2
misc. Sappho��������������������� SUpp]je5 include
housekeeping, janitorial disinfectants and other miscellaneous
supplies.�� The cost is $500.
3
inventory
inventory
does not fluctuate as a function of seasonal sales. The typical for-sale items
held in opening inventory are boxing gloves, protective gear, and LA Boxing
wearing apparel in the amount of $10,000.
4 ininnnce ^g discussed \n item 8 and Section 9.1
of the
Franchise Agreement, you must carry certain specified insurance. The method and
timing of payments is a matter to be resolved between you and your insurer.
Because the selection of the carrier, size of the Premises, location of the
Premises, value of the leasehold improvements, amount of inventory, amount of
wages and other related conditions will vary, it is difficult to estimate the
ultimate cost to you. Therefore, we can only estimate the total cost with the
caution that you should obtain quotes from carriers of choice before
proceeding. Our best estimate is approximately $4,200 to $6,000
per year,
paid at the rate of $350
to $500 per month, for insurance coverage.
s Graphics wj|| Specjfy
(ne s\gnS an(j graphics and only those we approve will be used.
Signs and graphics will be maintained in a condition acceptable to us at all
times. You, at your own expense, must prepare, construct and erect the signs
and graphics in accordance with approval from governmental authority and the
landlord. The costs of fabricating and installing approved signs and graphics
can vary depending upon local market conditions but are estimated to cost
approximately $12,000. These costs are paid to suppliers, when incurred, before
beginning business and are usually not refundable.
e omce Equipment QfRce equipment consists of a PC
computer and printer and Point of Sale system amounting to $3,500. You can
expect initial cash outlays to be lower if the items can be leased rather than
purchased. These costs are paid to suppliers, when incurred, before beginning
business and are usually not refundable.
7 Reot We expect that
you will lease rather than own real estate and construct a building. Lease
costs will vary based upon variances in: (i) size in square feet to be leased;
(ii) cost per square foot; and (iii) common area maintenance costs. These
variances are determined by location, the length of the lease, the age of the
leased property, local market conditions, the size of the Premises and the
bargaining power of the developer or property management company. We assume
that the landlord will require first and last months'' rent and a security
deposit equal to one months'' rent. We estimate this will be $18,000 to $20,000.
■ Grand opening We
fee^
strong|v mat a
you should enter the market in an aggressive way to minimize early
lack of awareness of the LA Boxing Franchise among large numbers of potential
customers in the Exclusive Territory. Grand opening promotional activities vary
greatly based upon the nature of the events you elect and the local rates for
services selected, for example, printing and advertising. We believe that
$7,500 is sufficient to create awareness using a multi-media advertising
program.
9a and 9b Leasehold implement,
and Arehi.eet. Fee��� ^ ^ Qf ,easehold improvementS for your LA Boxing
Franchise will vary as a function of size, condition
and location of the Premises, price differences among contractors, local wage
rates and material costs, other local conditions and the nature of your
leasehold improvements. The previous tenant or landlord may have installed
leasehold improvements that are very compatible, thereby reducing costs. We
estimate that leasehold improvements vary from $19,000 to $24,000. All
leasehold improvements are directly related to conforming the Premises to our
current standards for layout, traffic flow and other specifications. Included
in this amount is the cost of TV/audio equipment estimated to cost you $4,000.
Also, included in the total amount is the cost of wall mirrors estimated to
cost you $5,000. Architectural services are estimated to cost you an additional
$5,000. These costs are paid to suppliers, when incurred, before beginning
business and are usually not refundable.
to a, iob and lot Equipment you must
pUrcnaSe certain equipment including boxing ring, heavy punching
bags, bag cage, retail counters and speed bags. Our estimate is $23,000 paid in
lump sum. Leased Equipment includes cardio and strength machines and free weights
costing $50,000 that can be leased for $1,800 to $2,500/mo. The Web based
camera system cost is $3,500. These costs are paid to suppliers, when incurred,
before beginning business and are usually not refundable.
