Line-X Franchise FDD, Profits, Costs & Fees (2024)

Established in 1993, Line-X is recognized for its expertise in applying spray-on coatings made from polyurethane and polyurea, primarily designed to safeguard truck beds and a range of light industrial items.

In addition to their core services, they also provide a variety of truck and vehicle enhancements, highlighted by their exclusive LINE-X GEAR accessory collection.

The company presents entrepreneurial opportunities by allowing individuals to manage their ventures under the LINE-X umbrella, focusing on the application of these unique coatings and the distribution of associated products.

Headquartered in Huntsville, Alabama, LINE-X LLC has been authorizing franchise operations since 1999. These franchises are dedicated to the application of their proprietary coating solutions.

Initial Investment

How much does it cost to start a LINE-X franchise? It costs on average between $271,000 – $1,013,000 to start a LINE-X franchised center.

This includes costs for construction, equipment, inventory, and initial operating expenses. The exact amount depends on various factors, including the location, and whether the franchisee chooses to lease or purchase the property.

Type of ExpenditureAmount
Initial Franchise Fee$40,000
Initial Training Expenses$1,000 – $10,000
Real Estate$16,000 – $60,000
Leasehold Improvements$22,000 – $110,000
Insurance$1,000 – $11,000
Utilities$500 – $1,500
Vehicles$1,000 – $100,000
Graphics Package (Includes Interior and Exterior Signage)$5,000 – $40,000
Licenses and Permits$500 – $1,500
Office Equipment/Supplies/POS System$3,531 – $14,031
Initial Inventory of Coating Products$8,970.77 – $13,864.99
Opening Marketing$5,000 – $15,000
Uniforms$250 – $500
Bedliner Spray Equipment Package$46,968.08 – $86,658.60
Equipment Package$39,482.04 – $104,086.67
Application Booth$12,299.65 – $89,250
Shop Tools and Supplies$15,297.33 – $28,638.68
Inventory of LINE-X BRANDED PRODUCTS$2,200 – $7,150
Additional Funds – 3 months$50,000 – $75,000
Expansion Choice Equipment$0 – $205,014.12
Total$270,999 – $1,013,194

Line-X Franchise Disclosure Document

Recent Legal Disputes and Litigation

In early 2024, LINE-X faced significant legal challenges from its franchisees. The disputes began when LINE-X proposed major changes to franchise agreements. These changes introduced royalty fees after over 20 years of fee-free operation, sparking widespread dissatisfaction.

Historically, LINE-X operated under a non-royalty franchise model. In 2023, the company introduced a new business model that included the implementation of royalty fees. This shift was met with resistance from franchisees who had operated under the previous structure for over two decades.

The Independent Association of Line-X Franchisees (IALXF), representing the majority of franchise owners, expressed concerns that the new terms would adversely affect their profitability and the overall value of their businesses. Despite efforts to negotiate, the franchisor and franchisees were unable to reach an agreement, leading to a mass departure of franchisees from the LINE-X system.

Representing most franchisees, they argued the changes threatened profitability and sustainability. Despite negotiations, LINE-X upheld the new model. As a result, as of today (Q4 2024), around 190 franchisees, covering over 200 stores, chose to exit.

Their departure led to legal action challenging non-compete clauses. These clauses could block former franchisees from opening similar businesses. The IALXF argued these changes were unfair and harmful to franchisees’ livelihoods.

Frequently Asked Questions

How many LINE-X locations are there?

As of December 2023, LINE-X operated (only) 275 franchises. Indeed, LINE-X suffered a massive exodus in response to proposed changes in the franchise agreement.

Now, at the time of writing this article (Q4 2024), whilst the end of year numbers aren’t yet available, it is likely that LINE-X operates about 200 franchisees, down from 418 at the beginning of 2023 before the exodus.

What is the total investment required to open a LINE-X franchise?

The total investment required to open a LINE-X franchise ranges from $271,000 to $1,013,000.

What are the ongoing fees for a LINE-X franchise?

LINE-X franchisees are required to pay a royalty fee of 6% of their gross revenues, which contributes to the continuous support and development provided by the franchisor. Additionally, there is a marketing fee set at 2.5% of gross revenues, allocated towards national and regional advertising efforts to promote the LINE-X brand.

Franchisees are also expected to invest 2.5% of their gross revenues into local marketing initiatives to drive customer engagement within their specific territories.

What are the financial requirements to become a LINE-X franchisee?

To qualify as a LINE-X franchisee, franchisees are required to have a minimum net worth of $500,000 and possess at least $150,000 in liquid capital. These financial prerequisites ensure that franchisees have the necessary resources to establish and sustain their business operations effectively.

Who owns LINE-X?

LINE-X, a leading provider of spray-on bedliners and protective coatings, is owned by IXS Coatings, a parent corporation formed in 2018 following the acquisition of Ultimate Linings by LINE-X. This strategic merger combined the product lines and expertise of both companies, enhancing their offerings in the protective coatings industry.

Disclaimer

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