Initial Investment

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ESTIMATED INITIAL INVESTMENT

(RETAIL BUSINESS DEVELOPED UNDER FRANCHISE AGREEMENT)

 

Column 1

TYPE OF EXPENDITURE

Column 2

AMOUNT

Column 3

METHOD

OF

PAYMENT

Column 4

WHEN DUE

Column 5

TO WHOM

PAYMENT

IS TO BE MADE

Initial Franchise Fee(Note 1)

$25,000

Lump Sum

Upon Signing of Franchise Agreement

Us

Leasehold Improvements(Note 2)

$2,000 to $117,000

As Arranged

As Arranged

Contractors

Furniture, Fixtures and Equipment (Note 3)

$12,000 to $25,000

As Arranged

As Arranged

Third Party Suppliers and Contractors

Computer System (Note 4)

$3,300 to $4,020

As Incurred

As Incurred

Us

Signs (Note 5)

$560 to $2,490

As Incurred

As Incurred

Us

Lease & Utility Security Deposits (Note 6)

$7,500 to $21,000

As Arranged

Before Opening

Landlord and Utility Company

Initial Inventory (Note 7)

$72,000 to $212,000

Lump Sum

As Arranged

Us, Approved Third Party Suppliers

Insurance (Note 8)

$4,000 to $10,000

As Arranged

Before Opening

Third Party Supplier

Training Expenses (Note 9)

$2,000 to $8,000

As Incurred

As Incurred

Transportation Lines, Hotels, Restaurants

Grand Opening Advertising/Marketing (Note 10)

$10,000 to $30,000

As Incurred

As Incurred

Media, Printers, Other Suppliers

Office Equipment and Supplies (Note 11)

$3,000 to $10,000

As Incurred

As Incurred

Third Party Suppliers

Professional Fees, Business Licenses and Permits (Note 12)

$1,000 to $10,000

As incurred

As incurred

Your Attorneys and Other Professionals, Local and State Agencies

Additional Funds (Note 13)(3 month period)

$242,806 to $438,084

As Incurred

As Incurred

Employees, Landlord, Suppliers

TOTAL (Note 14) $385,166 to $912,594

 

 

Notes:

*          Except where otherwise noted, we do not offer direct or indirect financing to franchisees for any items.  Except where otherwise noted, all amounts that you pay to us or our affiliates are nonrefundable.  Third party suppliers will decide if payments to them are refundable.

(1)           Initial Franchise Fee. The Initial Franchise Fee is $25,000.

(2)           Improvements.  The costs of construction and leasehold improvements depend upon the size and condition of the premises, whether the landlord will pay for some or all the build out, the nature and extent of leasehold improvements required, the local cost of contract work and the location of the Retail Business.  If the landlord will pay for the build out, you would only need to purchase signage. The estimate includes your architectural and engineering fees.  This includes installation and wiring in connection with the Computer System, which could include obtaining a dedicated T1 Circuit and cabling/wiring.

(3)           Furniture, Fixtures and Equipment.  We will provide you with a list of the furniture, trade fixtures and other equipment necessary for the operation of the Retail Business.  The initial investment required will depend on financing terms available and other factors.

(4)           Computer System.  You will be required to purchase certain equipment for the setup of your Computer System.  Additionally, there will be optional computer equipment that you may purchase for the Retail Business.  These required and optional costs will run you between $1,675 and $2,366.  Also, you must lease designated hardware and software elements of the Computer System from us under the terms of the Technology Agreement (see Exhibit E to this Disclosure Document).  The low end of the estimate represents the technology fee for 3 months (the initial period) plus equipment purchase and the high end of the estimate reflects the technology fee for 3 months plus equipment and optional computer equipment.

