KIDDIE ACADEMY - FDD UFOC ITEM 7 Detail
Item 7
.YOUR ESTIMATED INITIAL INVESTMENT
Deleted: 1
L__ Set forth immediately
below is .your estimated initial investment for a LEASED Kiddie
Academy Franchise. The figures presented are not"
guaranteed; they are our best
estimate of actual costs you may incui;for,a leased academy,. Except
as otherwise noted, payments are _npt remndable.
Deleted:
(he....
Tbe estimates given are...an... that is leased...these
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Underline
Foi matted Table
Deleted: 25
Deleted: 35
Deleted: Initial
Deleted: 20
Deleted: 30... 60
Deleted: Either prior to the opening of
your academy or monthly, pursuant to your agreement with your financial
institution
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. Land Acquisition and Building Construction Costs, and
Associated Bank Fees Related to your Loan (Notes.... 6 & 7...
Deleted: Your Landlord or your
financial institution
Deleted: payment..., as agreed with
your financial institution������������������ ] ^ [7^
Deleted: 10...20
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1_______
Formatted Table
Deleted: the...your
Deleted: 80.000 - S
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[ - noi �
J
  
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Computers and
Software (Noteil)
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$7.000-$10.000
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Lump Sum or financed
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Payable upon purchase or over time
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Third party
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over time
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vendors
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Office Furniture, Equipment and
Supplies .and Telephone System
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$J 0.000- $�5.000
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Lump Sum or
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Payable before ppening of .academy or
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Third party
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Financed over time
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periodically as payments are due
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vendors
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(Note 12)
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Indoor and Outdoor Signs (Note 13)
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$10,000-$15,000
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Lump Sum or
Financed over time
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Payable before ppening of academy or
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Third party
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periodically as payments are due
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vendors
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Travel and Living Expenses while Training (Note 14)
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$2,000 - $8,000
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As incurred
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Payable before opening of academy
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Third party vendors
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Transportation Vehicles and
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ft - $40,000
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As incurred
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Payable beforeppening of^cademy or
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Third party
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Eau ioment (Note 15)
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■............. ����������������� - ■
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periodically as payments are due
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vendors.
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Insurance and Utility Deposits (Note 16)
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$2.000 - $6.000
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As incurred
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Payable before the opening of academy
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Third party
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vendors
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.Business Licenses (first vear)
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ft - $500
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y\s incurred
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Payable before opening pf academy
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applicable
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(Note 171
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Governmental
agencies
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JStart-Up Advertising and
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$30,000
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Lump Sum
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Pavable before opening and during the
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TThird party
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Marketing Investment (Note 18)
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first fortv-ftve davs of operations
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vendors
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.Additional Funds - 12 months
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�75.000 - $200.000
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,As incurred
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pavable as expenses are incurred
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.See Note 18
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after opening (Note 19)
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TOTAL���� (Note 20)
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$441.000-5716.500
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N/A
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N/A
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N/A
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-{ Deleted: Financed Deleted: 5...7,500 Deleted: the ...your
Deleted: training
Deleted: $2,000 ■ $5
Deleted: Insurance and Utility Deposits (Note 15)
Deleted: the .. .your
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Business
Licenses (first year) (Note 16)
Formatted Table
Deleted: Applicable Governmental agencies
Deleted: $30,000...
Deleted: Grand Opening Celebration and Start-up Advertising
(Note 17)
Formatted: Line spacing: single
Deleted: Third party vendors
Deleted: Additional Funds - 3 months
after opening��� (Note 18)
Formatted: Line spacing: Exactly 12 pt
Deleted: Payable as expenses are incurred...
Deleted: $345,800 - $499,500(
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Deleted: N/A
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I jJRcJp_sure Doci�Tm�CT.l i^.Q�S .Cajifornia
20-
II. Set forth immediately below is your estimated initial
investment for a PURCHASED Kiddie Academy Franchise (you purchase the land and the building).
