|
Item (Notel)
|
Estimated Cost
|
Method of Payment
|
When Due
|
To Whom Paid
|
|
Leasehold Improvements (Note 11)
|
$0 To
$15,000
|
As
arranged
|
When
signing lease or completion of improvement
|
Landlord, general contractor
|
|
First month''s rent and CAM charges plus one month''s security deposit (Note 12)
|
$2,000
To $6,000
|
As
arranged
|
When signing
lease and as incurred.
|
Landlord
|
|
Local Advertising; Grand Opening (Note 13)
|
$1,500
To $2,500
|
As
arranged
|
As
incurred
|
Various advertisers
|
|
Licenses and Permits (Note
14)
|
$0 To $2,000
|
As
arranged
|
Before opening
|
Government agencies
|
|
Outside Signage (Note 15)
|
$0 To $3,000
|
As
arranged
|
Before opening.
|
Vendors
|
|
Insurance, including Business liability and Worker''s
compensation (Note 16)
|
$300 To $1,200
|
As
arranged
|
Before opening
|
Insurance company
|
|
Working Capital (Note 17)
|
$5,000
To $7,000
|
As
arranged
|
As
incurred
|
Vendors,
employees,
etc.
|
|
Professional advisor (Note 18)
|
$0 To $1,000
|
As
arranged
|
When
incurred before opening
|
CPA,
attorney,
etc.
|
|
Total (Note 19 and Note 20)
|
$67,500
To
$103,800
|
|
|
|
In general, none of the
expenses listed in the above chart are refundable, except any security deposits
vou are required to make may be refundable.
Notes to Chart
Note 1: This table provides
estimates for a Tutoring Center facility. This table estimates your initial
investment. We used our and our affiliates'' experience to make these estimates.
These are only estimates.
Note
2: The
initial franchise fee is discussed in Item 5.
You pay the initial fee in a
lump sum by cashier''s check on signing your franchise agreement. Your initial
franchise fee is nonrefundable.
We do not
currently offer financing for your initial fee. (See Items 5 and 10)
Note 3: These amounts are the
estimated costs for your start-up office supply and equipment package and we
believe are at general retail prices. Some of these costs may be refunded to
you in the form of rebates from participating vendors. These amounts include
estimated shipping and handling charges and taxes.
Note 4: These amounts are the
estimated costs for your start-up printing and interior sign package and we
believe include substantial savings over retail prices. These amounts include
estimated shipping and handling charges and taxes. Your printing package
includes your business stationary, all interior signs and posters, marketing
materials and your grand opening banner. These amounts do not include the cost
of your exterior signs.
Note 5: These amounts are the
estimated costs for your start-up educational materials package and we believe
include substantial savings over retail prices. These amounts exclude estimated
shipping and handling charges and taxes. Your educational materials package
includes an estimate of your inventory needs for the first three months in
business. Your experience may be more or less depending on your initial growth.
Note 6: These amounts are the
estimated costs for your start-up furniture package and we believe include
substantial savings of about 50% over retail prices. These amounts exclude
estimated shipping and handling charges and taxes (approximately 10% of the
total price). The furniture package includes all required furniture for your
reception room, front office, classrooms and director''s office.
Note 7: These amounts are the
estimated costs for your start-up computer equipment package and we believe are
at general retail prices. These amounts include estimated shipping and handling
charges and taxes. The higher amount assumes you purchase a larger laptop
computer. You must purchase your computer equipment from our approved vendor.
All computer equipment items must be purchased as new and not used or
refurbished. Your computer package includes the following items:
Apple laptop including,
without limitation, the following:
Most current operating system
IWorks software
Optical mouse Apple Extreme
wireless router .Mac account
AppleCare
Warranty (3 year) Digital camera
(See
Item 11.)
Note
8: Your
training and support package includes the following:
1.
Travel,
lodging, food and expenses for a support team to visit your center for 2 days
to assist with your grand opening;
2.
Three
to six hour training seminar for you and your instructional staff on classroom
operations conducted at your center during your grand opening visit;
3.
Support
Team office hours via high speed internet, using e-mail, instant messaging
and/or audio and visual teleconferencing; and
4.
Annual
seven day training and continuing education programs at our corporate training
facility in Long Beach, California for you and one additional person involved
in the operation of your center; and
5.
Additional
personalized and individualized training at the Corporate Training Facility or
at a Center we designate, as needed by appointment.
Note 9: You must purchase an
assortment of children''s toys and rewards before you open your center.
Note 10: You must pay for all of your
travel expenses, lodging and meals for attending our training program for
approximately seven to nine days. The low estimate assumes you live in close
proximity to the training site and will not have any travel expenses. The high
estimate assumes you must fly to our training location with round trip airfare
of about $600, 7 nights in a hotel at approximately $100 per night, and $50 a
day for meals.
Note 11: Your center must meet our
specifications. The low estimate assumes that your landlord will pay for tenant
improvements or that the improvements are capitalized into the lease. The high
estimate assumes you will be responsible for all tenant improvements. These
figures are based on our experience. Bids may vary widely among contractors.
You should interview with and obtain bids from several contractors. In unusual
circumstances, you may be asked by your city or other governmental agency to
provide a conditional use permit for your location. These costs are not
included in your estimate.
Note 12: The amounts estimate your
first month''s rent and CAM charges plus a one month security deposit. The low
estimate assumes you can negotiate with your landlord for no rent or early
possession for three months. The high estimate assumes that your landlord gives
no rent relief and that rent payments are between $1,500 to $3,500 per month.
Note 13: You are required to conduct
local advertising for your center in the 30 days prior to your Grand Opening
and in the 90 days following your Grand Opening.
Note 14: You must get a business
license and permits from your city, county and/or state to operate the center.
Note 15: You must have an outside sign
for your center. The low estimate assumes your landlord pays for outside
signage, and the high estimate assumes you pay for the signage.
Note 16: You must maintain certain
levels of insurance. The estimates are for the cost of premiums for the
required insurance for 3 months. Insurance premiums may vary based on sales and
other factors. You must obtain general liability coverage, including
contractual liability and advertising injury coverage of at least $2,000,000
naming us and the indemnitees named in your franchise agreement as additional
insureds; fire and casualty insurance; business interruption insurance; and worker''s
compensation, employer''s liability, unemployment and state disability
insurance. We can revise required coverage and amounts. The low estimate
assumes you do not pay a deposit for insurance coverage.
Note 17: We recommend that you have
additional funds available to pay for rent (second and third months),
royalties, employee wages and other operational costs that may arise in the
first three months of operation, as well as for other expenses that are
incurred before you generate revenues from your center. None of these amounts
take into consideration any of your personal living expenses. We give no
assurance as to when, if ever, your center will generate a positive cash flow.
These amounts should be regarded as the minimum reserves that you should have.
Note 18: You may need to consult with
independent professional advisors like a lawyer and CPA concerning the
operation of your center.
Note 19: You may not achieve the low
estimate of zero in any category where zero is indicated.
Note 20: There could be other factors
not listed that may affect your initial investment. You should check with your
financial and other advisors. If you spend more money than the high estimates
in one or more categories, your total investment will be greater than the total
high estimate. Nothing in the above estimates take into consideration the costs
and expenses that would be associated with the purchase of an existing center
from an existing franchisee, nor the cost of converting an existing independent
business. Also, these estimates do not take into consideration any decision you
might make to "upgrade" any particular aspect of your center. It is
important that you solicit or investigate multiple bids and sources for each
construction contract and each major purchase. Some of your initial start-up
expenses for computers, equipment, inventory and other property may be financed
if you qualify with your own lender.
