@wireless franchise disclosure document (fdd/ufoc) - march 2004

8/6/2019 @Wireless Franchise Disclosure Document (FDD/UFOC) - March 2004

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@WIRELESS ENTERPRISES, INC.

INFORMATION FOR PROSPECTIVE FRANCHISEESREQUIRED BY THE FEDERAL TRADE COMMISSION

TO PROTECT YOU, WE'VE REQUIRED YOUR FRACHISOR TO GIVEYOU THIS INFORMATION WE HAVENT CHECKED IT, AND DON'TOW IF ITS CORRECT IT SHOULD HELP YO MAK UP YOURMIND STUDY IT CAREFULLY WHILE IT INCLUDES SOMEINFORMATIO ABO YOUR CONTRACT, DONT RELY ON ITALONE TO DERSTAND YOUR CONTRACT READ ALL OF YORCOTRACT CARFULLY. BUYING A FRANCHISE IS ACOMPLICATED IVESTMENT TAKE YOUR TIME TO DECIDE. IFPOSSIBLE, SHOW YOUR COTRACT AD THIS INFORMATIO TOA ADVISOR, LIKE A LAWYR OR AN ACCOUNTANT. IF YOU FINDAYTHING YOU THINK MAY BE WRONG OR AYTHINGIMPORTANT THATS BEE LEFT OUT, YOU SHOULD LET US KNOWABOUT IT. IT MAY BE AGAINST THE LAW

THERE MAY ALSO BE LAWS ON FRANCHISING IN YOUR STATE.ASK YOUR STATE AGENCIES ABOUT THEM

FEDERAL TRADE COMMISSIONWashington, DC.

ISSANCE DATE: MARCH 31

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fanchiseOFFERNG CRCULAR FOR PROSPECTVE FRANCHSEES

@WIRELESS ETEPISES, INC.(a Delaware Coporation)

50 Mehodist Hll Dive Sue 1500Rocheter, New Yok 14623

585) 359-3390

e rancse ere is t pen an @WIRELESS stre. @WRELESS stres prvide thesae f cellula telephnes pagers and wireless cable unts, wreess and celular handsets,satelite systems, and pagng, GPS, wireless data, and inteet prducts and accessries, and thesalef celuar telephne services, pager services and ther related gds and services.

The nitial anchse fee is $ 5000 fr each Franchise eement sied The estmated ttalintial investment required, including the intial anchise fee and addtinal nds is $8 00 -

$50700 nt incuding real estate csts. See Item 7 Yu must als pay cetain nging feesand epenses. See tem 6

f yu enter int an rea Develpment geement yu wil have the ptn t perate mre thanne @WRELESS stre. Each @WIRELESS stre wll be perated under a separateFranchse greement. The nta anchise fee is 000 fr each stre Fr mre nfrmatinn the nitial anchise fee and intial investment, see Items 5 and 7

RISK FACORS

1 HE FRANCHISE AGREEMEN REQUIRES HA HE PARIESARBIRAE HE PRNCIPAL CIY CLOSES O HE FRACHSORSPRINCIPAL PLACE OF BUSINESS A HE ME OF HE SAR OFARBRAION OU OF SAE ARBIRAION MAY FORCE YOU O ACCEP A

LESS FAVORABLE SELEMEN FOR DISPUES I MAY ALSO COS YOUMORE O ARBIRAE WIH HE FRANCHSOR N NEW YORK HAN N YOURHOME SAE

2 HE FRANCHISE AGREEMEN REQUIRES HA ANY LEGALACIONS BE BROUGH IN HE PRINCIPAL CIY CLOSES O HEFRANCHISORS PRNCPAL PLACE OF BUSINESS OU OF SAE LEGALACIONS MAY FORCE YOU O ACCEP A LESS FAVORABLE SELEMENFORDISPUES I MAY ALSO COS MORE O SUE HE FRANCHISOR N NEWYORK HAN YOUR HOME SAE

3 HE FRANCHSE AGREEMEN SAES HA NEW YORK LAWGOVERNS HE AGREEMEN AND HIS LAW MAY NO PROVIDE HE SAMEPROECONS AND BENEFIS AS LOCAL LAW YOU MAY WAN O COMPAREHESE LAWS

4 WE MAY ERMINAE YOUR FRANCHISE IF YOU PURCHASEGOODS OR SERVICES HA ARE NO ACCORDING O OUR SPECIFICAIONSOR HA NO FROM OUR APPROVED SUPPLIERS

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fanchise5 AS PER THE AUDITED BALANCE SHEET DATED DECEMBER 31,

2003, DECEMBER 31, 2002, AND DECEMBER 31, 2001, THE FRANCHISOR HAD AWORKING CAPITAL SURPLUS /(DEFICIENCY) OF $402,439, $202,971, AND($163,648), RESPECTIVELY.

