FRANCHISE
DISCLOSURE DOCUMENT
FOR
PROSPECTIVE SUBFRANCHISORS
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ESCO
GLOBAL REALTY CORP.
594
Dagall Road
Mill
Bay, BC V0R 2P4
CANADA
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The
Subfranchisor will assist the Franchisor in locating and securing
prospective Franchisees and will assist in the growth of Franchise
offices in a specific geographic territory (the “Regional
Territory”). The Franchisee will operate a real estate sales
office, but this is not offered here.
The
total investment necessary to begin operation of an ESCO
®
GLOBAL
REALTY Regional Territory ranges from $116,000 to
$731,000. This amount includes the Initial Fee for a
Subfranchise that must be paid to the Franchisor or affiliate in
the amount of $40,000 per 1,000,000 of population within the
Regional Territory. Subfranchisor should refer to Items
5 and 7 of this Circular for further information regarding the
investment.
This
disclosure document summarizes certain provisions of your franchise
agreement and other information in plain English. Read
this disclosure document and all accompanying agreements
carefully. You must receive this disclosure document at
least 14 calendar-days before you sign a binding agreement with, or
make any payment to, the Franchisor or an affiliate in connection
with the proposed franchise sale. Note, however,
that no governmental agency has verified the information contained
in this document.
The
terms of your contract will govern your franchise
relationship. Don’t rely on the disclosure
document alone to understand your contract. Read all of
your contract carefully. Show your contract and this
disclosure document to an advisor, like a lawyer or an
accountant.
Buying
a franchise is a complex investment. The information in
this disclosure document can help you make up your
mind. More information on franchising, such as “
A Consumer’s Guide to Buying a Franchise ,”
which can help you understand how to use this disclosure document,
is available from the Federal Trade Commission. You can
contact the FTC at 1-877-FTC-HELP or by writing to the FTC at 600
Pennsylvania Avenue, NW, Washington D.C. 20580. You can
also visit the FTC’s home page at www.ftc.gov for additional
information. Call your state agency or visit your public
library for other sources of information on franchising.
Your
state may have a franchise law that requires a franchisor to
register or file with a state franchise administrator before
offering or selling in Your state. REGISTRATION OF A
FRANCHISE BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS OR HAS
VERIFIED THE INFORMATION IN THIS DISCLOSURE
DOCUMENT. Call the state franchise administrator listed
in Exhibit B for information about the franchisor or about
franchising in Your state.
MANY
FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW UNCONDITIONALLY
AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN A
NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDER TO
CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDER WHAT
RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU
MIGHT HAVE TO ACCEPT IN ORDER TO RENEW.
Please
consider the following RISK FACTORS before You buy this
franchise:
THE
FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES WITH US BY
ARBITRATION ONLY IN MILWAUKEE COUNTY, WISCONSIN. OUT OF
STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE
SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE
WITH US IN WISCONSIN THAN IN YOUR OWN STATE. THE
FRANCHISE AGREEMENT REQUIRES THAT WISCONSIN LAW GOVERNS THE
AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND
BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE
LAWS.
FRANCHISOR
BELIEVES THAT AN INTEGRAL PART OF THE ESCO ®
SYSTEM
INCLUDES THE OWN YOUR FUTURE PLAN (THE “OWN YOUR
FUTURE ®
PLAN”),
WHICH ALLOWS PARTICIPANTS IN THE ESCO ®
SYSTEM
TO PURCHASE SECURITIES OF THE FRANCHISOR (THE
“SECURITIES”). AS OF THE DATE OF THIS
CIRCULAR, FRANCHISOR HAS NOT COMPLETED THE REGISTRATION OF THE
SECURITIES NECESSARY TO FULLY IMPLEMENT THE EQUITY
PROGRAM. FURTHERMORE, EVEN IF THE SECURITIES ARE
SUCCESSFULLY REGISTERED, OTHER RESTRICTIONS MAY PROHIBIT FRANCHISOR
FROM EVER FULLY IMPLEMENTING THE OWN YOUR FUTURE
PLAN. THERE ARE OTHER RISKS CONCERNING THE OWNERSHIP OF
ANY SECURITIES. THIS CIRCULAR IS NOT AN OFFERING OF
SECURITIES NOR AN INVITATION OR SOLICITATION TO BUY
THEM.
