Module 4 — The Franchise product

Section 1 · Tier 1 — The 60-second brief

The Franchise product is HiON’s product for sophisticated multi-unit operators. It is a development agreement structured for operators who already know what an FDD is, what a royalty is, and what general-contractor-of-record means.

1. The customer. Multi-unit operators with infrastructure or commercial-real-estate experience. Reference point: Steve Wazny — 150+ locations across 6 brands (Jack-in-the-Box, Arby’s, Buffalo Wild Wings, Sonic, Jimmy John’s), ~4,800 employees, first HiON site at I-25/Orchard in Parker, CO.
2. The investment. ~$550K per location. $400K site dev / equipment / construction; $100K permits / taxes / operating costs; $50K franchise fee.
3. The development agreement. 10 locations over 3 years. Year-one target: 5 sites selected and under development.
4. The royalty stack. $0.05/kWh royalty + $0.01/kWh technology contribution. Marketing fund: none required initially.
5. The term. 10 years with two 5-year renewal options.
6. The staffing standard. 0–1 on-site employees. Designated Business Manager required.
7. What HiON & Tesla provide. Site sourcing, utility engagement, design to Tesla standards, construction coordination, 24/7 remote monitoring, software dashboard, automated billing, on-call maintenance, traffic analytics, real-time comparable site performance.
8. What the franchisee owns. Capex and opex. General contractor of record during the build. Day-to-day operations. The DBM hiring decision. Site-area maintenance. The Sinking Fund.

What you must be able to say without notes: the ~$550K investment with its three-line breakdown; the 10/3-year DA with the year-one 5-site target; the 5¢ + 1¢ royalty stack; the 10 + 5 + 5 term; the 0–1 staffing standard; and the four-line “what HiON & Tesla provide” list.

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Section 2 · Tier 2 — Source map

Canonical documents

Document	Path	When to open
Master context brief §2	~/HiON Franchise Group Site v2/hion-context.md	Any franchise product question.
Franchise page public copy	~/HiON Franchise Group Site v2/site-v3/COPY.md	Before quoting any franchise-product line externally.
Investment deck (confidential)	~/HiON Franchise Group Site v2/HiON-Investment Deck 4.6.26 (CONFIDENTIAL).pdf	Internal — confirms cross-references.
FDD	(not in repo) [CONFIRM]	Any conversation crossing into legal substance of the offer. Owner: Kevin Hein.
Franchise Agreement template	(not in repo) [CONFIRM]	Any conversation about the operator’s contractual obligations. Owner: Kevin Hein.
Development Agreement template	(not in repo) [CONFIRM]	Any conversation about the 10/3-year structure or year-one target. Owner: Joe Lewis / Kevin Hein.
Master Services Agreement	(not in repo) [CONFIRM]	Any conversation about equipment supply or maintenance scope. Owner: Joe Lewis.

Owners

Person	What they own for M04 questions
Joe Lewis	The franchising motion. Anything about the DA structure or franchisee recruiting. The Ideal Franchisee Profile.
Jim Frank	Site sourcing strategy. Tesla coordination on franchisee-built sites.
Bill O’Connor	Per-unit unit economics on the franchisee side (cross-reference M06 for internal-only numbers).
Kevin Hein	FDD, FA, DA legal substance. Item 19 boundary on financial-performance representations.
Steve Wazny	First franchisee. SME reference for the operator’s perspective on the product.

Live dashboards / portals

• Partner Portal — franchisee operations system of record [CONFIRM URL / admin].
• Pipeline tracker — the seven-stage franchisee site pipeline [CONFIRM where this lives].

Related curriculum modules

• M01 — the role split that anchors what the franchisee owns vs HiON vs Tesla.
• M05 — the Host product, which the Franchise product is structurally distinct from.
• M06 — internal-only unit economics for the Franchise product.
• M07 — the site lifecycle the franchisee executes against.
• M08 — what the franchisee operates after a site is live.
• M09 — the redline phrasings that govern franchise-product claims.