6 THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE

Infatin abut cmparisns f anchsrs is avaiabe. Ca the state administratrsisted n Ehibit f this ering circuar r yur pubic ibrary fr surces f nfnatinRegistratn f ths anchise by a state des nt mean that the state recmmends it r has

vered the infatn in ths ering circuar f yu ea that anyhing in his eringcrcuar s untue, cntact the Federa Trade Cmmissin and the state adminisatr isted nEhibit .

THE FRANCHISOR MAY, IF IT CHOOSES, NEGOTIATE WITH YOU ABOUTITEMS COVERED IN THE PROSPECTUS. HOWEVER, THE FRANCHISORCANNOT UE THE NEGOTIATG PROCESS TO PREVAIL UPON APROSPECTIVE FRANCHISEE TO ACCEPT TERMS WHICH ARE LESSFAVORABLE THAN THOSE SET FORTH IN THIS PROSPECTUS

ssued Date March 1, 004

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@WIREESSFRANCHSE OFFERING CRCAR

TABLE O CONTENTS

ITEM PAGE

I THE RANCHISOR ITS PREDECESSORS AND AILIATES 12 BSNESS EXPERENCE . 33 LITIGATION .................................................... 44. BANKRPTCY .. 45 INITIAL RANCHSE EE. 46 OTHER EES 57 NTAL INVESTMENT 98 RESTRICTONS ON SORCES O PRODCTS AND SERVCES 129. RANCHSEES OBLGATIONS 141 INANCNG ...... ...... ...... ..... ..... ...... ...... ..... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... .. 15

1 RANCHSOR OBLGATIONS 1512 ERRTORY 231. TADEMARKS.2414. PATENTS, COPYRGHTS AND PROPRIETARY INORMATON.265 OBLGATON TO PARTICIPATE IN THE ACTAL

OPETON O THE RANCHSE BSNESS 2716. RESTRICTIONS ON WHAT YO MAY SELL 277 RENEWAL TERMINATON TRANSER AND DSPTE RESOLTON2818 PBLIC IGRES 3319 EARNINGS CLAMS 342 LIST O OTLETS 3421 INANCIAL STATEMENTS . 37

22 CONTRACTS . 3723 RECEPTS 38

EXHIBITS:

A. STATE ADMNSTATORSB AGENT OR SERVCE O PROCESS C. INANCIAL STATEMENTSD. NCHISE AGREEMENTE. AREA DEVELOPMENT AGREEMENT. CALIORNIA ADDENDM

G. LST O CRRENT RANCHSEESH LST O TERMNATED RANCHSEESI. RANCHISE DSCLOSRE QESTONNAREJ. RECEIPTS

fanchise

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fanchise.

Description

Item 1

HE FRANCHISOR TS PREDECESSORS AND AFFIIATES

smpi the aguage f this eing circula, we," s," r @Wireless" efers t

@Wireless Enterprises, nc, the achisr Yu" refers t a achisee wh enters int achise aeement The achisee may be a persn, crpratin, pateship r lmitedlaiity cmpay If the anchsee is a crpratn, patnershp imted lability cmpay,yu'' des nt include the pincpalsf the cpratin, parnership r limited liabilty cmpany

@Wreess was incrprated n Deawre n ugust 26 999. Our pincipa businessaddress is 50 Methdist Hil Dive, Suite 500 Rchester, New Yrk 4623. We d businessunde the name @Wieess" @Wreless ntepises" nd unde n ther name Our agentsfr sevice f prcess are lsted in Ehibit 8.