THERE
MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
ESCO
uses the services of one or more FRANCHISE BROKERS or referral
sources to assist ESCO in selling the Franchise. A
franchise broker or referral source represents ESCO, not
You. We pay this person a fee for selling the ESCO
Franchise or referring You to us. You should make sure
to do Your own investigation of the Franchise.
Effective
Date: See the next page for state effective dates.
STATE
EFFECTIVE DATES
The
following states require that the Franchise Disclosure Document be
registered or filed with the state, or be exempt from registration:
California, Hawaii, Illinois, Indiana, Maryland, Michigan,
Minnesota, New York, North Dakota, Rhode Island, South Dakota,
Virginia, Washington and Wisconsin. This Franchise
Disclosure Document is registered, on file or exempt from
registration in the following states having franchise registration
and disclosure laws, with the following effective dates:
TABLE
OF CONTENTS
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THE
FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND AFFILIATES
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Page
1
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BUSINESS
EXPERIENCE
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Page
2
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LITIGATION
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Page
3
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BANKRUPTCY
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Page
3
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INITIAL
FEES
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Page
3
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OTHER
FEES
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Page
4
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ESTIMATED
INITIAL INVESTMENT
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Page
5
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RESTRICTIONS
ON SOURCES OF PRODUCTS AND SERVICES
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Page
6
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SUBFRANCHISOR’S
OBLIGATIONS
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Page
7
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FINANCING
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Page
8
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FRANCHISOR'S
ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING
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Page
8
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TERRITORY
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Page
11
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TRADEMARKS
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Page
11
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PATENTS,
COPYRIGHTS AND PROPRIETARY INFORMATION
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Page
12
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OBLIGATION
TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE
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Page
13
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RESTRICTIONS
ON WHAT THE FRANCHISEE MAY SELL
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Page
13
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RENEWAL,
TERMINATION, TRANSFER AND DISPUTE RESOLUTION
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Page
13
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PUBLIC
FIGURES
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Page
15
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FINANCIAL
PERFORMANCE REPRESENTATIONS
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Page
15
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OUTLETS
AND FRACHISEE INFORMATION
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Page
16
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FINANCIAL
STATEMENTS
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Page
18
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CONTRACTS
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Page
18
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RECEIPTS
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Page
19
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LIST
OF UNITED STATES ESCO SUBFRANCHISORS AND FRANCHISEES
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Exhibit
A
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STATE
FRANCHISOR ADMINISTRATOR AND REGISTERED AGENTS FOR
SERVICE
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Exhibit
B
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FINANCIAL
STATEMENTS
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Exhibit
C
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SUBFRANCHISE
AGREEMENT
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Exhibit
D
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PROMISSORY
NOTE
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Exhibit
E
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FRANCHISE
AGREEMENT
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Exhibit
F
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PERSONAL
GUARANTY
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Exhibit
G
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TABLE
OF CONTENTS OF TRAINING MANUAL
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Exhibit
H
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©
2004 ESCO GLOBAL REALTY CORP.
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Page
ii
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ITEM 1
– THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND
AFFILIATES
To
simplify the language in this offering circular, "ESCO" means ESCO
GLOBAL REALTY CORP., the Franchisor. "You” means the person
who buys this Subfranchise. If You form a corporation, partnership
or other organization, the reference to "You” includes the
organization's owners.
ESCO
is a Colorado corporation that was incorporated on January 30,
2003. ESCO does business as “ESCO ®
GLOBAL
REALTY”. ESCO’s principal office is located at 594
Dagall Road, Mill Bay, BC V0R 2P4, CANADA. Its United
States address for service of process is Suite 700 – 411 East
Wisconsin Avenue, Milwaukee, Wisconsin, 53202. ESCO's
agent for service of process is disclosed in Exhibit B for this
Offering Circular.