Franchisee curriculum overlap

• [M04 · SITE · ACQUISITION · AND · FEASIBILITY](https://training.hionsuperchargers.com/curriculum/m04-site-acquisition-and-feasibility/) — the operator-grade view of the pipeline mechanics.
• [M05 · LEASE · SITE · HOST · RELATIONSHIP · LEASE · ADDENDUM](https://training.hionsuperchargers.com/curriculum/m05-lease-site-host-relationship-lease-addendum/) — operator-grade lease and Site Host mechanics.
• [M09 · STAFFING · DBM · PERSONNEL · CONTRACTOR · CONDUCT](https://training.hionsuperchargers.com/curriculum/m09-staffing-dbm-personnel-contractor-conduct/) — the DBM role.

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Section 3 · Tier 3 — Deep dive

3.1 — The unit-investment breakdown, defended line by line

Per-location initial investment ~$550K (hion-context.md §2). The three lines:

• $400K — Site development, equipment, construction. Civil and electrical work; cabinet pads; trenching; Tesla V4 equipment supplied under the MSA; signage and wayfinding; lighting; ADA-compliant surface work; commissioning. The franchisee is general contractor of record during this phase. Utility connection costs (transformer upgrades, joint trench, easement acquisition where required) sit inside this line and are the highest-variance component.
• $100K — Permits, taxes, operating costs. Building / electrical / grading / signage / right-of-way / conditional-use permits as the AHJ requires. Sales and use tax on equipment where applicable. Insurance binders (HiON named as additional insured, primary non-contributory, with waiver of subrogation — see franchisee curriculum M14). Working capital for the period between commissioning and stable cash flow.
• $50K — Franchise fee. Paid per location at execution of the Franchise Agreement. Standard franchise-system fee, comparable to franchise fees in commercial-real-estate-adjacent categories.

The number on the page is ~$550K because it is an order-of-magnitude figure. Actual per-site cost varies primarily with utility interconnection complexity. The figure is public-safe in the form ”~$550K” with the three-line breakdown. Specific cost ranges below or above this figure require Kevin Hein review before going public.

3.2 — The development agreement: 10 locations, 3 years

A franchisee does not buy one site. A franchisee signs a development agreement for 10 locations over 3 years with a year-one target of 5 sites selected and under development (hion-context.md §2). The structure does two things:

• Selects for sophisticated multi-unit operators. The franchisee has to underwrite ~$5.5M in committed capital across the DA — not as a lump sum, but as a serious enterprise. The DA structure is not for a single-site investor.
• Builds a pipeline at scale. Year-one target of 5 sites means the franchisee runs a continuous pipeline through the seven stages (Identified → Outreach → Discovery → Site Walk → Evaluation → Negotiation → Authorized — operator depth in franchisee curriculum M04). This is the engine of the buildout.

The DA is the mechanism that makes the 4,000-port HiON target reachable — a DA-per-franchisee multiplier on top of HiON’s own corporate effort.

3.3 — The royalty stack: 5¢ + 1¢

Royalty: $0.05/kWh. Technology contribution: $0.01/kWh. Combined: $0.06/kWh on every kWh dispensed. Marketing fund: none required initially (hion-context.md §2).

Two notes for the executive:

• The royalty is a kWh-based recurring fee. It scales with site utilization, not with a fixed monthly rent or a percentage of “gross sales” defined in a way that requires reconciliation. Operationally cleaner than restaurant-franchise comparables.
• “No initial marketing fund” does NOT mean no marketing obligation. The franchisee has a Start-Up Advertising spend obligation at launch and an ongoing Local Spend obligation. Operator depth in franchisee curriculum M08. The “no fund” line means no separate national-fund contribution upfront; A&M fees come in operationally.

3.4 — Term and renewals: 10 + 5 + 5

Term is 10 years with two 5-year renewal options (hion-context.md §2). A franchisee underwrites a 20-year operating horizon with two renewal decisions in between. Renewal mechanics — written notice inside the FA window, full cure of outstanding defaults, Renewal Fee, then-current Franchise Agreement, facility-upgrade requirements funded from the Sinking Fund — are operator-grade content in franchisee curriculum M15.

For the executive, the relevant point is that HiON sells a long-horizon agreement and the 20-year addressable horizon is the right time-base for any conversation about unit economics, lifecycle, or capital return.

