ITEMI
THE FRANCHISOR AND ANY PARENTS, PREDECESSORS
AND AFFILIATES
The
Franchisor and Our Predecessors
To simplify the language in this Franchise Disclosure
Document "we," "our," "us" and "AAN"
means Auto Appraisal Network, Inc., the Franchisor. "You" means the
person, corporation, partnership or other entity who buys the franchise, the
Franchisee. If a corporation, partnership or other entity is the Franchisee,
"You" includes the Franchisee''s owners. AAN is a California
corporation that was incorporated on August 28, 2006 as an "S"
corporation for the primary purpose of offering and supporting franchisees of
AAN. Our principal business address is 17845 Sky Park Circle, Suite F, Irvine CA, 92614.
Our agent for service of
process in California is David Williams, 17845 Sky Park Circle, Suite F, Irvine CA, 92614.. Predecessors and Affiliates
We have no predecessors; Auto
Appraisal Network C''AAN'') was created to offer franchises for a business
similar to the business operated by Classic Auto Appraiser ("CAA"), a
DBA under Zoemax, Inc. a California corporation, owned and operated by
JeffHyman. CAA has operated a similar business to the one being franchised
since 1989, in the state of California, but does not intend to offer franchises
in this or any other line of business. We have not previously offered
franchises in this or any other line of business. CAA is wholly owned by one of
our owners, Jeff Hyman, and it is our intent to incorporate the experience,
business practices and methods utilized by CAA in our future business
operations with our franchisees. We will remain affiliated with CAA to provide
this assistance and for the benefit of its experience as is practical.
Other
than the relationship we have with CAA, there are no predecessors or other
affiliates. The Franchise Offered
We are a franchising company which sells and grants
franchises for the operation of providing professional auto appraisals to
individuals, and/or companies. A franchisee will offer professional evaluation
and certified reports of all types of automobiles, watercraft and motorbikes
for the purpose of insurance, financing, and other requirements as requested by
clients of AAN.
We offer franchises that authorize you to use our
trademarks and to operate an Auto Appraisal Network franchise. As a franchisee,
you (or someone designated by you and approved by us, called an
"Appraiser") will be trained to provide appraisal services to your
customers using our unique system which includes proprietary software;
standards, specifications and procedures for operations; procedures for quality
control; training and assistance; and advertising and promotional programs (the
"System."). Customers are often classic car or motorcycle collectors,
but will also include owners of specialty vehicles and sports cars. You will
solicit customers through car clubs, car shows, networking, insurance
companies, financial institutions and referrals from existing customers or from
us when we receive a request from your specific area. You will travel to the
customers location where the vehicle is located and complete the evaluation
according to the training specifications, the guidelines in the Operations
Manual (the "Manual"), and the proprietary software (the
"software") that will be installed on the laptop computer we will
provide you with. You will also take the required photographs of the vehicle(s)
with the digital camera that you will also receive with your franchise. You are
responsible for collecting payment in full from your customer when you complete
the inspection, and before we deliver the reports. Once complete, you will send
us the electronic files of the evaluation along with the digital images for us
to process and complete the certified report. We will send the bound copy of
the certified report, signed by us directly to your customer within 2 business
days after receiving all completed files from you.
You must operate your Auto Appraisal Network franchise
according to the standards, specifications, procedures and business format
created, developed and designated by us at an approved location (the
"Premises") within a Designated Market Area (the "DMA").
Business
Experience
We have never offered franchises in this or any other
line of business before this offer. We will begin granting franchises in
January, 2007 for franchisee''s located outside the state of California and upon
registration of this UFDD, in the state of California. The effective date of
this Disclosure Document for certain state(s) is listed on Exhibit A.
Franchise territories are
based on a US Census Metropolitan and Micropolitan Statistical Areas with base
populations greater than 80,000 in the Territory and physical area no larger
than a the state and no smaller than a county, parish or independent city. We
will only establish one franchisee per territory as defined in this paragraph
and called the DMA.
Franchise
Agreement
We intend to enter into franchise agreements C''Franchise Agreements")
(included as Exhibit B to this Disclosure Document) with qualified legal
entities and persons C''you") that wish to operate an Auto Appraisal
Network franchise.
Under a Franchise Agreement, we will grant you the
right (and you will accept the obligation) to operate Auto Appraisal Network
franchise is an agreed-on Designated Marketing Area (the "DMA"). (In
this Disclosure Document, the term "Franchised Business" means Auto
Appraisal Network franchise; franchised to you under a Franchise Agreement)
If you are not an individual, then you must designate
one of your owners, who must be an individual person with at least a 10%
ownership interest in the franchisee entity, and who must be reasonably
acceptable to Auto Appraisal Network (the "Designated Principal"), to
be involved in the general management of your Franchised Business; even if you
hire a manager to handle the day to day operations of the franchise..
Area
Development Agreement
We may also offer an area
development agreement (the "Area Development Agreement") (included as
Exhibit C to this Disclosure Document) with qualified corporations and persons
(an "Area Developer"), which grants the right to establish and
operate a specified number of Auto Appraisal Network franchises in a specified
area (the "Development Area") at specific locations, that must be
approved by Auto Appraisal Network; each under a separate Franchise Agreement
Auto Appraisal Network will enter into Development Agreements under which at
least three Auto Appraisal Network franchises will be developed by an Area
Developer.
Area Developers must open each Auto Appraisal Network
franchise, following the Development Schedule set forth in Exhibit A to the
Development Agreement The Area Developer must exercise each development right
by itself executing a Franchise Agreement for the establishment and operation of
an Auto Appraisal Network franchise.
Industry-Specific
Regulations
While we are not aware of any
regulations specific to the industry; there may be laws or regulations in your
state which apply to operating a business in general, including one that is normally
home based. Additionally; your franchise may be subject to federal, state and
local laws, regulations and guidelines relating to consumer protection and/or
"truth in advertising." You may also be subject to general laws
relating to businesses, including those relating to employment, labor and
taxes. Please consult your lawyer about all of these laws, rules and
regulations.
You must comply with all
local, state, and federal laws that apply to your Franchised Business''s
operations, including for example; discrimination, employment, and sexual
harassment laws.
Competition
You will compete with existing and other businesses
and individuals performing similar services on a national or regional basis.
The market for auto appraisal services is newly developed. Sales for this
franchise are not typically seasonal.