ESCO
has no parents or predecessors and has never owned or operated real
estate sales offices. ESCO sells real estate subfranchises and does
not conduct any unrelated business activity. ESCO began offering
subfranchises for sale on February 1, 2004, and has sold four (4)
Subfranchises to date. ESCO has no prior business experience
offering franchises in any line of business, or providing products
or services to the franchisees.
The
franchise described in this Offering Circular is a subfranchise for
a specific geographic territory allowing You to sell ESCO
®
GLOBAL
REALTY franchises and to assist in the growth of the franchisees in
that specific geographical territory. You will execute a
Subfranchise Agreement in the form of Exhibit D attached to this
Offering Circular. The fee structure is outlined in the ESCO
®
Formula,
which is included as part of the Subfranchise Agreement. The
Subfranchise Agreement sets forth the obligations of You, as the
Subfranchisor, and ESCO, as the Franchisor.
FRANCHISOR
BELIEVES THAT AN INTEGRAL PART OF THE ESCO ®
SYSTEM
INCLUDES THE OWN YOUR FUTURE PROGRAM (THE “OWN YOUR
FUTURE ®
PLAN”),
WHICH ALLOWS PARTICIPANTS IN THE ESCO ®
SYSTEM
TO PURCHASE SECURITIES OF THE FRANCHISOR (THE
“SECURITIES”). AS OF THE EFFECTIVE DATE OF
THIS CIRCULAR, FRANCHISOR HAS NOT COMPLETED THE REGISTRATION OF THE
SECURITIES NECESSARY TO FULLY IMPLEMENT THE EQUITY
PROGRAM. FURTHERMORE, EVEN IF THE SECURITIES ARE
SUCCESSFULLY REGISTERED, OTHER RESTRICTIONS MAY PROHIBIT FRANCHISOR
FROM EVER FULLY IMPLEMENTING THE OWN YOUR FUTURE
PLAN. THERE ARE OTHER RISKS CONCERNING THE OWNERSHIP OF
ANY SECURITIES. THIS CIRCULAR IS NOT AN OFFERING OF
SECURITIES NOR AN INVITATION OR SOLICITATION TO BUY
THEM.
Any
real estate office that joins the ESCO ®
System
is referred to in this Circular as a "Franchisee”.
ESCO ®
GLOBAL
REALTY Franchisees offer real estate brokerage services to the
general public as independently owned and operated entities
utilizing the ESCO ®
System
(as defined below) in a specific geographic territory for a certain
term pursuant to the terms of a Franchise Agreement in the form of
Exhibit F attached to this Offering Circular. You and the
Franchisee are the only two (2) parties to the Franchise Agreement.
The Franchise Agreement sets out the obligations of You and the
Franchisee.
Every
Franchisee must possess a bona fide real estate broker's license in
good standing under the laws of the state where the franchise is
located. Your activities as a Subfranchisor are subject to state
and federal laws and regulations related to franchise disclosure
and real estate transfer and brokerage laws.
ESCO
has developed a plan (the "ESCO ®
System")
designed to enable independent real estate brokerage offices to
utilize brand name identification for the real estate industry. The
ESCO ®
System
is identified by means of certain trade names, service marks,
trademarks, logos, and commercial symbols (the "Marks") that
provide recognition of the ESCO ®
System
for customers and clients. The ESCO ®
System
includes training programs for Subfranchisors and Franchisees,
training and operating manuals, a program for the referral of real
estate listings and real estate buyers, and other procedures and
systems to assist in the operation and management of a real estate
office. The ESCO ®
System
also includes programs for the establishment of advertising and
promotional campaigns. ESCO will provide certain specified support
and services to all subfranchisors in their assigned geographical
territory. You will sell, service and assist the Franchisees in the
development of their franchised offices.
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©
2004 ESCO GLOBAL REALTY CORP.
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Page
2
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The
real estate sales business is highly competitive. You must compete
with numerous other real estate franchise sales offices. The
businesses with which You should expect to compete include, in
general, national or regional franchise systems and other chains,
and independently owned local firms. Your business will also be
affected by its location, the locations of competing real estate
sales offices, your financial and managerial capabilities,
availability of labor, interest rates, demographic or cultural
conditions, and other factors. There is also active competition for
management and service personnel.
