Franchise Disclosure Document

At a Glance: Key Franchise Highlights

Initial Investment: The total investment required to begin operations ranges from $10,370 to $60,560.
Initial Franchise Fee: The standard upfront fee is $4,000 per individual franchise agreement.
Royalty Fee: 5% of all Gross Earned Commissions per real estate sale and commercial lease transaction.
Minimum Sales Volume: You must complete a minimum of 12 transactions per year to avoid default and potential termination.
Term Length: Each franchise term lasts for 4 years.
Financial Representations: The franchisor does not provide any historical or prospective financial performance representations (Item 19 is blank).

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In-Depth Summary of Important Information

1. Financial Obligations & Fees

Beyond the initial franchise fee, operating a 1 Percent Lists franchise involves several ongoing system fees:

Fee Type	Amount / Cost	Due Date / Remarks
Royalty Fee	5% of Gross Earned Commissions.	Paid monthly; does not currently apply to residential leases or property management.
Digital Marketing Fee	Suggested $2,000/month localized spend.	Minimum required digital marketing spend covering local SEO, PPC, and social retargeting.
Technology Software Suite	$210/month.	Paid directly to the franchisor for front-office and back-office customer management tools.
Successor Franchise Fee	$4,000.	Due upon renewing the franchise agreement for a successor term.
Late Report Fee	$250.	Assessed if required sales or accounting reports are submitted late.

Fee Deferral Note: Depending on the state of registration (such as Illinois, Maryland, Minnesota, or Virginia), the franchisor may be legally required to defer all initial fees until all pre-opening obligations have been fully met and the branch is open for business.

2. Financing Options for Established Brokers

The franchisor does not offer direct or indirect financing to standard applicants. However, if you are converting an existing brokerage and closed more than 18 transactions in the preceding year, you may qualify for a fee-deferral payment plan. Under this plan, you can pay off the $4,000 initial franchise fee by contributing an additional 5% of your Gross Earned Commissions per closed transaction over a maximum period of 24 months.

3. Territory and Competition Rules

No Exclusivity: Franchisees do not receive an exclusive or protected territory. The franchisor reserves the right to place other franchised or company-owned outlets anywhere, meaning target marketing areas can overlap.
Target Marketing Area: You will be assigned a non-exclusive “Target Marketing Area,” usually defined by zip codes, configured to contain between 10,000 and 12,000 residential homes.
Operational Focus: System standards dictate that you must concentrate 90% or more of your listing and sales efforts within your designated Target Marketing Area.

4. Management & Licensing Requirements

Broker Sign-off: The franchise must be directly managed by a duly licensed real estate broker who has successfully passed the initial training program.
Owner Participation: Either the primary franchisee or an owner holding at least a 10% voting stake must personally participate in the direct day-to-day operations of the business.
Spousal Liability: In several states (and depending on property regimes), an owner’s spouse may be required to sign a personal guaranty, placing personal and marital assets at risk even if they have no active ownership in the business entity.

5. Training Programs

The initial training framework is split into two distinct tracks:

Owner/Broker Training: Lasts 4 to 6 days and includes up to 48 hours of classroom instruction alongside 4 hours of on-the-job training, typically held at headquarters in Covington, Louisiana.
Agent Training: Consists of 18 hours of online or on-site classroom training covering the Multiple Listing Service (MLS), local marketing, sales processes, and customer service compliance. Franchisees do not pay an extra fee for this training but are fully responsible for all associated travel, lodging, and living expenses.

6. System Restrictions & Post-Term Covenants

Supplier Constraints: You are required to purchase brand-bearing assets, marketing elements, and initial website setups directly from the franchisor or its designated affiliates. Approved third-party vendors currently include Chase Bank, QuickBooks, DotLoop, and DocuSign.
Non-Compete Restrictions: During the active agreement term, you cannot hold any beneficial interest in a competitive real estate brokerage. Upon termination or expiration of the agreement, a 2-year post-term non-compete restriction applies to any competitive operations located within a 25-mile straight-line radius of your franchise site or any other active system location. (Note: Post-term non-competes are explicitly highlighted as generally unenforceable under state addenda for North Dakota and South Dakota ).
Liquidated Damages: Violations of system covenants carry severe contractual penalties, including $1,000 per day for active non-compete breaches, $100,000 for non-solicitation violations, and up to $500,000 for leaking confidential system information.