1.
Item 7
ESTIMATED INITIAL INVESTMENT YOUR ESTIMATED INITIAL
INVESTMENT
|
TYPE
OF EXPENDITURE1
|
AMOUNT
|
METHOD
OF PAYMENT
|
WHEN DUE
|
TO
WHOM PAYMENT IS TO BE MADE
|
|
Initial Franchise Fee
|
$55,000
|
Lump sum
|
Upon
execution of the Franchise Agreement
|
Us
|
|
eKennelwood License Fee
|
$7,000
|
Lump sum
|
As arranged
|
Us
|
|
Lease, Utility & Security Deposits2
|
$10,000 to $20,000
|
As incurred
|
As incurred
|
Third parties
|
|
Leasehold Improvements3
|
$200,000 to $250,000
|
As incurred
|
As arranged
|
Third parties
|
|
Signage4
|
$13,000
|
Lump sum
|
As arranged
|
Third parties
|
|
Furniture
& Fixtures5
|
$10,000
|
As incurred
|
As incurred
|
Third parties
|
|
Office
Equipment & Supplies
|
$22,500
|
As incurred
|
As incurred
|
Third parties
|
|
Equipment
|
$200,000
|
As incurred
|
As incurred
|
Third parties
|
|
Initial Inventory
|
$23,300
|
Lump sum
|
Before
commencing
business
|
Third parties
|
|
Business Licenses & Permits
|
$200 to $5,500
|
As incurred
|
As incurred
|
Third parties
|
|
Professional Fees
|
$19,000 to $24,000
|
As arranged
|
As arranged
|
Third parties
|
|
Membership Dues6
|
$575
|
Lump sum
|
As incurred
|
Third parties
|
|
TYPE
OF EXPENDITURE1
|
AMOUNT
|
METHOD
OF PAYMENT
|
WHEN DUE
|
TO
WHOM PAYMENT IS TO BE MADE
|
|
|
ABKA Certification7
|
$0 to $1,000
|
Lump sum
|
As incurred
|
ABKA
|
|
|
Insurance*
|
$7,500 to $10,000
|
Lump sum
|
Before
commencing
business
|
Third parties
|
|
|
Training Expenses9
|
$7,400 to $10,000
|
As incurred
|
As incurred
|
Third parties
|
|
|
Grand Opening
Advertising10
|
$10,000
|
As incurred
|
As incurred
|
Third parties or us
|
|
|
Additional
Funds�3 Months"
|
$100,000 to $130,000
|
As incurred
|
As incurred
|
Third parties
|
|
|
Total12
|
$685,475 to $791,875
|
|
|
|
|
|
|
|
|
|
|
|
THE FOREGOING EXPENSES ARE
MERELY ESTIMATES. YOU ARE ENCOURAGED TO MAKE AN INDEPENDENT INVESTIGATION AND
ANALYSIS OF THE POTENTIAL EXPENSES WHICH MAY BE INCURRED IN ORDER TO START YOUR
FACILITY. THIS DOES NOT INCLUDE THE COST OF THE LAND OR BUILDING IF YOU
PURCHASE THE LAND.
Explanatory Notes:
1.
All
expenditures and amounts that are paid to us are non-refundable. Unless
specifically agreed to by third parties to whom you make payments, all
expenditures with third parties are non�refundable.
2.
If
you do not already own your own space, you will have to lease a space for your
Franchised Resort. The estimated amount is for your rent deposit (typically
first and last month''s rent). Your monthly rent will vary depending on factors
like size, condition, location and the local real estate rental market. You
will need approximately 5,000 square feet for your Franchised Resort; this
amount is dependent upon the amount of useable outdoor space directly attached
to the leased space. Typically, your Franchised Resort will be located in an
industrial park or other area in which you can obtain zoning to operate a
kennel.
3.
Your
initial investment for leasehold improvements depends on the size and location
of the leased premises, type of improvements desired or required and the amount
of usable improvements already in place at the location. This cost will also
vary depending on the amount (if any) of construction work and/or dollars you
negotiate with your landlord as a tenant improvement allowance. In this table,
we have assumed a negotiated tenant improvement allowance of $60,000. The
tenant improvement allowance you receive may be different, depending on various
factors, including the local real estate market, the size of the space you
lease and your ability to negotiate with your landlord. The terms and costs of
financing would be determined by market forces. We do not provide any of this
financing. This estimate assumes a leased space of 5,000 square feet.
4.
Signage
costs depend, in part, on the size and location of your Franchised Resort and
the particular requirements of your landlord and local ordinances and zoning
requirements. This estimate includes both interior and exterior signage.
5.
Furniture
and fixtures include furnishings, fixtures, supplies and internal decor (other
than interior signage). We will give you a list of required furnishings,
fixtures, supplies and internal decor items by the time you sign your lease.
This estimate does not include shipping to your location.
6.
You
must maintain a membership in the Independent Pet Animal Transportation
Association and your local chamber of commerce. This amount will depend upon
the membership fees charged by your local chamber of commerce.
7.
You
are encouraged to obtain certification from the American Boarding Kennels
Association (the "ABKA"), a trade association for the pet care services
industry, within 1 year of your grand opening. You must become a member of
ABKA. ABKA offers multiple forms of membership at varying annual dues rates.
This estimate is based on current annual dues rates, which are subject to
change at the discretion of ABKA.
8.
This
is an estimated down payment against your annual premiums to acquire the
insurance required by the Franchise Agreement.
9.
We
do not charge a fee for the Initial Training (defined below in Item 11) of you
or your initial Manager (if applicable). You must, however, pay all expenses,
including accommodations, food, travel and wage expenses for these individuals
during the Initial Training. If you will offer any Optional Services, we may
require you to send additional persons to training programs designed for these
Optional Services. The estimate above includes only the expenses associated
with the 1 or 2 (if applicable) persons that will attend the Initial Training.
10.
You
must spend a minimum of $10,000 on your grand opening advertising. This amount
is in addition to the minimum local advertising expenditures you must make,
which are defined in your Franchise Agreement. We reserve the right to collect
this minimum amount directly from you and use it for grand opening marketing on
your behalf.
11.
You
will need to support ongoing expenses, including payroll (but not including a
draw or salary for you). New businesses often generate a negative cash flow. We
estimate that this amount should be sufficient to cover these ongoing expenses
for the initial period of your Franchised Resort''s operation, which we
calculate to be up to 3 months; however, there is no assurance that additional
funds will not be necessary during or after this initial period. Please note
that this estimate does not include costs listed elsewhere in this Item 7 and
the fees listed in Item 6. The actual amount of funds you may need and the
times at which these funds will be required depends on many factors, including
how closely you follow our methods and procedures, the prevailing wage rate,
the rate of growth of your business, your management skill, economic conditions
and competition in your area, and the sales levels reached during the initial
period. We estimated these additional funds based upon KVI''s experience in
opening certain of its Kennelwood Pet Resorts businesses.
12.
You
should review these figures carefully with your business advisor before making
any decision to purchase a franchise. This total does not include the cost you
would bear if you determined to purchase the real estate and/or building where
your Franchised Resort is located.�� If you
� determine, in your
discretion, to purchase this real estate and/or building, the cost to you would
depend on a number of factors, including the local real estate market, and the
size, quality and location of the purchased property.
We do not offer, either
directly or indirectly, financing to you for any items. (See Item 10).
