SHELF GENIE - FDD UFOC ITEM 7 Detail

Item 7

ESTIMATED INITIAL INVESTMENT

In addition to the payments described above in Items 5 and 6, you must make various other expenditures in connection with your SHELFGENIE Business. The following table describes the range of expenditures we anticipate as reasonable for the total initial investment required to establish each SHELFGENIE Business. These estimates are subject to variations according to geographical location and other factors.

Explanatory Notes:

1. All expenditures that are paid to us are non-refundable, except as specifically noted within this document. Unless specifically agreed to by third parties to whom you make payments, all expenditures with third parties are non-refundable. We do not offer direct or indirect financing to franchisees for any items.

2.                   The Initial Franchise Fee listed is for your first SHELFGENIE Business, If you are awarded an additional SHELFGENIE Business, such additional SHELFGENIE Business shall have an initial fee equal to the then current Initial Franchise Fee multiplied by 80%. If this is your first SHELFGENIE Business and you qualify for the International Franchise Association''s VetFran program, then the Initial Franchise Fee you will pay for this franchise will be the Initial Franchise Fee multiplied by 85%.

3.                   It is assumed that you will work from a home office. The amount listed is to make some improvements to your home office, if needed.

4.                   You will be required to purchase or lease an approved vehicle for your SHELFGENIE Business. The vehicle will need to be branded according to SHELFGENIE''s guidelines. The low end of the estimate assumes the vehicle is leased. The high end of the estimate assumes the vehicle is purchased.

5.                   Includes furniture for your home office and your initial trade show display.

6.                   This estimate excludes the laptop and mobile printer which SHELFGENIE will provide to you as part of the Initial Franchise Fee.

7.                   This estimate includes tools used for measuring and installing shelving units.

8.                   You can obtain information from your local, county and state authorities about the required licenses and related types of expenses in your local area.

9.                   This is an estimate of fees paid to professionals such as attorneys and accountants. This amount will depend on the fees charged by the professionals you choose,

10.                Initial inventory is minimal since all products are made to order. However, you may order spare parts or demonstration materials for in-home presentations.

11.                This is an estimate on the down payment against your annual premiums to acquire the minimum insurance required under the Franchise Agreement. This estimate is for general liability insurance, property insurance, motor vehicle insurance and product liability insurance.

12.                Training will be provided for up to 10 days for up to 2 individuals. You will be required to pay all expenses, including accommodations, travel and wage expenses for these individuals during training. If you decide to send more than 2 people to the initial training program, we will charge you a fee (see Item 6) and you will be required to pay their expenses, The estimate is based on you sending only 2 individuals.

13.                Within 60 days of opening your SHELFGENIE Business, you are required to spend at least $5,000 on grand opening advertising. In addition to that amount, you are required to spend a minimum of $5,000 per month on local advertising. The estimate includes the minimum grand opening requirement and the first three month''s minimum advertising requirement. In the event that you open your SHELFGENIE Business during what we consider low sales months, we may allow you to delay the full expenditure of advertising amounts to months of higher sales volume. If we allow a delay, we will only do so in a writing signed by us.

14.                This is an estimate of other expenses you will incur before operations begin and during the first 3 months of operations. These expenses include estimated payroll costs, benefits, utilities, additional inventory and supplies, but do not include any fees listed in Item 6 and do not include the owner''s salary or draw or any expenses in the above chart. In estimating this amount, we relied upon prior experience by our affiliates in operating businesses similar to a SHELFGENIE Business and our management''s general business experience. The stated range is merely an estimate and we cannot guarantee that the upper range amount is sufficient or that you will not have additional expenses starting your SHELFGENIE Business.� The actual amount of funds required and the times when they are required depend on many factors. These factors include whether the SHELFGENIE Business is owner-operated, 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 level you reach during this period. We cannot estimate or promise how much additional funds any particular franchisee requires, nor estimate when or for how long additional funds are needed to operate any SHELFGENIE Business.

15.���� You should review these figures carefully with your business advisor before making any decision to purchase a franchise.