ITEM 7.����������� ESTIMATED
INITIAL INVESTMENT
Company anticipates that you
will incur the following estimated initial expenditures in the establishment of
a Franchised Business.
Franchise Fee.� The franchise fee is
described in greater detail in Item 5 of this Franchise Disclosure
Document.
2 Real Property. You must
provide a location other than a personal residence from which to operate the
Franchised Business, and the open office must exist solely and exclusively for
the operation of the Franchised Business. Normally, space is obtained on a
leasehold basis. The floor area recommended for the Franchised Business
is approximately 600 to 800
square feet. The estimate for rental property represents a high-end lease rate
of $14 per square foot for 800 square feet of space. The low-end estimate
represents a lease rate of $7 per square foot for 600 square feet of space.
Additionally, there may be lease acquisition costs in the nature of deposits.
It is extremely difficult to estimate lease acquisition costs because of the
wide variation in these costs among various locations. Company will not assist
in financing this expenditure.
3 Utility Deposits. A utility deposit may be
required if you are a new customer of the utility company.
4 Leasehold Improvements.
Minimal leasehold improvements are generally required before operation. These
costs again vary based on the size of the business and requirements of a
particular landlord, depending upon whether or not the improvements are
capitalized as part of the lease.
5 Insurance. Requirements
are described in greater detail in Item 6 of this Franchise Disclosure
Document. This estimate is for estimated first year premiums of all insurance
except office contents and workers'' compensation insurance which vary by
location.
6 Furniture and Fixtures.
The range represents the approximate costs associated with acquiring the
furniture, including desks, chairs, shelves and phone system.
7 Training. You are
responsible for arranging transportation and paying the expenses for meals and
lodging for any persons attending the Company training program. The amount
expended will depend on the distance you must travel and the type of
accommodations you choose. The estimate contemplates attendance by you and one
employee traveling to Company''s headquarters or other designated location for
approximately 10 days.
8 Signage. This range includes the cost of
all requisite signage used in the Franchised Business.
9 Additional Funds. Such
amounts are the minimum recommended levels to cover operating expenses,
including employees'' salaries for 3 months. However, Company cannot guarantee
that such an amount will be sufficient. Additional working capital may be
required if sales are high''or fixed costs are high. The disclosure laws require
us to include this estimate of all costs and expenses to operate your franchise
during the "initial phase" of your business, which is defined, for
purposes of this paragraph, as 3 months or a longer period if "reasonable
for the industry." Company is not aware of any established longer
"reasonable period" for the industry, so the disclosures cover a
3-month period.
* The low-high range of payments is based on
franchisor''s current experience.
In compiling this list of
expenditures, Company relied on its and Teryl Corp.''s experience in a business
similar to the Franchised 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. For planning purposes, please note
that most costs and expenses listed in this Item 7 are not within our control
and are affected more by general economic conditions than our actions. This
does not include any personal living expenses. You should review these
estimates carefully with a business advisor or accountant before making any
decision to buy a franchise. Company does not offer direct financing to you for
any item. All or part of your investment may be financed by a bank or other
lending institution on terms Company cannot estimate. Once you sign the
Franchise Agreement, no payment you make to Company is refundable except as so
stated in Item 5, the Franchise Agreement or Manual.
