GOLF ETC - FDD UFOC ITEM 7 Detail

ITEM 7.����������������� ESTIMATED INITIAL INVESTMENT

YOUR ESTIMATED INITIAL INVESTMENT

NOTES

'' Pre-Opening Fees. As described in ITEM 5, you pay a pre-opening fee to us in up to 4 separate payments for your franchise territory, shop equipment, fixtures, displays, inventory, supplies and other items and for our shop finish-out services. See ITEM 5 for the conditions when this fee is partly refundable and for more information about payments.

² Initial Inventory. As a part of your pre-opening fees, Golf Etc. procures, on your behalf, a required initial inventory of approximately $25, 000 and, if you request, Golf Etc. may procure optional additional inventory. Additional inventory is not included in your pre-opening fees. You will authorize these purchases separately and pay for them separately. See Note 5 below.

³ Leasehold and Improvements. If you do not own adequate shop space, you must lease or purchase a store location for operating your shop. The typical Golf Etc. shop will range in size from approximately 2,500 to 4,000 square feet. It is difficult to estimate lease or acquisition costs because of the wide variation in these costs between locations. Costs also vary based on square footage and required maintenance costs. You are solely responsible for selecting your location, a rent or purchase price that is agreeable to you and other terms of the lease or purchase agreement. We are not responsible for selecting your location or negotiating terms. We assume you will have to pay the first month''s rent and a security deposit equal to one month''s rent or a down payment in advance. These amounts are typically not refundable, but in some circumstances a security deposit may be. You are responsible for the costs of materials and labor for all leasehold improvements, including floor installation, electrical wiring, plumbing, ceiling dry-wall and wall paint. The costs of the leasehold improvements will vary depending on factors, including the size, condition and location of the shop space, local wage rates and the cost of materials. We assume that your landlord will arrange the improvements. The flooring material used for the installation of your floor must match a sample we provide you. The amounts you pay for leasehold improvements are typically not refundable. Golf Etc. will perform the shop finish-out services after the leasehold improvements are completed. Golf Etc. will not perform any work requiring licensing by a governmental entity.

⁴ Travel and Expenses to Attend Training. The cost of initial training is included in the pre-opening fees, (see Note 1; ITEM 5). You are responsible for transportation and expenses for meals and lodging while attending training. The total cost will vary depending on the number of people attending, how far you travel and the type of accommodations. These expenses are typically not refundable. The estimated range of costs is based on the assumption that training will be conducted in Granbury, Texas.

⁵ Optional Inventory and Equipment Options. You must maintain a minimum of $110,000 of required and optional inventory at your shop at all times. As a part of your pre-opening fees, Golf Etc. procures, on your behalf, a required initial inventory of approximately $25,000 and if you request Golf Etc. will procure additional optional inventory, (see Exhibit I to the Franchise Agreement). This means you must procure a minimum of additional optional inventory $85,000 from leading golf equipment vendors. You may choose to procure more, (see Note 1; ITEM 5). We assume your costs will vary depending on factors, including the capacity of the shop, time of year and vendors. We do not know if the amounts you pay for optional inventory may be refundable. You should inquire about the return and refund policy of the specific vendor at the time of purchase.

^(> Miscellaneous Opening Costs. You may need to pay utility deposits, state license fees, sales taxes, incorporation costs and other miscellaneous costs to begin operation of your shop. Actual amounts may van.¹ depending upon actual prices charged by suppliers, utilities, and other factors similar to those enumerated in Note (6) below. The amounts you pay for miscellaneous opening costs are typically not refundable.

⁷ Advertising. You are responsible for advertising for your shop. You will want to conduct grand opening advertising and marketing for your shop. (See ITEM II) Factors that may affect the actual amount you spend include the type of media used, the size of the geographic area of your target audience, local media cost, location of the shop, time of year and customer demographics in the surrounding area. The amounts you spend for advertising are typically not refundable.

⁸ Additional Funds. Such amounts are the minimum recommended levels to cover operating expenses, including rent, utilities, employees'' salaries, and replenishing your inventory and supplies after the shop is open and during the start-up phase of the business, which Golf Etc. calculates as 3 months. You must carry a minimum of $110,000 inventory at all times. You are solely responsible for acquiring and payment for this inventory. This inventory is in addition to the $25,000 of inventory we procure for you, (see Note I). These figures are estimates. Golf Etc. cannot guarantee that you will not have additional expenses starting the business. Your additional funding needs will depend on factors such as: how much you follow Golf Etc.''s methods and procedures; your management skill, experience and business knowledge; local economic conditions; the local market for your products; the prevailing wage rate; competition; and the sales level reached during the initial period.

⁹ Total. In compiling this chart, we relied on our industry knowledge and experience as a franchisor of Golf Etc. shops since 1995. The amounts shown are estimates only and may vary for many reasons, including the size and condition of your facility, your management skill, business acumen and experience and where you locate your franchised business. The total pre-opening payment to Golf Etc. of America, Inc. is $179,500, plus the amount of any optional inventory (Franchise Agreement Exhibit 1) and optional equipment payments authorized by you (Franchise Agreement Exhibit 2). Golf Etc. of America, Inc., through its years of experience, has derived additional working capital estimates in the golf retail business. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. We cannot guarantee that you will not have additional expenses in starting the franchised business.