The Income Guarantee (IG) forms part of the Franchise package and is designed to be assistance if needed in the initial stages of the Franchise business. The IG is NOT an income in the normal sense of the word rather it is a benchmark figure that has been provided as an expectation of the levels of Gross Income the Franchisee should achieve. In the event the level is not reached in the specified time frames and providing all conditions have been met, Hire A Hubby will make payment and offer further assistance to achieve these levels in future.
Obligations explained under the Agreement
Detailed below is an extract of the Franchise Agreement Section 8.8. A brief explanation is provided for the Clauses and is provided to give you a clearer understanding of the Franchisees obligations and give you guidance in your management of this important component of our Franchise model.
8.9 Guaranteed Income
The Franchisor shall guarantee the Franchisee a minimum gross weekly income as referred to in Item 15 of the Schedule on the following terms and conditions:-
a) “Minimum Income Guarantee” means the minimum gross weekly income referred to in Item 15(a) of the Schedule.
(b) “The Minimum Income Period” means the period commencing on the date specified in Item 15(b) of the Schedule and running consecutively for the number of weeks specified in Item 15(c) of the Schedule.
8.9.1 The Minimum Income Period will be deemed suspended from the Monday prior to 25th December each year for a period of 21 consecutive days (“the holiday suspension”). The unexpired portion of the Minimum Income Period (if any) will resume at the conclusion of the holiday suspension.
8.9.2 The guaranteed income period shall not apply to any renewal, assignment or transfer of the Franchise Agreement nor is it applicable if the franchise territory referred to in Item 12 of the Schedule is a going concern. The guaranteed income does not apply in any instance to any regional location. For the purposes of this agreement, a regional area is defined as an area that does not share the same telephone prefix as the telephone prefix of the capital city for the state or territory in which the proposed franchise territory is to operate.
8.9.3 Subject to the provisions of this Agreement, the Franchisor shall use its best reasonable endeavours to assist the Franchisee to obtain the opportunity to service Clients each week during the Minimum Income Period by:
(a) Providing Work Referrals to the Franchisee where the cumulative value of the service provided to Clients is equal to or greater than the value of the Minimum Income
These are the leads provided through the Call centre and must meet minimum requirements to be equal value in Quoted price to the IG amount.
(b) Providing Work Referrals to the Franchisee to enable the Franchisee to make up the difference, subject to the conditions set out in Clause 8.8.7, between the value of the services being provided by the Franchisee and the Minimum Income Guarantee; and/or Hire A Hubby Franchise Operations Guidance Manual 2013 Page 21
This is determined from the weekly reports and any deficiency in numbers will be corrected by additional Work Referrals being given
(c) Requiring the Franchisee to perform such other services as set out in Clause 8.8.6 to enable the Franchisee to make up the difference, subject to the conditions set out in Clause 8.8.7, between the value of the service being provided by the Franchisee and the Minimum Income Guarantee for the period set out in Clause 8.8.5.
If such Work Referrals are not available we may have the Franchisee perform specific promotional or marketing activities to make up the balance in hours for the week
8.9.4 Payment to the Franchisee under the Minimum Income Guarantee is subject to and conditional upon the following, namely:
(a) The Franchisee being in full compliance with the terms and conditions of this Agreement, including the performance of all obligations under the Manual;
(b) The Franchisee is available to work for a minimum period of eight (8) hours per day Monday to Friday (inclusive) during each week of the Income Guarantee Period. In the event the
Franchisee does not perform the minimum hours required by this clause; the Franchisee shall be available to work on the Saturday for a minimum period of eight (8) hours. In the event that the Franchisee is unavailable to perform Work Referrals during such period, the Franchisee will forfeit the Minimum Income Guarantee for that week.
A minimum of 45 hours is to be accounted for when submitting the weekly timesheets and a minimum of 8 hours per day.
(c) The Franchisee not unreasonably failing to accept any Work Referrals provided to the Franchisee during the Minimum Income Guarantee Period. In the event that in the Franchisors opinion, the Franchisee unreasonably fails to accept any Work Referrals during a particular week, the Franchisee will forfeit the Minimum Income Guarantee for that week.
The Franchisee must accept all Work Referrals within reasonable distance and their capabilities.
(d) The Franchisee has notified the Franchisor by 4.00pm each Tuesday during the Minimum Income Period that the Franchisee anticipates that the Franchisee is unlikely to achieve the Minimum Income Guarantee for that week.
The Franchisee must fax, mail or email the Operations team by 4pm on the Tuesday if you do not have sufficient work for the following working days of that week.
(e) The Franchisee completes the Services requested by the Franchisor in accordance with the Franchise Agreement.
(f) The week during which the Franchisee seeks to enforce the Minimum Income Guarantee falls within the definition of the Minimum Income Period referred to in Item 15(b) and Item 15(c) of the Schedule.
These are the starting date of the IG and the duration.
(g) The Franchisee, within seven (7) days of being requested to do so by the Franchisor, provides a list of all Clients serviced by the Franchisee during that week, together with copies of invoices issued to those clients.
We shall request a copy of ALL quotes and invoices and relevant Client data to determine true and correct reporting. NOTE: By enforcing the full use of Hub E Connect this data is readily available
(h) Should a public holiday fall within the minimum income period in any week, then such income guarantee shall be calculated by reducing the minimum income payment by the number of public holidays in that period. Hire A Hubby Franchise Operations Guidance Manual 2013 Page 22
8.9.5 During each four (4) week or such other period in respect of which the Minimum Income Guarantee is sought to be enforced, if the Franchisor is unable to refer sufficient Work Referrals to the Franchisee to meet the Minimum Income Guarantee on average for each week during that period, the Franchisor may direct you to carry out, and the Franchisor will be liable to pay the Franchisee for providing additional allocated services as directed by the Franchisor from time to time.
