Detailed Estimates of Aaron’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Aaron’s 2013 Franchise Disclosure Document
1. Initial Fee: $15,000 to $50,000
2. Real Estate: $3,800 to $20,000
- The figures above assume that you will rent the premises for the Franchise and, thus, do not include the cost of acquiring real estate or constructing a building. The amounts shown above are monthly estimates.
- A Franchise will require 7,000 to 12,000 square feet of floor space.
- Rental costs in a strip-type shopping center or free-standing building vary considerably, depending on the location and local market conditions. Aaron’s estimates that the annual cost per square foot will range from $5.00 to $15.00 (and possibly higher in select markets). Aaron’s also estimates that the annual cost per square foot for common area maintenance, real estate taxes, and insurance will range from $1.00 to $1.50 (and possibly higher in select markets).
- These figures do not include security deposits of one or two months rent, or utility deposits, which may be required.
3. Leasehold Improvements: $2,000 to $200,000
- You must install flooring, counters,wiring, display shelving, painting, and decor items that comply with the specifications in the blue-lined floor plans that Aaron’s provides.
- The cost will vary depending on the condition of the premises, square footage, lease negotiations, and the extent to which your landlord funds leasehold improvements.
- You must purchase and install the Aaron’s equipment package, which Aaron’s estimates will cost about $7,000.
4. Signs: $20 to $100
- Aaron’s will purchase exterior signs, which Aaron’s estimates will vary in cost from $3,000 to $30,000, and lease the signs to you for the first 5 years of the Franchise Agreement. You may prepay the 5-year lease. After the initial 5-year term, you can renew the sign lease for $1 per week.
5. Computer Equipment Lease: $50 to $80
- At Aaron’s choice, Aaron’s will either lease the computer equipment package to you or require you to pay for the computer equipment package, which Aaron’s estimates will cost about $11,800 to $15,000.
- If the computer equipment package is leased to a franchisee, Aaron’s will lease it to you per the terms of the Equipment Lease over the initial 3-year term of the Franchise Agreement.
- You may be required to upgrade your equipment on expiration of the 3-year lease, or, if purchased, you may be required to pay for the upgrade of your equipment every 3-4 years.
6. Equipment and Fixtures: $12,500 to $20,000
- You must purchase or lease equipment, such as office furniture, a telephone system, security equipment, file cabinets, calculators, and “off the shelf” software that comply with the specifications in Aaron’s Pre-Opening Manual.
7. Delivery Vehicle: $1,500 to $7,600
- You must purchase or lease at least one delivery vehicle that meets the specification in Aaron’s Confidential Operating Manuals before opening the Franchise. The estimated low figure is for the security deposit on a leased vehicle, and the estimated high figure is for a down payment to purchase a vehicle.
8. Insurance: $6,500 to $11,000
- The figures above are Aaron’s best estimate of the initial payment for the minimum coverage required. Aaron’s estimates a total annual insurance cost from about $6,500 to $11,000.
9. Travel and Living Expenses While Training: $500 to $3,800
- Aaron’s provides initial training at no charge, but you must arrange and pay for all transportation, lodging, meals, and wages for yourself and any of your employees that receive training.
10. Opening Advertising: $2,000 to $5,000
- Aaron’s will make available a financing program to Aaron’s franchisees for the sole purpose of conducting grand opening advertising, marketing, and promotional activities at new Aaron’s Sales and Lease Ownership stores.
- Under the program, Aaron’s will lend Aaron’s franchisees up to $15,000 per store.
11. Promotional Advertising: $0 to $15,000
12. Initial Inventory: $120,000 to $160,000
- You must have sufficient capital in cash and/or a line of credit to stock your showroom and warehouse with products for sale and lease. Costs will vary depending on the size of the Franchise.
- You may be able to obtain financing for your inventory purchases from SunTrust Bank under the arrangements described in Item 10, or under arrangements with other lenders.
13. Additional Funds – 6 to 15 Months: $100,000 to $200,000
- You must have sufficient capital in cash and/or a credit line to cover employee salaries, payments on product reorders of about $3,000 to $80,000 each month, and general operating expenses. The figures above are Aaron’s best estimate for covering your ongoing expenses for about 6 to 15 months.
- As of December 31, 2012, Aaron’s and its franchisees operated about 1,969 stores. Aaron’s has used its experience in operating these stores to formulate the estimate of required additional funds.
14. Totals: $275,620 to $707,400