ITEM 2
– BUSINESS EXPERIENCE AND AFFILIATES
The
following are ESCO's directors, trustees, general partners,
principal officers, all individuals who will have a management
responsibility relating to the sale or operation of the franchises
offered by this disclosure document, and the Franchise Broker
utilized by ESCO, together with a brief occupational history of
each person:
Mr.
Alexander is our former Chairman of the Board and Chief Executive
Officer. A former trial lawyer, Mr. Alexander has served as the
head of our management team since ESCO ®
’s
inception. He was a top producing Realtor ®
with
Re/Max from 1990-1996 and from 1997-2000 owned a real estate
office. In 2002, Mr. Alexander began the ground-up
development of the ESCO ®
Global
Realty franchise system. In his role as Consultant, Mr. Alexander
will assist the Board of Directors and our Chief Executive Officer
to implement the securities and business development
activities of the Corporation.
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ESCO
Global Realty Corp. (Victoria, BC)
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Consultant
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2007-present
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ESCO
Global Realty Corp. (Victoria, BC)
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CEO,
Chairman
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2002-2007
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Brent
Boyd
Senior
Vice President, Chief Operating Officer, Director
Mr.
Boyd is our Senior Vice-President and Chief Operating Officer and
member of our Board of Directors. He brings over thirty years
experience in the communications industry to the Company. Mr. Boyd
has worked closely with Mr. Alexander in the development of the
ESCO ®
Global
Realty franchise system and is responsible for ESCO
®
’s
organizational structure and technology offerings.
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ESCO
Global Realty Corp. (Victoria, BC)
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Senior
Vice President, COO
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2002-present
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Marketing
Consultant (Victoria, BC)
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Self-employed
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1999-present
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Watermark
Communications Group Inc. (Victoria, BC)
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President
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1987-1998
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David
Alexander
President,
Chief Executive Officer, Chairman
An
honors graduate of prestigious Brentwood College, and subsequently
an honors graduate of University of Alberta, Mr. Alexander is
fluently bilingual in French and English and understands Russian. A
gifted public speaker, he brings significant personnel management
and administrative experience to ESCO ®
. Mr.
Alexander has a ‘can do’ attitude and a commitment to
realize ESCO ®
’s
vision of an ethical, community-minded real estate organization
that meets the needs of the public that it serves as well as the
needs of its Regional Owners, Franchisee-Brokers, Realtors
®
and
Support Staff through equity ownership in ESCO Global Realty
Corp.
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ESCO
Global Realty Corp. (Vancouver, BC)
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President
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2008-present
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ESCO
Global Realty Corp. (Vancouver, BC)
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CEO,
Chairman
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2007-present
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Langley
Christian School (Vancouver, BC)
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Teacher;
Fine Arts Coordinator
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1995-present
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Vice-President
– Regional Development
A top
real estate trainer, Mr. Schwartz began his real estate career over
twenty-five years ago. While experienced as a sales agent and
owner/broker of a Century 21 franchise, Mr. Schwartz’ gift is
his ability to recruit, train and build organizations. For the past
10 years, he has been recruiting and training sales agents for
established real estate offices throughout Western Canada. Working
with the ESCO ®
Training
Institute, Mr. Schwartz will develop curriculum and present courses
to pass on his skills in recruiting and building real estate
organizations.
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©
2004 ESCO GLOBAL REALTY CORP.
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Page
2
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1401041
Alberta Ltd. (Calgary, AB)
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Director
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2008-present
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ESCO
Global Realty Corp. (Calgary, AB)
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Vice-President
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2005-present
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Realty
Executives Apex (Calgary, AB)
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Recruiter
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2004-2008
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Realty
Executives Regional (Calgary, AB)
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Recruiter
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2004
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Market
Networks (Calgary, AB)
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President
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2003-2004
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A.E.
Lepage (Nanaimo, BC)
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Recruiter/
Trainer
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2002
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Gaius
Carmichael
Vice
President – Atlantic Canada
Mr.