On auay 26 2000 @ieless ntepises merged with elua Unimited US, Inc,

ur pedecessr (UU") UU was frmed under Delawae law n March 19 99. UUI des nt pvde prducts r servces t @ieess achisees Since 199, UU, hascnducted a busness f the type t be perated by yu UUI has nt ered achises fr thesame type f business as that t be perated by yu and has nt ffered anchises n ther linesfbusness We have n afiates fr purpses f tem .

e have been ering anchses f a type substantially similar t thse ffered in ths eing cicula since January 2000. Since 994 we have cnducted a business f a typesubstantialy smilar t thse ered in ths ering circular We perate tw cmpaywned@WIRELESS Stres, ne f which was fmerly prated by UU, which er the samegds and seices as the anchsed business and upn which the nchised business s

mdeled We have never peated anchises in any ther line f business We d nt engage,ad have never engaged n any usness actvtes ay e lne f usness the han asdescibed in this ering crcular

n ceain areas, @WREESS may enter int a brkerage sales aeement (BrkeageSales greement") wth a brke ad suppt agent (the gent") Unde the Brkeage Saleseement, we have the ight t delegate duties t the gent wh may prvide certain siteassistance, and inita and nging assstace t anchisees n behalf f us

of the Franchised Business

GeneraL We grant anchses t establish and perate an @WIRELESS stre (the

Fnchise Business" r the @WIRELESS Stre") under a achise aeement (Franchiseeement") he Fanchised Business is a retail stre which features ad ers fr sale t the public celuar telephnes pagers and wireless cable units, wireless and cellular handsets,satelte systems, ad pagng GS, weless data, nd ntet pdcs d ccesses, ndcellular telephne sevices, pager servces ad ther related gds and services, unde the trade

name "@WIRELESS In rder t becme a anchisee, yu will be reured t peate yur@WIRELESS stre n accrdce with ur standards and specicatins, nd yu will bereuired t sign a Fanchise geement We als gant anchses t establish mre than neFrachsed Busness unde an area develpment agreement (rea Develpment eement") tbe sed at the same time as r fllwing the siing f a single unt Franchse eement

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The @WIREESS System The Franchised Business will operate according to a uniuesystem developed and owned y us (the System". The distinguishing characteristics of theSystem include distinctive usiness formats methods, procedures designs, layouts standards,and specications, and the Marks (dened elow.

The Franchised Business will e operated in accordance with an Operations Manual(Operations Manual" to e provided to you. ou will also e provided with the right to usecertain trade names service maks, and other commercial symols, including the@WIRELESS trademarks and service marks and associated logo, which have gained andcontinue to gain pulic acceptance and goodwill, and other additional trademarks service marksand commercial symols in conjunction with the operation of @WRELESS stores(collectively, the Marks".

Market and Competition. The market for cellular telephones pages, and wireless caleunits and other accessories and for cellular telephone services pager services, and other related

goods and sevices such as those that will e oered y the Franchised Business is well developed and competitive. The Franchised Business will compete with other regional nationaland local retail usinesses that sell cellular telephone and pager sevices and goods our aility

to compete will depend upon such factors as consumer taste and local economic conditions

Indust Secc aws and Regulations our Franchised Business will e suject tolaws and regulations that are applicale to usinesses generally, ut not specic to the industry in

whch the Franchised Business operates. ou should check the laws within your state todetermine whether any state licensing laws or regulations are applicale.

[REMINDER OF GE INTENTON EFT BNK]

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Cag Jeabeck,

Battagla, Develoment

Chandle, Develoment Manage

Chaman, Maketng

Item 2

USINESS EXPERIENCE

sed beow are our prcpa ofcers drecors ad oher execuves who wll have aagee esposby coeco wh he achses offered by hs offerg crcularThe pricpa occupao ad busess experece of each cludg he aes ad locaos of por epoyers are dcaed below Uess oherwse dcaed he eploye s Welessad he locao of epoye s Rocheser New Yo. We also ls below our achseboers.

J Peident and Chie Executive Oce

Sce our cepo ugus 1999, Mr J erabec has served as our Pesde ad hefExecuve Ocer Sce July 1997 M. Jerabec has aso served as he Presde of UU!. Mr.Jerabec was he Regoal Maager of e's Tal elular & Wreless Ma Florda oecebe 997 o Jauay 999

Michael C. Vice Peident o Fanchie

Sce March 2, Mr Baaga has sered as our Vce resde of Frachseevelope Mr Baagla was he recor of O r Wreess for Bell lac Moble oeceber 999 o March 2. Fro Noveber 1997 o eceber 1999 Mr. Baagla was arecor fo Froer eluar

Mike Aea

Sce ecebe 22 Mr. hader has sered as our rea evelope Maager for he era pat of he sae of Ketucy. Mr. hadler has bee he Ower/Maager ofdvaced oucaos Radcle Ketucy sce ha copays cepo Noveber 2 Fro Jue 994 o Noveber 2, Mr hade wored as a esao for hadlerElecric o Radcle Keucy.