The figures presented are not guaranteed; they are our best estimate of actual
costs you may incur. Except as otherwise noted, payments are not refundable.
See notes 5. 6 and 7 for additional information about land and building
acquisition costs.
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Category
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Estimated Amount for a Purchased Location
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Method of Payment
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When Due
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To Whom Payment is Made
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Preliminary Agreement Fee
(Note 1)
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$30,000
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Lump Sum
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Payable in
full when Preliminary Agreement is signed
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Kiddie Academy
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Franchise License and
Development Fee (Note 2)
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$60,000
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Lump Sum
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Payable in
full when vou execute vour lease or purchase contract
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Kiddie Academy
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Training and
Initial Opening Assistance Fee (Note 3)
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$30,000
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Lump Sum
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Payable in
full when vou receive vour building permits
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Kiddie Academy
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Land Acquisition (Note 6)
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$325.000-$1,000,000
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Either Lump
Sum or payment over time, as aereed with vour financial institution
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Either prior to the opening of vour academy or
monthly, pursuant to vour agreement with vour financial institution
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Your
financial institution
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Building and Improvements
(Note 6)
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$1,500,000-$1.800;000
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Either Lump Sum or payment
over time, as agreed with your financial institution
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Either prior to the openine of vour academy or
monthly, pursuant to vour agreement with your financial institution
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Your financial institution
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Professional Fees and Bank
Charges (Note 7)
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$70,000 -$210,000
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As agreed with
professional or bank
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Payable as
agreed with professional and as required by lending bank
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Professional
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,{ Deleted : OfTeringC ircular.2007
I jjjs^losure Document ^Q�S .Califorma
21
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Kitchen EauiDment���� (Note 8)
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$20,000 - $25,000
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Lump Sum or Financed over
time
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Pavable before the opening of vour
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Third party
vendors
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academy or
periodically as payments are due
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Supplies and Equipment for the
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$120,000 -$130,000
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Lump Sum or Financed
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Pavable before
the opening of vour academy or periodically as payments are due
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Third party
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inside of vour academy (Note 9)
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over time
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vendors
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Outdoor Plav Equipment (Note
10)
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$20,000 - $50,000-
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Lump Sum or
Financed over time
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Pavable upon purchase or over time
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Third oartv
vendors
|
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Computers and
Software (Note 11)
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$7.000-$10,000
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Lump Sum or Financed over
time
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Pavable upon purchase or over time
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Third party
vendors
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Office
Furniture. EauiDment and Supplies and Telephone System
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$10.000-$15,000
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Lump Sum or Financed over
time
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Pavable before the opening
of vour academy or periodically as payments are
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Third party vendors
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(Note 12)
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due
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Indoor and Outdoor Signs
(Note 13)
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$10.000-$15,000
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Lump Sum or Financed over
time
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Pavable before the opening
of vour academy or periodically as payments are due
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Third party
vendors
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Travel and Living Expenses
while Training (Note 14)
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$2,000 - $8,000
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As incurred
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Pavable before the opening
of vour academv
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Third party
vendors
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Transportation
Vehicles and Equipment (Note 15)
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0 - $40,000
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As incurred
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Pavable before the opening
of vour academv or periodically as payments are due
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Third partv
vendors
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I j) js^losure Pocumment|2
OOg .California_____________________________________________________________ 22
,{ Deleted: OfFeringCircular.2007
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Insurance and Utility Deposits (Note 16)
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$2,000 - $6,000
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As incurred
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Payable before the opening
of your academy
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Third party
vendors
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Business Licenses (first vear) (Note 17)
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0 -$500
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As incurred
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Payable before the opening
of your academy
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Applicable
Governmental
agencies
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Start-UD Advertising
and Marketing Investment (Note 18)
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$30.000
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LumD Sum
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Payable before
opening and during the first forty-five days of operations
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Third oartv vendors
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Additional Funds - 12 months
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$75;OO� - $200.000
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As incurred
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Payable as expenses are incurred
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See Note 18
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after opening fNote 19)
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TOTAL���� fNote 20)
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$2,311.000-$3.659.500
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N/A
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N/A
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N/A
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JTHE REMAINDER OF THIS PAGE HAS
BEEN INTENTIONALLY LEFT BLANK!�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� (Formatted: Font: Bold
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I .Disclosure Do^mmeffl^OQg^Cajifqniia..............................................................................................