If we fail to provide the Work Referrals necessary we can ask the Franchisee to do promotional activities for HAH and HAH is liable to pay for these services. These can include attendance to the Home Shows or similar events
8.9.6 Should clause 8.9.5 apply, then subject to the Franchisors prior approval, the Franchisee will, firstly do such promotional work as to equate to the balance of 40 hours per week not billed or directed by the Franchisor or offer services to Clients without charge where: the Clients are existing Clients who have sought to enforce a warranty or other guarantee in respect of the Services and the Franchisor has directed the Franchisee to provide the Services without charge.
We may also have the Franchisee perform rectification work to other Franchisee clients to make up the balance in deficiencies of the IG provisions.
8.9.7 The Franchisor will be liable to pay the Franchisee for the Services provided in accordance with Clause 8.9.6 herein, where:
(a) The Franchisee provides to the Franchisor a true and correct record of the weekly turnover in the Franchise Business during the Period in respect of which the Franchisee seeks to enforce the Minimum Income Guarantee;
(b) During the month in which the Franchisee seeks to enforce the Minimum Income Guarantee, the Franchisor is liable to make payment under the Minimum Income Guarantee;
(c) The Franchisee has provided to the Franchisor a written report in the manner prescribed of all names, addresses and contact telephone numbers of the Clients who have received the Services within fourteen (14) days of the end of the month during which the Franchisee is seeking to enforce the Minimum Income Guarantee, failure to provide such report for the week provides failure of this clause.
Make sure the detailed Client list from the Accounting package is submitted by the 14th day of the following Month. NOTE: By enforcing the full use of Hub E Connect this data is readily available
8.9.8 For the purpose of the Minimum Income Guarantee, the Franchisee acknowledges that:
(a) The Minimum Income Guarantee amounts to no more than an opportunity to provide services in circumstances where the Franchisor has a contractual obligation to provide that opportunity;
The opportunity is the Work referrals and we are obligated to provide these to the Franchisee.
(b) The Minimum Income Guarantee is not income.
(c) All payments under the Minimum Income Guarantee are contingent upon the Franchisees strict compliance with this Agreement and in particular Clauses 8.8.3, 8.8.5, 8.8.6, 8.8.7, 8.8.8 and 8.8.9;
(d) The Minimum Income Guarantee is not an estimate or representation of earnings (whether actual or anticipated) that can be achieved by the Franchisee in the Franchised Business. The turnover generated by the Franchise Business depends on the Franchisees own efforts in successfully completing a sufficient volume of work and successfully marketing the Franchised Business; and (e) Regardless of the services performed as set out in Clause 8.8.6 the Franchisor is liable to pay a maximum amount not exceeding the difference between the value of services provided by way of Work Referrals and work already performed by the Franchisee for the relevant week, and the Value of the Minimum Income Guarantee. Hire A Hubby Franchise Operations Guidance Manual 2013 Page 23
8.9.9 The Franchisor may terminate the Minimum Income Guarantee in the event of any one or more of the following events occurring;
(a) The Franchisee has refused Work Referrals for services to be provided to Clients either inside or outside the Territory;
(i.) on two or more occasions in any given week; and/or
(ii.) On eight or more occasions during the Minimum Income Period;
(b) The territory has been changed at the Franchisees request;
(c) The Franchisee breaches the provisions of clause 8.8.7(c) of more than three occasions during the income guarantee period.
If the Monthly reports are late on more than three occasions during the IG period, the IG will be stopped immediately.
8.9.10 The Franchisee must submit a weekly report to the Franchisor, in the manner prescribed by the Franchisor from time to time, on or before 9am each Monday, which report shall contain details of the Franchisees preceding weeks activities related to the Franchised Business. Failure to provide this report on two or more occasions during the Minimum Income Period will render void any obligation upon the Franchisor to make any payment to the Franchisee pursuant to Minimum Income Guarantee for the unexpired portion of the Minimum Income Period.
Should the Franchisee be late or not submit your weekly reports on more than two occasions the IG can be stopped immediately.
The calculation of income generated by the Franchisee will consist of 45 hours made up of labour charges, promotional activity accrued during one week’s operations between Monday to Sunday, plus the margin (if any) on materials supplied as part of the Services to Clients. The Franchisee must provide to the Franchisor copies of the Franchisees material invoices within 7 days of a request by the Franchisor.
8.9.11 The Franchisor will make payment to the Franchisee for any deficiency with respect to the Minimum Income Guarantee on an aggregated monthly basis, with payment being made 1 week in arrears; after the second week, after the sixth week and after the twelfth week and where applicable every four weeks thereafter with expiry of the guaranteed income period. The Franchisor reserves the right to offset any payment to the Franchisee against monies owed by the franchisee to the Franchisor.
Payments, should they be enforced will be paid in blocks being week 2, week 6, week 12 and then every fourth week after.
8.9.12 Where, at the conclusion of the Minimum Income Period;
(a) The Franchisor has made a payment to the Franchisee pursuant to the Minimum Income Guarantee; and
(b) The Franchisees aggregate gross income including any payments made pursuant to the Minimum Income Guarantee exceeds the income guarantee as set out in Item 15. The Franchisee must repay to the Franchisor any payments paid to the Franchisee over the aggregate total income pursuant to the Minimum Income Guarantee within seven days of the conclusion of the Income Guarantee Period.
If the total Gross Profit is over the IG amount then the Franchisee will be invoiced for the difference of any payments made during the IG period.