Denie Diecto

Ms hapa has seed as our Mareg recor sce eceber 24. Fro February 998

o eceber 24 Ms. hapa sered as he Mareg oucaos reco forGeraow-So opaes Rocheser New Yor

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Gusee Arano,

TrujUo,

Franchise Broker

Mr ran ha ered a ur anhie brker ine Ober 2 Sine ug 2,

Mr. ran ha erved a Vie Preiden Wirele Gru n in Miami Flrida naddiin, m Ober 998 ug 2, Mr ran wa he Preiden G.T. Time, nin Miami, Flida

ober Franchise Broker

Sine Ober 2, Mr. Tjill ha eved a a anhie bker and ha been aanhiee wner an @WIELESS re Frm Ober 1998 ugu 2, Mr. Trujilerved a Vie Preiden/Oerain r ain mera r G.T. Tire In. in Mimi, Flrida.

Iem 3

LITIGTION

N liigain i required be diled in hi ering irulr

Iem

BNKUPTY

N ern reviul idenied in em r 2 hi eing irular ha been invlveda a debr under he U.S. Bankr de required be diled in hi Iem.

Iem

INITIL FNISE FEE

Franchise Fee

Yu mu a u a nnreuring and nn-rendable iniial anhie ee, ee a deibed belw in he amun $15, r a ingle @WIELESS re be eraed

under an individual Franhie geemen Yu mu a he enire iniial anhie ee n laerhan he dae ur igning he Franhie eemen. I u ail lae an arved ie wihin 6 da aer he dae he Franhie eemen, we will rend u he iniialanhie ee aid, le he eaer : ( 1% he iniia anhie ee aid, r (2 ur reanable adminiaive uevir, and legal inurred. During ur reeding al ea, we ered eiing anhiee and anhiee wh develed mre han ne@WIELESS rewihin ne ear, a lwer iniial anhie ee $5,.

Goods and Services

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-----

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I

IP"ricdI

teet

Cte Maeae Fee3

ang Fee - angmloyee'

Commo Reeue Royay of1% of al ommo eeue

"Commo Reeue a deed ou Metod of Oeato (adeed Noe 1) e Aoutg

(a deed Noe 1). thethat you ahee et

mothly elua/wele atatoay Aoutg Peod, the oyalty

all Commo Reeue n thatAoutg Peod wll be edued to

Mothy wth 1 day folowgloe of Aoug Peod

Royalty ad

ay Fee Pe day fee ad age a we A ued etablh

g:: Maual Relaemet $1 e age Whe elaemet age ae; deleed to you

o exeed the geate of % of We he Royalty adReeue o$1,2

Adetg A ued

Ogog etoy of Ogog eoyuae10 of uae ad f o obtaed equed ad a ued

you ou ouemet exee

Audg CotI Cot of Aud

$1, of afeSueo Fahe Fee3 % of the theuet ta fee of ueo

Cot of Labty A uedad Attoey Fee Cot of olleto ad attoey fee A ued

fo aoal of ule ad Ou atual ot of ealuato Whe uedtetg of amle of em

Reloao 7 outofoket exee A ued

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Durig the term of the eemet you mut pay a o-redable royalty (Royalty") foreach caledar moth (the ccoutig Period") i the amout of 1% of all commiio reveue(the ommiio Reveue"), per ccoutig Period I the evet you achieve 5 or more et mothy cellular/wirele activatio, a deed i our madatory ad uggeted pecicatio,

tadard operatig procedure ad rule we deiate i the Operatio Maua (Method ofOperatio"), i ay ccoutig eriod the Royalty o al ommiio Reveue wil be reducedfor uch ccoutig Period to 6% additio to the Royalty you pay to u o a ommiioReveue, you mut pay 5% of Gro Reveue per ccoutig erod

ued i thi oerig circular, the term Gro Reveue" mea al reveue you derveom operatig the @WIRELE tore icludig al amout you receive for merchadiegood or ervice old at or away om the approved locatio of the @WRELE toredeiated i the Frachie greemet (pproved ocatio), ad whether om cah, check orcredit traactio but excludig all reveue you derive om the ale of promotioal euipmeta deed i our Operatio Maua, all paymet (icludig a ecurity depoit ad bil

paymet) received for wirele commuicatio ervice provider (ommuicatio arrerompaie") al federal, tate or muicipa ale, ue or ervice taxe collected om cutomerad paid to the approprate taxig authorty ad excludig cutomer red adjutmet creditad aowace actualy made by the @WIRELE tore i compliace with our Method ofOperatio