3.5 — Staffing standard: 0–1 on-site employees

The operating standard is 0–1 on-site employees per site (hion-context.md §2, §8). Tesla software runs the station; the driver experience is in the Tesla app; payments are network-side. What the franchisee staffs:

• A Designated Business Manager (DBM) — the franchise system’s required role, with a full-time-and-best-efforts obligation under the Franchise Agreement. The DBM is typically not on-site at any one location; the DBM supervises the franchisee’s portfolio.
• Optional Site Operations Lead — for routine site-area presence at a multi-site cluster. Often shared across sites.
• Marketing / Local Growth Lead and Finance / Reporting Lead — typically headquarters roles, not site roles.

The compliance language for the staffing standard is the M01 / M09 redline: “operator-light infrastructure business”, not “passive income” or “semi-passive autonomous.” The DBM role is the discipline that the executive raises whenever a counterparty floats “passive.”

3.6 — What HiON & Tesla provide

The royalty stack buys the franchisee access to a system worth describing in concrete terms. From hion-context.md §2:

• Site sourcing. HiON brings site identification, comparable-site data, and territory definition. The franchisee runs the pipeline; HiON supports the qualification.
• Utility engagement. HiON’s engineering team interfaces with utilities on interconnection scoping. The franchisee opens the utility service order and owns the cost; HiON’s engagement reduces the friction.
• Design to Tesla standards. The Site Design Manual is HiON’s. Tesla’s spec is integrated. The franchisee does not design the site from scratch.
• Construction coordination. HiON coordinates the milestone inspections, the commissioning workflow, the equipment delivery sequence. The franchisee is GC of record; HiON is the coordinating party.
• 24/7 remote monitoring. Tesla’s network; HiON receives the operational signal.
• Software dashboard. Partner Portal: utilization, faults, financial summary, comparable-site performance.
• Automated billing. Tesla network function; HiON aggregates for franchisee reporting.
• On-call maintenance. Via approved providers. The franchisee does not select these providers ad hoc — the vendor list is governed (franchisee curriculum M12).
• Traffic analytics. Real-time and historical, surfaced through the Partner Portal.
• Real-time comparable site performance. The franchisee can benchmark their site against the network at a level no independent operator can replicate.

The list is the answer to “what does the royalty pay for.” It is also the comparison reference when a prospective franchisee asks “why not just build my own?“

3.7 — The Ideal Franchisee Profile

The Franchise product is for sophisticated multi-unit operators or commercial property owners who already operate at scale in adjacent categories. The prototype reference is Steve Wazny (hion-context.md §5):

• 30+ years restaurant industry experience.
• 150+ locations across 6 brands (Jack-in-the-Box, Arby’s, Buffalo Wild Wings, Sonic, Jimmy John’s).
• ~4,800 employees.
• First HiON site: I-25 / Orchard in Parker, CO.

The Voice Playbook describes this audience as “immune to enthusiasm” — operators who have signed five FDDs and do not need the basics of what a development agreement is explained to them. The Franchise product’s marketing, the FDD, and the Franchisee Training Program are all calibrated to this audience.

What the Ideal Franchisee Profile is not:

• A single-site investor looking for passive income.
• A first-time franchisee with no prior multi-unit operating experience.
• A property owner whose primary motivation is monetizing one piece of land (that’s the Host product, M05).

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Section 4 · The numbers

All public-safe in the form below. Internal-only EBITDA / payback / ROI translations live in M06.

Metric	Value	Source
Initial investment per location	~$550K	hion-context.md §2
Site dev / equip / construction	~$400K	hion-context.md §2
Permits / taxes / opex	~$100K	hion-context.md §2
Franchise fee (per location)	$50K	hion-context.md §2
Development agreement	10 locations / 3 years	hion-context.md §2 [CONFIRM DA template]
Year-one DA target	5 sites selected and under development	hion-context.md §2 [CONFIRM]
Royalty	$0.05/kWh	hion-context.md §2 [CONFIRM FDD]
Technology contribution	$0.01/kWh	hion-context.md §2 [CONFIRM FDD]
Combined recurring fee	$0.06/kWh	derived
Marketing fund (initial)	none	hion-context.md §2 [CONFIRM]
Term	10 years	hion-context.md §2 [CONFIRM FA]
Renewal options	Two × 5 years	hion-context.md §2 [CONFIRM FA]
Total operating horizon	20 years	derived
Staffing standard	0–1 on-site employees	hion-context.md §2
Approximate committed capital across a full DA	~$5.5M	derived (10 sites × ~$550K)

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Section 5 · Why this matters

The Franchise product is HiON’s revenue engine and the legal product the FDD describes. Every conversation with a prospective franchisee tracks back to the precision of M04’s facts. The wrong number on the per-site investment misleads the operator on their underwriting. The wrong DA structure misleads the operator on their pipeline obligations. The wrong royalty stack misleads the operator on their long-horizon unit economics. Each of those errors produces a franchisee who is at the wrong stage of the funnel or who signs without an accurate model — and either of those is harder to fix after the FA is executed than before.