y\
(1)
Preliminary
Agreement Fee: _The
Preliminary Agreement Fee is fully refundable only if the Preliminary Agreement
is terminated by us. If you elect to terminate the Preliminary
Agreement, we will retain $�2,500 of the
Preliminary Agreement Fee and will refund to you a ...---(Deleted: isjsq portion of the remaining $^500 after deducting
the amount of our expenses incurredi in-{Deleted:6,250" connection with signing the
Preliminary Agreement and assisting you in your site selection process.
(2)
Franchise
License
and Development Fee:� The Franchise License and Development ._.--{ Deleted: Fees: Fee is non-refundable.
(3)
Training
and Initial Opening Assistance Fee: _The Training and Initial Opening Assistance Fee is
non-refundable.
(4)
Lease
Deposit:
_This is
our estimate of the range of security deposit amounts that will be required if
the premises for your academy are leased. In the event the premises are
subleased directly from Kiddie Academy, you would pay this amount directly to Kiddie Academy when the sublease is executed. This amount may be refunded (to the extent
your lease provides that such amount is fully refundable) when the lease
terminates or expires in accordance with the terms specified in the lease.
(5)
Tenant
Contributions, Facility Improvements: _We strongly recommend that if you intend to lease your
academy premises, that you enter into an agreement with your landlord for a
"build-to-suit," wherein the landlord for the premises performs
and/or pays for the build out costs and those costs are included in the rent
and/or additional rent fees paid by you during the term of your lease. A
build-to-suit agreement will increase the monthly payments you make to your
landlord under your lease, but will significantly lower your up-front costs and
the amount of your personal debt. If you choose to do the "build out"
of your Kiddie Academy premises yourself, substantial costs may be incurred by
you or on your behalf to improve and configure your leased premises in
accordance with our specifications, those of your local governmental
authorities and your own considerations. This amount may vary greatly depending
upon the condition and size of your academy, the amount of the tenant
improvement costs paid by your landlord, if any, and your own decisions
regarding your academy.
(6)
Land.
Building and Improvements: The size of the typical Kiddie Academy Franchise ranges
from 8,000 square feet to 10,000 square feet. Should you choose to purchase the
land and build your own building and playground, your real estate acquisition
costs will vary depending upon a multitude of factors including whether the
property is purchased or leased, the size and location of your academy and the
availability of financing on commercially reasonable terms.
We estimate that the land, if purchased outright, will
cost you between $�25.000 and $1,000,000 and the building will cost you between
$1^500^000 and $1.800^
the land and
building for your Kiddie Academy Franchise, you must add the acquisition and
construction costs, as well as increased bank charges (related to your loan)
and professional fees, to the investment ranges. However, you will not
be required to pay a Lease Deposit. Thus, for a '' purchased Kiddie Academy Franchise (where you will own the land and the building), the estimated
initial investment ranges from $2.311.000 to $3.659.500. These estimates
are of the costs that would be incurred by you if you purchase an existing
building and the land around it or '' purchase real estate and construct a new
Kiddie Academy Franchise on that parcel of real estate.. : These
amounts may be lower or higher depending upon the location of the land, the
condition of .
