FIELD OF DREAMS - FDD UFOC ITEM 7 Detail

ITEM 7

ESTIMATED INITIAL INVESTMENT

YOUR ESTMIATED INITIAL INVESTMENT

Notes to Item 7 Chart

1             Initial Franchise Fee. You must enter into the Deposit Agreement before entering into the Franchise Agreement. The deposit paid under the Deposit Agreement will be credited against the initial franchise fee if you sign a Franchise Agreement. The deposit will only be refundable in the circumstances described in Item 5. The balance of the initial franchise fee (after the deposit is applied) must be paid when the Franchise Agreement is signed. See Item 5 of this Disclosure Document for an explanation of the reduction that we will apply if you have also signed an Area Development Agreement.

2             Rent. These estimates are for your first month''s rent only, which is typically prepaid on execution of your lease. The typical facility requires 1,000 square feet or more of retail space. The rental expense may vary widely based on geographic location, size of the store, local rental rates, lease term, and other factors, and may be considerably higher in large metropolitan areas. This estimate covers three months of rent at an annual rental rate of $45 to $75 per square foot.

3             Lease and Utility Security Deposits. Lessor and utility companies may require you to place a deposit before occupying the premises and before installing telephone, gas, water, electricity and related utility services. A typical lease deposit will be equal to the rental payments for the first month of the lease term (calculated as described in Note 2). The low end of the estimate assumes that no utility deposits will be required.

4             Leasehold Improvements. The cost of construction and leasehold improvements depends upon the size and condition of the premises, the nature and extent of leasehold improvements required, the local cost of contract work and the location of the FOD Store. The range of figures above includes the cost of reasonable renovation or leasehold improvements, including flooring, and installation of fixtures, but may vary if the lessor provides you a construction allowance.

5             Fixtures and Equipment. The Operations Manual describes the fixtures and equipment necessary for a FOD Store, which include display cases, fixtures, counters, and other items.

Notes to Item 7 Chart

6             Initial Inventory. Before beginning business operations, you must purchase an initial inventory of sports-related and celebrity-related merchandise, collectibles, memorabilia, trading cards and related merchandise and products of the type and quantity that we require, as provided in the Confidential Operations Manual and as described in Item 8 of this Disclosure document.

7             Insurance. You must procure and maintain throughout the term of the Franchise Agreement insurance of the types and amounts that we establish as described in Item 8 of this Disclosure document. The cost of insurance will vary based on policy limits, type of policies procured, geographic location, and other related factors. The above figures represent the first month''s premium, and assumes that you will pay insurance in 12 monthly installments. The method of payment of premiums varies, and often is paid either annually or quarterly in advance.

8             Training Expenses. We will provide an initial training and familiarization course to you, your designated manager and a reasonable number of your employees. You must arrange transportation and pay the expenses for meals and lodging for any persons attending the training program. Your costs will depend on a number of factors, including the distance you must travel and the type of accommodation you choose. The low estimate contemplates that you reside in the general vicinity of an operating DFC franchise; and the high estimate includes costs for one representative of an out-of-state franchisee attending the on-the-job training phase of our training program at a non-local DFC franchise. Training requirements are described in Items 6 and 11 of this Disclosure document.

9             Signage. You must acquire interior and exterior signage bearing the Proprietary Marks as we require. The cost of signage will vary based upon the supplier of such signage, location of the business, local laws, the Lessor''s signage requirements and ordinances and other similar factors.

10          Grand Opening Advertising. You must expend on Grand Opening advertising and promotion the minimum amount specified in the chart above during the first 90 days of operation of the FOD Store.

11          Real Estate Fees Commission. You may, at your option, use a real estate agent or broker to select a site. The fees charged by the broker or agent will vary based upon the fee structure negotiated by the parties.

12          Point of Sale Software. You will be required to purchase point-of sale ("PQS") software that meets our specifications and that is compatible with our and your computer systems. See Item 11.

Notes to Item 7 Chart

13 Additional Funds. The disclosure laws require us to include an estimate of all costs and expenses to operate your franchise during the "initial phase" of your business, which is defined as at least 3 months or a reasonable period for the industry. We are not aware of any established "initial phase" for this industry, so our disclosures for "Additional Funds" cover a 3 month period. These figures assume that you will receive no operating revenue during this period, and cover only the following costs: 3 months payroll (and related taxes and payroll expenses) for a minimal staff; real property rental for the second and third month following opening (the first month is covered under the heading "Rent"); advertising, promotion, travel and entertainment; business insurance; utilities; telephone and general office expenses. The estimates do not cover Continuing Services and Royalty Fees, Marketing and Development Fund payments, or cost of goods sold, which you will not incur absent sales, nor do they cover any interest or other financing costs you may incur, which will vary depending on how much you borrow.

Fees paid to us are not refundable except as explained in Item 5 of this Disclosure Document. Amounts you pay to third parties may or may not be refundable depending upon the arrangements you make with them.

We do not offer any financing for your initial investment. The availability and terms of your financing will depend upon various factors including the availability of financing generally, your credit�worthiness, the collateral security that you may have, and policies of lending institutions concerning the type of business to be operated.

We prepared these estimates based on our experience and that of our existing franchisees in opening locations. These estimates cover your initial cash investment up to the opening of your business. The "Additional Funds" line covers our estimate of certain costs you will incur during the first three months of operation. They do not provide for your cash needs to cover any financing costs that you incur or your personal living expenses. You should not plan to draw income from the operation during the start-up and development stage of your business, the actual duration of which will vary materially from store to store and which we cannot predict for your business (and which may extend for longer than the three month "initial phase" described in Note 5). You must have additional sums available, whether in cash or through a bank line of credit, or have other assets that you can liquidate or against which you may borrow, to cover personal living expenses and any operating losses you may sustain, whether during your start-up and development stage, or beyond.

Your investment and expenditures may vary considerably from the figures above, depending on many factors such as location, the amount of space you lease, the business capabilities of your management and service team, your requirements for living expenses, and the rate of growth and success of your business. Because the exact amount of reserves will vary from operation to operation and we cannot meaningfully estimate this figure, we urge you to retain the services of an experienced accountant or financial advisor to develop a business plan and financial projections for your particular operation, and to contact our existing franchisees to discuss their experiences and start-up and development expenses and costs.