(5)           Signs.  You will need to purchase interior signage and in store point of sale peripherals.  This signage will cost between $200 to $1,200 depending upon the square footage of the Retail Business.  We will purchase exterior signs for your Retail Business, which we estimate will vary in cost from $90 to $430 a month and lease the signs to you for the first 5 years of your Franchise Agreement under the Signage Lease Agreement (see Exhibit G to this Disclosure Document).  You may pre-pay the 5-year lease.  After the initial 5-year term, you can renew the Lease Agreement for $1 per month.  The low end of the estimate represents the low end of the sign lease for 3 months (the initial period) plus the low end of interior signage purchase and the high end of the estimate reflects the high end of the sign lease for 3 months (the initial period) plus the high end of the interior signage purchase.

(6)           Lease & Utility Security Deposits.  You typically will rent the premises for the Retail Business. We are unable to estimate with any precision the costs of leasing or purchasing real estate because of the wide variation from region to region and between urban and rural areas. A new lease will vary in rental amounts, lease terms, amount of space, tenant improvements, security deposit and advance rental required, and the cost of purchasing real estate is extremely site-dependent.  Location is a major factor in the amount of rent needed, as are the age and quality of the building, the proximity to residential areas and other commercial areas of interest, local demographics, real estate related taxes in the jurisdiction, brokerage commissions, the length of the lease, and other factors. Your location will typically be 3,500 to 12,000 square feet.  Buddy’s Retail Businesses are usually located in strip centers or free-standing buildings.

Landlords may require a security deposit, and utility companies may require that you place a deposit prior to installing telephone, gas, electricity and related utility services.  A typical utility security deposit is one month’s expense.  A typical lease deposit will be an amount equal to one month’s rent.  These deposits may be refundable in accordance with the agreements made with the utility companies and landlord.

(7)           Initial Inventory.  Your initial inventory must be purchased from us or any approved suppliers.  Initial inventory consists of various Approved Products and Services used in the operation of the Retail Business as well as other merchandise or products offered for sale by the Retail Business.  The initial inventory expenditure will vary according to anticipated sales volume and current market prices for supplies.

(8)           Insurance.  You must procure and maintain throughout the term of the Franchise Agreement insurance in such amounts that, at a minimum, meet the requirements set forth by us in writing.  The estimate is for approximately 25% of an annual premium.  The balance of the annual premium is generally payable over a nine month period.  The cost of insurance will vary based on policy limits, type of policies procured, any lease requirements, nature and value of physical assets, number of employees, square footage, contents of the business, geographical location and other factors bearing on risk exposure.

(9)           Training.  You must make arrangements and pay the expenses for at least two people, including your General Manager and any additional people we may require, to attend our initial training program, including transportation, lodging, meals and wages.  The amount expended will depend, in part, on the distance you must travel and the type of accommodations you choose.  The estimate provided contemplates initial training of two people for five to ten days.

(10)        Grand Opening.  You must conduct your “grand opening” advertising and promotion according to our written specifications.  These amounts generally will be spent before and through the first 30 days of operation of the Retail Business, although in certain instances we will recommend a delay in grand opening promotional activities based on the weather or other related reasons.

(11)        Office Equipment and Supplies.  Before beginning operations, you must purchase an assortment of office equipment and supplies as prescribed in the manuals.  Items include telephones and facsimile machine.

(12)        Professional Fees, Business Licenses and Permits.  The estimate for professional fees, license and permits, including the cost for lawyers and accountants related to opening the Retail Business.

(13)        Additional Funds.  This amount of working capital is projected as sufficient to cover initial operating expenses, including management salaries, for a period of three months.  These figures are estimates, and we cannot guarantee you will not have additional expenses starting the business.  Your costs will depend on factors such as how closely you follow our recommended methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for our product; the prevailing wage rate; competition; and the sales level reached during the initial period.

Total.  This total is an estimate of your initial investment and is based on our estimate of average costs and market conditions prevailing as of the date of this Disclosure Document and our affiliates’ 45 years of experience.  You should review these figures carefully with a business advisor before making any decision to purchase the franchise.