an existing building or the
size of the academy to be built, as well as the very wide variances in ,----------------------------------------------------
.,-(
Deleted: OfTeringCircular.2007
jJisclosure Doc
ument.2008.California������������������������������������������������������������������������������������������������������������������������������������������������� _���� 24��� __���������������������������������������� _����
__................. _ _.................................................
land and construction costs throughout the United States. Because of these variances, there can be no assurances that a Kiddie Academy
Franchise could actually be purchased or constructed for an amount equal to or
less than the estimate provided. If you elect to lease the site, no estimate is
given of your anticipated rent (including ground rent) because of the wide
variance of rents from location to location^
Deleted:
(7) Professional Fees and Bank Fees: You may decide to obtain
advice from professionals, such as an attorney, an accountant, an architect, a
civil engineer, and others, regarding the meaning of the terms of your
agreements with Kiddie Academy, the overall development of your academy, the terms
of your lease and/or purchase agreement, among other issues. In addition, based
upon the type of academy you decide to develop and build, the size of your loan
will vary. The size of your loan will determine the size of the bank fees you
will be required to pay. Bank fees and professional fees will increase
significantly as the size of your loan increases and will change based upon
whether you lease or purchase your academy^
(8) Kitchen Equipment: You will need to Require
commercial grade kitchen equipment and appliances. You may purchase these items
or a leasing arrangement may be available through a vendor.
Deleted: For example, for a purchased
academy, where you purchase Ihe land and the building, your bank fees and
professional fees could be in the range of $50,000 to $100,000.
Deleted: purchase '' ''
  (9) Supplies and Equipment for
the Inside of Your Franchised Business: You must purchase classroom
supplies and equipment, from a list of supplies and equipment we provide.
This list will include, for example, children''s tables and chairs, shelves,
carpets, active play equipment, books, arts and crafts supplies, cribs and
cots, changing tables and supplies, swings and high chairs, manipulahves, toys,
language development materials, wall coverings, music and movement materials,
science and discovery materials and teacher resource materials,, You may
purchase these items t from any supplier approved jiy us.
The precise amounts will vary depending upon the size of your academy and the
number of children for which it will be equipped at the time you open. ,Your
actual costs may vary due to such factors as shipping distances, price
differentials between vendorsjicensing requirements and cos v of
installation.
(10) Outdoor Plav Equipment: You must purchase outdoor play
equipment for your Kiddie Academy Franchise. We will help you design your
outdoor play area and provide you with a list of accepted vendors and
equipment, which will include, for example, large and small fixed play centers
for various ages, riding toys, balls, water play equipment, fencing and ground
cover. The precise amounts will vary depending upon the size of your academy,
the number of children for which it will be equipped, the ages of the children
who will attend your academy and the types of
play equipment you choose to
install. The amount stated also may vary due to such factors as ______________________ �,!
shipping distances, price
differentials between vendors, licensing requirements and costs of ,..---{Deleted: goverrmientai installation.
(11) Computers and Software: You must purchase at least one
computer for the classroom area of your Kiddie Academy Franchise in order to
offer computer instruction to the children enrolled in your academy. We
reserve the right to increase this requirement in the future at our discretion.
You must also purchase at least two additional computers, one to be
included in the entrance area of your Kiddie Academy Franchise and another to
be located in your Director''s office, as well as certain specified software and
networking equipment, to participate in the Kiddie Academy Business Management
System. ^Your^costs will vary depending upon how many computers, the types of
computers and the related equipment you install, price differentials between Tvendors
and whether you choose to install a web cam service in your academy.
Deleted: The precise amounts
-1 Deleted: you install
{Deleted:
^JisiP^l^Si^tliineniJpJ&Califomja........ ................. 25
-{
Deleted: �fferingCircular.2007 ]
(12) Office Furniture. Equipment and Supplies: You must purchase basic office
furniture, equipment and supplies.
(13)
Indoor
and Outdoor Signs: You will need to purchase indoor and outdoor signs for
your Kiddie Academy Franchise. We will provide you with specifications for your
signs, which will be built to conform to the our requirements, as well as those
of your lease and local authorities.