Carmichael is Regional Owner of the ESCO ®
Atlantic
Canada region. He is also the owner of Solid Gold Construction, a
Halifax-based construction company that has built and sold over 200
high end homes in Atlantic Canada since 2001. Prior to becoming a
full-time home builder Mr. Carmichael owned a highly successful
landscaping business that earned him Entrepreneur of the Year
Award.
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ESCO
Global Realty Corp. (Halifax, NS)
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Vice-President
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2007-present
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ESCO
Atlantic Canada (Halifax, NS)
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Regional
Owner
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2006-present
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Solid
Gold Construction (Halifax, NS)
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Lyle
Spearing
Vice
President – Western Canada
Mr.
Spearing is Regional Owner of the ESCO ®
Western
Canada region. He owned and operated a third-generation
family farm in Saskatchewan which he sold before moving to
Calgary and becoming a Realtor ®
. Mr.
Spearing volunteers with the Civil Air Search and Rescue
Association, flying out of Calgary as a spotter in search of downed
aircraft.
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1401041
Alberta Ltd. (Calgary, AB)
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Director
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2008-present
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ESCO
Global Realty Corp. (Calgary, AB)
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Vice-President
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2008-present
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MaxWell
Realty (Calgary, AB)
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Realtor
®
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2006-2008
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Realty
Executives (Calgary, AB)
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Realtor
®
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2005-2006
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Farming/Highway
Trucking Company (SK)
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Owner/Operator
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1965-2004
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ITEM 3
– LITIGATION
No
litigation is required to be disclosed in this offering
circular.
ITEM 4
– BANKRUPTCY
No
person previously identified in Items 1 or 2 of this offering
circular has been involved as a debtor in proceedings under U.S.
Bankruptcy Code required to be disclosed in this Item.
ITEM 5
– INITIAL FEES
You
must pay an initial subfranchise fee of $40,000.00 per 1,000,000
persons who reside in your Regional Territory when the Subfranchise
Agreement is signed ("Subfranchise Fee"). Because your Regional
Territory may differ in population from those offered to other
Subfranchisors, the Subfranchise Fee may not be the same for all
subfranchisees. The Subfranchise Fee generally ranges
from $40,000 to $400,000. This amount is the only
Initial Fee payable to ESCO before the business opens. The
Subfranchise Fee is due on the date you execute the Subfranchise
Agreement, and is not refundable.
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©
2004 ESCO GLOBAL REALTY CORP.
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Page
3
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ITEM 6
– OTHER FEES
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©
2004 ESCO GLOBAL REALTY CORP.
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Page
4
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Type
of Fee
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Amount
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Due
Date
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Remarks
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Transaction
Fees
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50%
of the Transaction Fees generated from each Sales Representative
transaction
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Transaction
Closing Date
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Currently,
the Transaction Fees from the Sales Representative for each
Transaction total $150, resulting in a payment of $75 per
transaction end.
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Transfer
Fee
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$10,000
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Prior
to transfer
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Training
Fee
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$1,500
plus costs for travel, lodging, meals and incidental
costs
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Prior
to training session
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There
is no charge for tuition fees for the attendance of one person at
the training session but there may be a fee for additional persons
attending the session. All persons pay their own costs for travel,
lodging, meals and incidental costs while attending.
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Stock
Purchase Plan Remittance
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Two
percent (2%) from Sales Agents and two-tenths of one percent (0.2%)
from Franchisees of the gross commissions earned by each Sales
Agent in Your Regional Territory, plus any elective
withholding
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Transaction
closing date
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Pursuant
to the Own Your Future Plan, You will assist ESCO in facilitating
the collection and submission of any amounts from the Sales
Representatives and Franchisees within Your Regional Territory
pursuant to the Own Your Future Plan. For Sales Agents,
this currently totals two percent (2%) of the total gross
commissions from each Sales Agent, plus an elective amount up to an
additional 3% of the total gross commissions earned by each Sales
Agent; and for each Franchisee, two-tenths of one percent (0.2%) of
the total gross commissions of the Sa
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