WEX Universal Network) will also be assesed a fee of.006 cents per gallon Royalty Fees and.0015 cents per gallon Advertising Fees. EXPLAIN THE DIFFERENCE IN TRANSFER PRICING, SETTLEMENT AND PRICING ON THE PRIDE COMPLETE UNIVERSAL CARDS AT PACIFIC PRIDE CARDLOCK SITES AND OUT IN THE RETAIL NETWORK? Pride Complete Universal Cards are settled at Pacific Pride Cardlock Sites just like the PrideLock Cards. You Set the Price that you will bill your customers on sales at your Pacific Pride Cardlock Sites and all other Pacific Pride Cardlock Sites in the Pacific Pride Network (Opis + Applicable Taxes and Fees + Margin you set on both Local Sales & Foreign Purchases). On purchases out in the Retail Network whether it is a Pacific Pride Retail Site or a WEX Universal Network Retail Site the transfer price to you will be the posted retail price less a discount of 1.8% minimum and with incentives that are offered that discount will increase to 1.9% if you issue 2000 PrideComplete Universal Cards in a year, discount increases to 2.0% if you issue 4000 PrideComplete Cards in a year. You bill your customer whatever you have negotiated with them on these purchases in the retail network. It is up to you whether you bill them the posted retail price or upcharge the retail by a few cents per gallon, pass on the.29 cent transaction fee, charge a flat universal network acceptance fee, etc. Much will depend on the capability and options available to you through your billing software provider. You will want to make sure your billing software is capable of pricing transactions differently at Retail Sites and Cardlock Sites. WHAT IS THE COST OF THE CARDS AND CAN I HAVE CUSTOM PLASTIC? $1.25 per card is the cost per piece for standard card plastic. Custom cards can be ordered with Pacific Pride approval. A quote for the plastic can be provided and the quantity required to order custom plastic. Rev Pacific Pride Services, LLC. All rights reserved. Page 4

6 WHAT IS THE $20 TRANSFER OF FUNDS FEE? You pay a flat fee of $20.00 on the 8th and again on the 23rd when funds are switched between all the system participants. It does not matter if your customers bought fuel from every system participant or just 2 we charge one flat fee no matter how many system participants we pay for fuel on your behalf. WHAT IS TRANSFER PRICE? Daily Opis - Morning Posting. The closest rack that has adequate supply of your branded or unbranded product is the cost reference used in OPIS. If your site is unbranded then it would be the unbranded average price for that rack the morning posting. If your site is branded it would be the branded average morning posting. The transfer price is the rack as described here + applicable taxes and fees+.06 cents at a standard cardlock site that meets all Pacific Pride requirements. A.02 cent per gallon penalty is applied on foreign sales (other franchisees customers at your site) if your site is classified as a PrideNet or Amerinet site. These sites do not meet all requirements for a standard cardlock site. So the transfer price at a PrideNet or Amerinet Site is Rack +Applicable taxes and fees, +.04 cents. WHEN DOES PACIFIC PRIDE SETTLE WITH ALL THE FRANCHISEES AND HOW DOES THAT WORK? Pacific Pride will settle with you twice per month on the 8th and 23rd of each month. We refer to this process as the Switch. Settlements are the net difference between your foreign purchases (your customers purchases out in the network) and foreign sales ( other franchisees purchases at your sites). If your customers buy more out in the network than the foreign sales at your sites then you will owe the network money and it would be debited from your account. If other franchisees customers purchase more at your sites than your customers are buying out in the network we will owe you money and that will be credited to your account. The Switch as we call it is one of our roles and responsibilities as the Franchisor to ensure all parties are paid for transactions at their sites for sales by other franchisee s customers. This is also the reason that we require security in the form of a LOC, Bond or Cash Deposit to ensure that when the time comes to pay for sales your customers have done in the network we have security to ensure that payment. WHAT IS THE DIFFERENCE BETWEEN A STANDARD CARDLOCK SITE, PRIDENET & AMERINET? A Standard Pacific Pride Cardlock Site = Dedicated Island for Pacific Pride customers with a minimum of R.U. Gas & Dsl, open 24/7, 10,000 minimum sf lot, 4 x 10 internally lit signage or approved canopy striping, accept all Pacific Pride cards and 3rd party fleet cards approved by Pacific Pride. Must have air/water and window cleaning supplies as well as surveillance system. Site can not be shared with retail. Standard cardlock site does offer exclusive zip territory if an Exclusive franchisee that does not market or issue similar programs cards. PrideNet Site = Minimum of 1 Product Dispenser dedicated to Pacific Pride - R.U. Gas or Diesel Fuel, site can be shared w/retail, does not have to be 24/7, not required to have air/water, window cleaning supplies. PrideNet sites do not have zip exclusivity even if an Exclusive franchisee. Amerinet Site =Full Service Truck Stop offering diesel fuel and one or more of the following: Truck Scales, Restaurant, Showers, Service, Truck Tires, etc. Amerinet Truck Stops do not have zip exclusivity even if an Exclusive franchisee. WHEN AM I REQUIRED TO HAVE AIR, WATER AND SURVEILLANCE SYSTEM INSTALLED AT THE SITE - IS IT REQUIRED THE DAY SITE IS UP AND RUNNING? The Air & Water is currently a requirement however we will give you up to 1 year to provide air & water services and not require that they be present day of opening. Surveillance system we will give you until your first renewal to have installed and Rev Pacific Pride Services, LLC. All rights reserved. Page 5