(14)
Travel
and Living Expenses While Training: You are responsible for the costs
incurred by you and your academy Director to attend our mandatory training
courses. The
estimated cost presented for Owner Training is for transportation, meals and
lodging for two
people for two weeks near Baltimore, Maryland where the initial training
programs are currently
held. Director Training is for one week. Transportation costs will vary with
distance from your
state and the mode of transportation that you select. There are many lodging facilities
near our
training center. The Kiddie Academy Corporate Offices are located 20 miles
northeast from the
City of Baltimore, Maryland. SEE ITEM U, PAGES T40 - 42. for a
detailed description of our
training programs^ ........................................................................................................................................
(\5\ Transportation Vehicles and
Equipment: You are responsible for the costs incurred by you and
your academy relating to the purchase and maintenance of all transportation
vehicles and equipment utilized by you and your academy for a before and after
school program, should you choose to operate such a program at your Franchised
Business. All such vehicles and equipment must comply with all of our requirements,
as well as those of relevant state and federal regulatory agencies.
-{Deleted: 38-41
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0.25"
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06) Insurance and Utility Deposits: These amounts are for initial
deposits that will be required for insurance policies, telephone service
installation, utilities and related items. These amounts are payable as
incurred to third parties. The deposits may be refundable under the conditions
specified in the agreement with the applicable supplier. You will need to
obtain the following types of insurance: general liability; all risk; student
accident; workers'' compensation; business interruption; and any insurance
required by your lease.
QJ) Business Licenses: Many States and localities, but not all,
impose license or permjt fees on local businesses including child care license
fees. These fees vary from state to state.
-{ Deleted: 16
Q. ,-Start-Up Marketing and Advertising Investment: You must spend at a minimum
this amount pn the pre-opening and opening marketing and advertising
programs for your Franchised Business. This amount will pay for your
jire-opening marketing campaign in your targeted market area, other pre-opening
marketing items and certain promotional items, including, without limitation, ^n
Enrollment Kit. This amount will also pay for the marketing that will
occur in support of special promotional events during the initial period after
your academy opens. This amount is in addition to the annual two percent
(2%) of gross revenues or $10,000 advertising Requirement vou will spend
annually during the term of your J.ranchise Agreement.
CI9) Additional Funds: This estimates your start up
expenses and working capital for the first Jwejve months of the
operation of your franchise. These expenses include payroll costs for
operations but do not include any allowance for an owner''s remuneration. THESE
FIGURES ARE ESTIMATED AND KIDDIE ACADEMY CANNOT GUARANTEE THAT YOU WILL NOT
HAVE ADDITIONAL EXPENSES DURING THE FIRST T_WrgLV� MONTHS YOUR
BUSINESS OPERATES. IN NO EVENT ARE THESE ESTIMATES: INTENDED TO
SUGGEST THAT YOU WILL BREAK EVEN OR BE PROFITABLE AFTER THE FIRST
�JSCJO�uniQo�unj|n^^ ..................................................... 26...... -............ -
-.................... - - -......... -.................... ■
Deleted: 17>. Grand Owning
Deleted: for a Grand Opening promotion
for your Kiddie Academy Franchise.
Deleted: Grand Opening Celebration, a
Deleted: a Grand Opening
.---''{ Deleted: requirements in place ]
...-{Deleted:''^ ] .---{
Deleted: three
]
--{Deleted: three (3)
-{ Deleted: OfferingCircular.2007
TWELVE� MONTHS� OF� OPERATIONS,� OR
THAT� YOU� WILL� NOT REQUIRE . --{Deleted;three(3)
ADDltlO^^������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� three (3)
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Deleted; ; and whether you decide to purcliase or lease a
vehicle to transport children to and from your Kiddie Academy Franchise
during this period to support a before and after school care program ''
Deleted: 19
Deleted: it___________________
Deleted: three
(3)
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actual
amount of additional funds you will require will depend on factors such as: the
rate at
which you are able to enroll children at your academy and accordingly, the
amount of revenues
you are able to generate; your management skill, experience and business
acumen; local
economic conditions; the local market for early childhood learning services;
the prevailing wage
rate; competition; and the time of year in which your academy opens,
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