Franchise Costs 2013: Detailed Estimates of Fantastic Sams Franchise Costs (2013 FDD)

Detailed Estimates of Fantastic Sams Franchise Costs Based on Item 7 (Estimated Initial Investment) of Fantastic Sams’ 2013 Franchise Disclosure Document

1.  Initial License Fee:  $25,000

2.  New Owner/Salon Fundamentals Course:  $1,395 to $2,300

• The estimate provided does not include amounts for transportation, lodging, and meals.

3.  Travel and Living Expenses for You and Your Employees During Training:  $2,000 to $4,000

• The estimate provided for Travel and Living Expenses During Training is a general figure and will vary depending upon the number of people sent, accommodations available, distance traveled, and a variety of other factors.

• The lower estimate set forth above approximates the cost for one person attending, while the higher estimate approximates the cost for three people attending.

4.  Leasehold Improvements  (including architectural fees):  $0 to $35,000

• Most new salons are developed in multi-unit commercial establishments such as “strip centers”. You must modify your salon to meet the franchisor’s standards of decor established for Fantastic Sams salons (“leasehold improvements”).

• The costs of leasehold improvements, including architectural expenses, depending on the lease, may be amortized over the lease term thus increasing the rent, or the landlord may provide a cost allowance for leasehold improvements. In some cases, leasehold improvements must be paid in full by you.

• Due to variable materials and labor costs, leasehold improvement costs cannot be estimated with precision. The higher figure of $35,000 assumes that you pay the full cost of leasehold improvements before salon opening.

5.  Rent and Utility Deposit:  $2,000 to $5,000

• Your rent deposit equals approximately two months’ rent. In addition, you may be required to pay for various utility deposits, which could vary from $2,000 to $3,000.

• You must pay your own legal and other expenses in connection with the review and negotiation of your lease.

6.  Initial Haircare Product Inventory (60 day supply):  $9,000 to $14,000

• Estimates for the cost of Initial Haircare Product Inventory assume that you will install the new salon decor with the expanded retail product line.

7.  Salon Equipment, including computer equipment:  $19,000 to $29,000

• Beauty salon equipment, such as shampoo bowls, dryers, styling/shampoo/reception chairs, mirrors and styling stations, and styling mats, etc. must be acquired before salon opening.

• If purchased, the price to you is approximately $19,000 to $29,000. You may choose to lease the equipment; however, there is no leasing program available through the Region (i.e. the area developer) for salon equipment.

• You may purchase or lease the equipment from any approved supplier. The estimates provided assume cash payment for the equipment necessary to furnish a nine station salon.

• The computer hardware and software that you must purchase is estimated to be between $1 and $4,000 of this amount.

8.  Other Equipment, Fixtures, and Furnishings:  $4,000 to $8,000

• You must purchase certain equipment from various approved vendors other than Fantastic Sams Franchise Corporation (FSFC) or the Region, including training tapes, price board, washing machine and dryer, manuals, signage, and a POS/computer system.

9.  Salon Supplies – Non Technical (60 day supply):  $1,500 to $3,000

10.  Salon Identity and Graphics Kit:  $1,000 to $2,000

11.  Regional Advertising Fund:  $2,000

12.  Advertising (first 90 days):  $5,000 to $10,000

• The franchisor recommends that, on a continuing basis, you spend not less than 5% of your gross revenues toward advertising, in addition to the NAF Fee. The franchisor also recommends that an additional amount be spent on advertising in the first 90 days of operation. These payments are made to local media suppliers such as newspapers, radio, television, or direct mail.

13.  Working Capital (additional funds):  $15,000 to $25,000

• The amount you must have available for working capital is an estimate of the first three months reserves for ordinary, extraordinary, and miscellaneous expenses you may have in your salon. For example, there will be salon employees whose salary levels will be negotiated between you and the employees.

• Additional working capital may be required until salon revenues exceed expenses incurred.

14.  Additional Funds – 3 Months:  $20,000 to $30,000

• You must maintain the minimum insurance coverages set forth in the License Agreement. For all types of insurance, you must include FSFC and the Region as additional insureds, as well as furnish the franchisor with proof of such coverage every twelve months.

• Insurance fees are paid to an insurance agency, person, or entity chosen by you.

15.  Total:  $106,895 to $194,300

• The lower total initial investment set forth above assumes you lease your salon equipment. Payments to FSFC and the Region are not refundable. Payments made to other suppliers are generally not refundable unless you negotiate refund terms and conditions with a particular supplier.