7 operational. Failure to provide these services within the grace period provided could result in the downgrading of your site to a PrideNet. DOES PACIFIC PRIDE OFFER A BILLING SOFTWARE PACKAGE THAT IS STANDARD FOR EVERYONE? No Pacific Pride franchisees purchase a billing software of their choice. We can provide a list of certified billing software providers and can provide names of franchisees that use the different systems if you would like to talk to them about their satisfaction level and experience with the provider while you are comparing systems. TERRITORIES - EXCLUSIVE/NON EXCLUSIVE? Exclusive Franchisee= Franchisee that does not market or issue a program similar to Pacific Pride such as CFN, Voyager, Proprietary Systems, etc. and/or you may not operate sites for a similar program to Pacific Pride. If you are an exclusive franchisee you are given zip protected territory in the zip code where your Standard Pacific Pride Cardlocks are located. If you operate PrideNet Sites or Amerinet sites those sites will not be given zip protection and a Standard cardlock might be allowed in that zip code. Non Exclusive Franchisee = Franchisee that operates sites for a similar program to Pacific Pride and/or markets and issues cards for a similar program to Pacific Pride you will be classified as a Non Esclusive franchisee. If you have a plan in place to convert all your sites and customers to Pacific Pride within a reasonable period of time we may classify you as an Exclusive marketer however that classification would change if you failed to follow through with the total conversion to Pacific Pride. As a dual marketer operating both Pacific Pride sites and sites for a similar program and marketing and issuing both Pacific Pride and cards for a similar program you will not have zip protection around any of your Pacific Pride sites. We have criteria that is used when determing the approval of sites and our goal is to allow sites that will add value to the network and an influx of new foreign sales into the network that will benefit surrounding sites. Continuation of Exclusive Territory - Pacific Pride has the right to change your status from Exclusive to Non Exclusive if you do not market and issue Pacific Pride cards. Your status would also be changed if you become a participant of a similar program and begin operating sites and issuing cards for another program similar to Pacific Pride or acquire sites and customers affiliated with a similar program and you do not convert them to Pacific Pride. WHAT TRAINING DOES PACIFIC PRIDE PROVIDE? 3 Day New Franchise Orientation Training is offered quarterly at the Pacific Pride Headquarters in Salem, OR. There is no cost to you to attend the Training Classes other than your travel costs, airfare, hotel and meals. Pacific Pride includes the required 3 Day Training Class as part of your franchise fee. In addition to the 3 Day Training Class quarterly Pacific Pride provides in most cases at no charge ongoing Webinars for sales and marketing, operations, fraud prevention tips and tools, equipment provider seminars to inform and educate, etc. EXPLAIN THE PROCESS OF JOINING THE PACIFIC PRIDE NETWORK AND BECOMING A FRANCHISEE? Step 1 - Receive and Review the FDD thoroughly Step 2 -Schedule Calls with Sales Representative to Review and Answer Questions you have identified while reviewing the FDD Step 3 - Consult your Attorney and/or your CPA for advice Step 4 - Identify & Contact Franchisees that you might know from Industry Association, Brand Affiliations or Study Groups from the list of Franchisees provided in Exhibit E of the FDD. Discuss their opinion and satisfaction level with Pacific Pride Services. Discuss their opinion of revenue potential and ROI on their investment in Pacific Pride. As a franchisor the FTC does not allow Rev Pacific Pride Services, LLC. All rights reserved. Page 6

8 us to make revenue claims or ROI projections so talking with existing franchisees is the best way to help you evaluate the opportunity. Step 5 - Sign & Return the Original FDD Receipt (Exhibit M) as required by the FTC to prove it has been provided to you. Upon receipt of the FDD Receipt the 14 day waiting period required by the FTC will begin. Step 6 - Once the 14 day waiting period has been fulfilled, you have completed your due diligence and you make the decision to join the Pacific Pride Network you will complete and submit the Franchise Application (Exhibit B to FDD) to the Sales Representative. Along with the Franchise Application you will need to submit the previous 2 years financials (audited if available) along with the YTD in-house financials. A completed W-9 Form (provided by Sales Rep), Site Applications (Appendix V of FDD) for the sites you propose to add to the network along with diagram/drawings of the sites and photos will also be needed to complete review and approval. You are under no obligation at this point to move forward with executing the Franchise Agreement and you do not owe any monies to Pacific Pride until the Franchise Agreement is executed. It is important to submit applications as soon as a decision has been made to ensure that you do not lose the opportunity if an existing franchisee or another prospect submits a site application for the same area. Step 7 - Once the Franchise Application, financials and proposed sites have been approved the next step will be to schedule an FDD Questionnaire call. The FDD Questionnaire is Exhibit I of the FDD. The purpose of the call is to make sure all your questions have been answered and you have been provided everything you needed to make a fully informed decision about joining the Pacific Pride network. Once the call has been completed to everyone s satisfaction a Franchise Agreement will be prepared and sent to you for execution along with an EFT form to set up your banking information to debit the franchise fee once the date has been coordinated with you. Step 8 - The next step after execution of the agreement and final approval a Host # will be assigned to your New Franchise along with Site # s for your approved sites. A weekly implementation call will be scheduled with your Account/Implementation Manager to help walk you through each stage of the implementation process until your sites are up and operational. Registration for the 3 Day Training Class in Salem will be one of the first things that will need to occur. Rev Pacific Pride Services, LLC. All rights reserved. Page 7