The Acknowledged Elephant: an executive might feel the per-site number, the royalty, or the term is “the FDD’s job to communicate.” The FDD is the legal disclosure. The conversational delivery of these facts in a sales call, a board meeting, or a press interview is the executive’s job, and a verbal misstatement is harder to correct than a written one. The discipline is to know the numbers cold and to deliver them in the exact form the FDD does.

Two specific risks:

• “Passive” creep. The staffing standard (§3.5) is operator-light, not passive. Drift into “passive” or “semi-passive” language is a redline violation under any audience.
• DA conflation with single-site. A prospect who hears “$550K” but doesn’t internalize ”× 10 over 3 years” underwrites at 10× the wrong horizon and either drops out late or signs without an accurate model.

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Section 6 · Decision scenarios

Scenario 1 — The prospect who hears “$550K” and stops

A first-meeting franchisee prospect says, after Joe’s pitch: “OK, so $550K total. That’s well inside my budget.”

What does the executive say?

The wrong answer is to confirm and move on. The prospect has misunderstood the structure — the $550K is per location across a 10-location DA.

The right answer corrects in the same sentence and re-anchors:

“$550K is the per-site investment. The Franchise product is a development agreement — 10 locations over 3 years, year-one target of 5 sites selected and under development. The committed capital across the full DA is roughly $5.5M, deployed as each site reaches its build stage. We can walk a representative deployment schedule if it’s useful.”

Cited basis: hion-context.md §2; FDD Items 5 and 7 [CONFIRM].

Scenario 2 — The press question about “passive income”

A trade reporter asks Will: “You’re pitching this as a passive-income franchise, right? Tesla runs the station, the owner just collects checks?”

What does the executive say?

The wrong answer is “yes, broadly,” or “mostly passive with a manager.” Both are redline violations.

The right answer corrects the frame:

“It’s an operator-light infrastructure business. Tesla software runs the station, so the on-site staffing standard is 0 to 1 employee — but there’s a Designated Business Manager role required under the Franchise Agreement, the franchisee is the general contractor of record during the build, and ongoing operations include site-area maintenance, vendor management, and a structured Sinking Fund. The model removes much of the operating intensity of a restaurant or convenience franchise. It is not passive.”

Cited basis: hion-context.md §7 (Akerman redline: “semi-passive autonomous” → “operator-light infrastructure”); §2.

Scenario 3 — The capital partner asking “why a kWh-based royalty?”

A capital partner asks Bill: “Most franchise systems take a percentage of gross sales. Why is HiON kWh-based?”

What does the executive say?

The right answer explains the operational logic:

“Two reasons. First, kWh is the unit of revenue at a fast-charging site — the franchisee bills the driver per kWh dispensed via the Tesla network. A kWh-based royalty tracks the actual transactional unit without requiring reconciliation against a ‘gross sales’ definition that varies by franchisee. Second, it scales with site utilization the way the operator’s revenue does — there’s no flat-fee mismatch as a site ramps. The combined royalty plus technology contribution is six cents per kWh; the marketing fund is structured separately and is not part of that recurring rate.”

Cited basis: hion-context.md §2.

Scenario 4 — The franchisee candidate whose DBM is “their cousin”

A franchisee candidate at the discovery stage tells Joe Lewis: “My DBM is going to be my cousin — he’s between jobs and he’ll have time to drop by the sites.”

What does the executive say?

This is a friendly-but-firm correction conversation. The DBM has a full-time-and-best-efforts obligation under the Franchise Agreement. “Drops by between other things” doesn’t meet it.