If the ommiio Reveue we receve o your behalf i ay ccoutig Period i aamout iuciet to cover the Royalty ad ay other amout due to u or our aiate uderthe Frachie greemet you will pay u immediately the Royalty ad ay other amout due to u or or aiate uder the Frachie eemet by check through U mai or bak-wiretrafer a we determie, aer you receive otice om u of uch outtadig amout due to uor our aliate

2 ll amout which you owe u or our afliate uder the Frachie greemet ad do otpay u or our aiate whe due wil bear iteret aer their due date at the highet cotract rateof iteret permitted by law

You mut pay u a o-redable ogoig computer maiteace fee (omputerMaiteace Fee") at our the-curret rate a pecied i our Method of Operatio (a deedi Item 14 of thi offerg circular), for our ogoig upport ad maiteace of the proprietarypoit of ae computer ytem you are required to ue i operatig the @WIRELE tore

4 For perodic reeher traiig coure coducted by u or our get, you are repoible for

reaoable fee that we may charge for thee coure You may ao be repoibe for fee for traiig of your ew employee hired aer your @WIRELE tore ope for buie ifyou o reuet

e or our get wil ih additioal guidace ad aitace ad may charge the per diemfee ad charge we etablih om time to time If you reuet or if we require additioal orpecial traiig for your employee, all of the expee that we or our get icur i coectio with thi traiig icudig per diem charge ad travel ad ivig expee for our pere,wil be your repoibiity

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10

If you copy of the Operations Manual is lost, destroyed, or signicantly damaged, you aeeto obtain a eplacement copy at our then applicable chage

You aee to contrbute to the @WRELESS adveising nd (the dvetising und"amounts that we designate, not to exceed the eater of 5% of Gross Revenue or$,25 (the d

ee" In the event that the combined Eed Co-Opeative dvertising unds (dened in Item1 of this oeing circula and the Commission Revenue is in an amount insucient to pay

your required contibution to the dvertising und during any ccounting eriod youmust pay us the d ee, by check through nited States Mail, bankwire transfer, o it will be debitedom eed commissions as we deteine, within 7 business days aer you receive notice omus of such outstanding amounts due to us

You must spend annually fo advetising and promotion of the @WIRELESS Store atleast I% of Gross Revenue f you elect to list and advertise the @WRELESS Store in the

prncipa regula (white pages and cassied (yelow pages teephone directoies coveing thearea in which the @WIRELESS Store is located, the costs of your telephone directoy

advertising wil not be credited toward this advertising and pomotion obligation

You must purchase your ongoing inventoy of celluar phones, accessories wireless cableunits, pe-merchandising materials and other equipment, products or items as we desiate in theOperations Manua o otherwise in writing om us o our desiee (which may be ou afliatef you fail to pay us o our aliates for purchases required bythe ranchise eement we and our aliates have the right among other remedies to withhold shipment to you of inventory orany othe product which we are providing to you under the anchise eement You aee toassume a esponsibility, risk of loss and bear all costs, including insurance and anspoation,nce the equipment, products and items leave the shipping partys place of business, even thoughwe may make shipping and eated arrangements for shippingto you

You must obtain the types, amounts, terms and conditions of insurance coverage equiedto be carried fo the @WRELESS Store and standards for underwrites of policies poviding requied insurance coveage If you fail to obtain equired coverage we have the right to obtaininsuance coverage forthe @WRELESS Stoe atyour expense

We, ou gent, and other designated agents will have the ight during normal working hoursto inspect, examine and copy, at ou expense, your books, records, accounts and tax etus with respect to the @WIRELESS Store We will also have the rght at any time, to have anindependent audit made of your books f an inspection should disclose your underreporting onany Gross Revenue Report o any othe report or the underpayment of any Royalty fee oradvetising fee payable under the anchise greement you must immediately pay to us he

amount underepoed and/or underpad, in addition to inteest om the date this amount was dueuntil paid In addition, if (a the underreporting and/or underpayment exceeds two percent of the total Royalty fee or advetising fee payable fo any period covered under the audit, or (binspection or audit is made necessary by your faiue to ish eports, supporting records or

other information as equired, or to ish these items on a timey basis you agree to reimburse us for te reasonable cost of this inspection o audit, including the chages of atoeys andindependent accountants and the travel expenses, oom and board and compensation of ouremployees These emedies will be in addition to ou ote emedies and rghts unde heanchse eement and applicable law

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