11
utilities
yQU
must jncur certajn deposits with local utilities, for
example, electric, telephone, gas, water, etc. These will vary depending on the
policies of the local utilities but are estimated to be $750.
12 Lkenia ^oca^ municipal, county and state
regulations vary on what licenses and permits are required to operate a''LA
Boxing Franchise. Classification of various types of fitness centers by local
governments can cause the cost of licenses to vary. The total cost is
approximately $2,000 to $3,000. These fees are paid to governmental authorities,
when incurred, before beginning business and are usually not refundable.
13ugai ^hj|e vou
must gjgf, tne LA Boxing Franchise Agreement
individually, you may decide to hold the franchise interest in a corporation or
other entity and will transfer the LA Boxing Franchise Agreement to a
corporation or other entity formed before beginning operations. Regardless of
the ownership of the LA Boxing Franchise, you must comply with the fictitious,
assumed, or trade name statutes of the state in which the LA Boxing Franchise will be
located. We estimate that the attorneys'' fees, publication fees, filing fees
and other costs will total $1,500 to $2,000 for incorporation, compliance with
your state''s
fictitious
or assumed name statute and review of this Franchise Disclosure Document,
depending on the scope of legal services rendered. These fees may vary from
state to state depending on each state''s laws and the prevailing rate of
attorneys'' fees. These costs are paid to attorneys; newspapers and governmental
agencies, are not refundable and usually incurred before beginning business.
14 tl&m you muS( pay
for a]| out-of-pocket expenses, workers'' compensation
insurance and all employee compensation along with federal and state taxes for
the Trainees. We assume no responsibility for your human resource-related
liabilities or costs during Initial Training. You must bring no fewer than 3
people (owner, instructor and salesperson), of whom at least one must be the
operating partner. The typical costs of training that you must bear are the
transportation, lodging, compensation and meals. The estimate is for items that
are non-discretionary in nature. Generally these costs will vary widely as a
function of the distance traveled, accommodations selected, restaurants
selected, the distance between the hotel and the training center and the
transportation selected. Using different lifestyles, distances and compensation
assumptions, the estimates are from $3,500 to $5,000.
is working c�pit�i yQu mus^ navfi
adequate working capital before beginning operation of a LA Boxing Franchise. Working
capital should be sufficient to keep the LA Boxing Franchise in operation for 3 months and capable
of covering the excess of expenses over cash flow from the gym covering
independent contractor fees, employee salaries and taxes, inventory
replenishment, insurance premiums, rent, utilities and other normal expenses
that are associated with the day-to-day business operation of the Franchise.
You must be able to meet operating expenses from pre-opening, including hiring
and training expenses, until the LA Boxing Franchise develops sufficient cash flow to cover
all costs. The estimate for working capital is $35,000. This figure does not
include any payments to you during the start-up period. You must have
sufficient personal resources to cover your living expenses during this period.
In the area of working capital, you must fill out a personal/family cash flow
budget and determine if there is sufficient revenue on the personal level to
provide for your family through the start-up period. Clearly, working capital
requirements will be a function of your decisions regarding nearly every aspect
of your LA Boxing Franchise, for example,
how many independent contractors you engage, the size of the payroll, rent,
utilities, size of the operation and many other expenses that you decide to
incur. We
do not guarantee that you will not have greater start-up expenses than these
estimates, or that you will not need more operating funds than these estimates.
We do not imply or guarantee that you will "break even" by any
particular time.
i6 MiKdiantous although the estimated start-up
expenses are our best estimate, it is possible that you will exceed these
figures and it would be advisable to have additional working capital available.
You must have an additional $3,000 in reserve cash.
Basis for Estimates
We relied on our management
staffs 16 years of experience as owners and operators of seven 7 boxing and
fitness gyms in Southern California and Georgia, utilizing the LA Boxing name
and trademark, to compile these estimates. You must review these figures
carefully with a business advisor before making any decisions to purchase an LA
Boxing Franchise.
Financing
As described in ITEM 10,
neither we nor our agents offer any financing arrangements to you.
