ITEM 7.������ INITIAL INVESTMENT
1� Franchise Fee. If you
are an existing MONSTER MINI GOLF� franchisee, each additional franchise
agreement you sign to establish a MONSTER MINI GOLF� Business will have a
reduced Franchise Fee of $15,000. See ITEM 5.
2� Real Estate. You must
lease or otherwise provide a suitable facility for the operation of the
Franchised Business. Typically, a MONSTER MINI GOLF� Business will range in
size from 9,000 to 12,000 square feet and will be located in either a
stand-alone building, strip-mall, shopping mall, or other commercial space deem
may deem appropriate. If you locate the Franchisee! Business in a shopping
mall, your rent may be significantly higher than as disclosed in the table
above. It is difficult to estimate lease acquisition costs because of the wide
variation in these costs between various locations. Lease costs will vary based
upon square footage, cost per square foot and required maintenance costs. The
estimate in the table represents one month''s rent and does not include any
security deposit. The amounts you pay are typically not refundable, but in
certain circumstances a security deposit may be refundable.
3 Phase I Leasehold
Improvements. To convert an existing facility into a MONSTER MINI GOLF�
Business, it must be renovated according to our standards and specifications.
The cost of golf course construction, props and materials are listed separately
in the table. The cost of the leasehold improvements will vary depending upon
the size and location of the Franchised Business, local wage rates and the cost
of materials. The low estimate assumes that your landlord will provide a
partial build-out allowance. The range listed represents an average, and the
total costs could come in below or above the estimated range. Our
specifications for leasehold improvements include: construction and finish of
all walls (related to office/storage rooms, restrooms, electrical closets,
party/functions rooms, offices, etc.); electrical (all facility electrical,
including the room illumination (outfitted with UV tubes), outlets for games/props/general,
and all fire/emergency lighting/horn/strobes, etc.); plumbing (complete
restrooms); paint (entire facility sprayed black; party/functions rooms
base-coated to our specifications); sprinkler system (all sprinkler/fire
protection as per local/state codes); floors (carpet and installation in party
rooms and gaming/common areas); bathroom tile/floor finishes; signage (all
applicable signage and installation); and other (including 30 gallon or greater
compressor).
4 Architectural Plans.
You may need to hire an architect to prepare plans for the build-out and
improvement of the Approved Location.
5 Insurance. You must
purchase and maintain in effect during the term of the Franchise Agreement the
type and amount of insurance specified in Section 15 of the Franchise
Agreement. Factors that may affect your cost of insurance include the size and
location of the Franchised Business, value of the leasehold improvements,
number of employees and other factors.
6 Office Equipment and
Supplies. You must purchase general office supplies including stationery,
business cards and typical office equipment. Factors that may affect your cost
of office equipment and supplies include local market conditions, competition
among suppliers and other factors.
7 Point-of-Sale System.
You must purchase and use personal computers and point-of-sale software to
assist you in operating the Franchised Business.
8 Training. The cost of
initial training is included in the Franchise Fee, but 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 you choose.
9 Signage. This range
includes the cost of all signage used in the Franchised Business. The signage
requirements and costs will vary based upon the size and location of the
Franchised Business, local zoning requirements and local wage rates for
installation, among other things.
10 Golf Course Phase II
Build-Out Package Fee. The Golf Course Phase II Build-Out Package fee
includes
all of the "concept related" components of the build-out. We may
increase the cost of the Phase II Build-Out
Package if our Affiliate''s costs exceed the Phase II Build-Out Package fee due
to local market conditions, the size
of the premises, shipping rates, suppliers and other related factors. See Item
5.
11������������� Operating
Supplies. You must purchase golf clubs and balls for the golf course and
prizes and other items
for the redemption games. The cost of these items depends on how much you
purchase and how much prize inventory
you carry.
12������������� Grand Opening.
You must spend a minimum of $5,000 on Grand Opening Advertising prior to your
grand
opening. You may choose to spend more. See ITEM 11. Factors that may affect the
actual amount you spend include
the type of media used, the size of the area you advertise to, local media
cost, location of the Franchised Business,
time of year and customer demographics in the surrounding area.
13������������� Miscellaneous.
You may incur expenses for things such as deposits on utility services,
business licenses
and building permits, dues for local organizations, incidental supplies and
other miscellaneous items.
14������������� Legal &
Accounting. You will need to employ an attorney, an accountant and other
consultants to assist
you in establishing your Franchised Business. These fees may vary from location
to location depending upon the
prevailing rates of local attorneys, accountants and consultants.
15������������� Additional
Funds. We recommend that you have a minimum amount of money available to
cover
operating expenses, including employees'' salaries, and your own personal
expenses, including possible debt service,
for the first 3 months that the Franchised Business is open. However, we cannot
guarantee that our recommendation
will be sufficient. Additional working capital may be required if sales are low
or operating costs are high.
16������������� Total. In
compiling this chart, we relied on our and our Affiliate''s combined industry
experience and
experience in operating a MONSTER MINI GOLF� Business. The amounts shown are
estimates only and may vary
for many reasons including the size of your Franchised Business, the
capabilities of your management team, where
you locate your Franchised Business and your business experience and acumen.
You should review these estimates
carefully with an accountant or other business advisor before making any
decision to buy a franchise. These figures
are estimates only and we cannot guarantee that you will not have additional
expenses in starting the Franchised
Business.