“The DBM role has a full-time-and-best-efforts obligation under the Franchise Agreement — it’s the lever that makes the operating model work, because Tesla running the station upstream depends on a serious operator running the site governance downstream. A DBM ‘between jobs’ or doing this part-time isn’t going to pass HiON’s DBM approval, and the Franchisee Training Program (Module 9 of the franchisee curriculum) covers what the role actually entails. If your cousin is the right person, that’s terrific — but they’d need to be in the role full-time, complete the training, and be approved by HiON before the FA is executed. Want me to send you the DBM role description?”

Cited basis: hion-context.md §2; franchisee curriculum M09 (DBM role); hion-context.md §7 (no “passive” framing).

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Section 7 · Common executive blind spots

1. Quoting $550K without the per-location qualifier. Consequence: prospect misunderstands the DA scale; underwrites at 1/10 the actual committed capital; either drops late in the funnel or signs without an accurate model. Prevention: the number is “$550K per location under a 10-location DA over 3 years.” Always with the qualifier.

2. “Passive” framing in any audience. Consequence: triggers the Akerman redline; misrepresents the DBM and operations obligations; sets the wrong expectation for the prospect. Prevention: “operator-light infrastructure business” — verbatim, every time.

3. Explaining what a DA is to a sophisticated multi-unit operator. Consequence: violates the operator-fluent voice principle; signals to a Steve Wazny-tier prospect that the system is calibrated for first-time franchisees. Prevention: assume the prospect knows what a DA, FDD, and royalty are. State the structure and the numbers without educating on terminology.

4. Citing per-site EBITDA or payback in a sales conversation. Consequence: FDD Item 19 exposure; redline violation. Internal-only numbers (M06) live in confidential decks and 1:1s — not in cold outreach or public sales material. Prevention: the omit-and-redirect pattern from M06. If a prospect asks, route to the FDD and the disclosure process.

5. Conflating Franchise product mechanics with Host product mechanics. Consequence: a property owner gets pitched the wrong product; a multi-unit operator gets pitched a zero-capital model that’s not applicable to them. Prevention: M04 is for operators. M05 is for property owners. The products are structurally distinct.

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Section 8 · Self-check

Pass threshold: 80%.

1. State the three lines of the per-location investment with their dollar amounts. (§3.1)
2. State the DA structure (sites / years) and the year-one target. (§3.2)
3. State the combined royalty + tech rate per kWh. (§3.3)
4. State the term and renewal structure. (§3.4)
5. What is the staffing standard, and what is the compliance-safe descriptor for the staffing model? (§3.5)
6. List five things from the “what HiON & Tesla provide” set. (§3.6)
7. Name the Ideal Franchisee Profile reference and one supporting credential. (§3.7)
8. What is the approximate committed capital across a full DA, and how is that number derived? (§4)
9. Identify the redlined or imprecise phrasing errors and correct them: “For about $550K, an investor gets a passive-income franchise on Tesla’s network — Tesla handles everything, and the development agreement lets you scale into multiple sites if you want.”
10. Scenario. A prospective franchisee at the discovery stage emails Joe Lewis saying: “We’ve decided to go forward. We’d like to sign for 3 sites over 5 years and see how it goes — if it works we’ll do more. Can you send the agreements?” Walk the response — what’s structurally wrong with the prospect’s framing, what’s the right next step, and what’s the redline-safe language to use?

