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Franchise Costs: Detailed Estimates of Young Rembrandts Franchise Costs (2015 FDD)

by Franchise Chatter on January 8, 2014

in Art-Related Franchise, Child-Related Franchises, Franchise Costs

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Young Rembrandts Photo by The Salvation Army

This post was updated on April 3, 2016 to reflect information from Young Rembrandts’ 2015 FDD (Item 7).

Detailed Estimates of Young Rembrandts Franchise Costs Based on Item 7 (Estimated Initial Investment) of Young Rembrandts’ 2015 Franchise Disclosure Document

  • The franchisee will provide art classes and teach art techniques to preschool and elementary school children.

1.  Initial Franchise Fee:  $31,500

  • You pay an initial franchise fee of $31,500 if you are purchasing the standard Gold Franchise. The initial franchise fee for a Silver Franchise offered in limited areas is $28,500.
  • You pay the fee when you sign the Franchise Agreement. If your franchise is terminated by the franchisor for your failure to satisfactorily complete the initial training, it will refund the initial franchise fee less the amount to cover its costs incurred for you but not to exceed 70% of the initial franchise fee.

2.  Office Equipment and Computer System:  $3,125 to $4,210

  • You must purchase computer hardware and software, printer/scanner, fax machine, and a telephone for use in operating the franchise business. This equipment must be purchased following the franchisor’s specifications.
  • The low estimate includes the first three months of fees under the ASAP Subscription Agreement for the application software. The high estimate includes prepayment of 1 year of fees under the ASAP Subscription Agreement which entitles you to a 10% discount.
  • You will pay a prorated annual technology fee which depends on what month you sign the Software License Agreement.

3.  Travel and Living Expenses While Training:  $700 to $1,700

  • You are not charged an additional fee for you to attend initial training. You must arrange for transportation and pay the expenses for meals and lodging incurred in attending the initial training program.
  • The total cost will depend on how far you must travel and the type of accommodations you choose. This estimate is based on 1 person attending.

4.  Miscellaneous Opening Costs:  $1,000 to $2,000

  • This estimate includes legal and accounting fees, telephone and other utility expenses, costs for obtaining required certifications or licenses, and other miscellaneous opening costs.
  • You must have a dedicated phone number used only for your Young Rembrandts business.

5.  Initial Inventory of Art Supplies:  $500 to $1,000

6.  Initial Inventory of Marketing and Promotional Materials:  $550 to $700

  • You must purchase the Marketing Starter Kit from the franchisor’s dedicated supplier.
  • The Marketing Starter Kit includes an initial supply of brochures, informational and promotional literature, posters, display boards, business cards, brag book, and promotional items.
  • The higher estimate assumes you purchase materials in addition to the required Marketing Starter Kit.

7.  General Liability Insurance:  $350 to $1,270

  • You must purchase the general liability insurance required by the franchisor. The estimate is for a 1-year premium. The cost of insurance will vary based on the types and limits of the insurance you purchase, your location, your driving record, and other factors affecting risk exposure.
  • You may also want to obtain sexual molestation coverage which would increase the cost of your insurance.

8.  Additional Funds – First 3 Months of Operation:  $2,500 to $6,500

  • This estimate covers business operating costs, including supplies, marketing materials, transportation, costs of promotion, utilities, and minimum royalty payments.
  • No amount has been included for employee compensation in the low estimate. The high estimate includes an amount to cover 2 part-time employees to teach classes during the first 3 months, plus worker’s compensation insurance.
  • No amount has been included for an owner’s draw or salary. You may need additional funds for personal living expenses.
  • There is no requirement that you have an office, so there is no expense included in the above estimate for a lease. It is anticipated that you will operate the business from your home.
  • These figures are estimates and the franchisor cannot guarantee that your expenses won’t be higher.

9.  Totals:  $40,225 to $48,880

  • The franchisor has compiled these estimates based on the experience of its franchisees and its general business knowledge.

Territory Development Agreement

  • If you sign a Territory Development Agreement, you should anticipate the initial costs listed above for the first franchise you will open plus the initial fee due under the Territory Development Agreement which is $13,250 times the number of franchises you intend to open.
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