Answer key

1. $400K site dev / equip / construction; $100K permits / taxes / operating costs; $50K franchise fee. (§3.1)
2. 10 locations over 3 years; year-one target 5 sites selected and under development. (§3.2)
3. $0.06/kWh combined ($0.05 royalty + $0.01 technology). (§3.3)
4. 10 years with two 5-year renewals = 20-year operating horizon. (§3.4)
5. 0–1 on-site employees plus a required Designated Business Manager with a full-time-and-best-efforts obligation. Compliance-safe descriptor: “operator-light infrastructure business.” (§3.5)
6. Any five of: site sourcing, utility engagement, design to Tesla standards, construction coordination, 24/7 remote monitoring, software dashboard, automated billing, on-call maintenance, traffic analytics, real-time comparable site performance. (§3.6)
7. Steve Wazny. Any one of: 30+ years restaurant industry, 150+ locations across 6 brands, ~4,800 employees, first HiON site at I-25 / Orchard in Parker, CO. (§3.7)
8. ~$5.5M. Derived: 10 sites × ~$550K per site. (§4)
9. Multiple errors: “passive-income” (redlined), “Tesla handles everything” (overstates), “if you want” (misunderstands the DA structure). Correct version: “The Franchise product is a development agreement — 10 locations over 3 years, with a year-one target of 5 sites selected and under development. Per-site investment is approximately $550K. The model is operator-light: Tesla operates the station, but the franchisee is the general contractor of record during the build, owns day-to-day operations including a required Designated Business Manager role, and runs the site under HiON’s franchise system.” (§§3.1, 3.2, 3.5; §7 blind spots 1, 2)
10. Structurally wrong: the DA structure is 10/3, not 3/5. There is no “we’ll do 3 and see how it goes” version of the product, because that would not meet the DA’s commitments or qualify the prospect as a multi-unit operator. Right next step: schedule a call to walk the DA structure properly, surface what the prospect actually wants (test exposure? capital flexibility?), and decide whether they’re a fit for the Franchise product or a different conversation. Safe language: “The Franchise product is structured as a development agreement for 10 locations over 3 years with a year-one target of 5 sites selected and under development — that structure is what makes the operating model and the system support work as designed. We don’t offer a smaller commitment under this product. Before we send any agreements, let’s get on the phone and walk what you’re actually trying to achieve — that conversation usually clarifies whether the Franchise is the right fit, or whether we should be talking about a different structure.” (§3.2; §7 blind spot 5; Kevin Hein review of any structural variation)

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Section 9 · Cross-references

Other exec curriculum modules

• M01 — what HiON is, including the role split the franchisee operates inside.
• M05 — the Host product (the alternative for property owners).
• M06 — internal-only unit economics for the Franchise product.
• M07 — the site lifecycle the franchisee executes.
• M08 — what the franchisee operates once live; the Franchisee Training Program summary.
• M09 — the FDD basics, regulated states, and full Akerman redline.
• M10 — Joe Lewis’s role and credentials; the capital stack at the franchise level.

External documents

• hion-context.md §§2, 5, 7
• site-v3/COPY.md — franchise page copy
• FDD Items 5, 7, 11 [CONFIRM]
• Franchise Agreement, Development Agreement, MSA templates [CONFIRM]

Franchisee curriculum overlap

• [M04 · SITE · ACQUISITION · AND · FEASIBILITY](https://training.hionsuperchargers.com/curriculum/m04-site-acquisition-and-feasibility/) — pipeline mechanics operator-grade
• [M05 · LEASE · SITE · HOST · RELATIONSHIP · LEASE · ADDENDUM](https://training.hionsuperchargers.com/curriculum/m05-lease-site-host-relationship-lease-addendum/) — lease and host operator-grade
• [M09 · STAFFING · DBM · PERSONNEL · CONTRACTOR · CONDUCT](https://training.hionsuperchargers.com/curriculum/m09-staffing-dbm-personnel-contractor-conduct/) — DBM role operator-grade
• [M13 · FINANCE · SINKING · FUND · REPORTING](https://training.hionsuperchargers.com/curriculum/m13-finance-sinking-fund-reporting/) — Sinking Fund operator-grade

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Section 10 · Source verification log

Claim	Current source	Primary source needed	Status	Owner
~$550K initial investment, three-line breakdown	hion-context.md §2	FDD Item 7	unverified	Kevin Hein / Bill
10/3-year DA structure	hion-context.md §2	DA template	unverified	Joe Lewis / Kevin Hein
Year-one 5-site target	hion-context.md §2	DA template or FDD Item 11	unverified	Joe Lewis
$0.05/kWh royalty + $0.01/kWh tech	hion-context.md §2	FDD Item 6	unverified	Kevin Hein
Marketing fund “none required initially”	hion-context.md §2	FDD Item 6 + 11	unverified	Kevin Hein
10-year term + two 5-year renewals	hion-context.md §2	FA template	unverified	Kevin Hein
0–1 on-site staffing standard	hion-context.md §2	FDD Item 15 / Ops Manual	unverified	Joe Lewis
Steve Wazny credentials (150+ locations / 6 brands / ~4,800 employees / first site Parker CO)	hion-context.md §5	Steve’s bio on file	unverified	Will / Steve

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Section 11 · Change log

Version	Date	Author	Changes
v0.1	2026-05-20	Claude	Initial draft.