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Franchise Costs 2013: Detailed Estimates of Ace Hardware Franchise Costs (2013 FDD)

by Franchise Chatter on August 31, 2013

in Franchise Costs, Retail Franchise



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Detailed Estimates of Ace Hardware Franchise Costs Based on Item 7 (Estimated Initial Investment) of Ace Hardware’s 2013 Franchise Disclosure Document

  • The franchisor’s estimates of the ranges of initial investments in Ace stores are shown in Tables 1-3 below.
  • Ace stores vary widely in size. As illustrations, a low-high range of estimates is set forth below for stores having between 5,000 and 15,000 square feet.

Start-Up Business – Leased Premises

1.  Initial Franchise Fee – Processing Charge:  $5,000

2.  Initial Franchise Fee – Capital Stock Subscription:  $5,000

Ace Hardware Franchise Photo by BACKYard Woods Explorer3.  Exterior Signage:  $2,500 to $25,000

4.  Interior Decor:  $7,000 to $14,000

5.  Leasehold Improvements – Decorating, Furniture, and Fixtures:  $8 per square foot; $40,000 to $120,000



6.  Telephone and Other Equipment:  $10,000 to $20,000

7.  Computer:  $0 to $80,000

8.  Electronic Ordering System:  $0 to $50,000

  • You are required to transmit orders electronically. If you do not already own equipment, you must purchase the equipment from a supplier of your choice; the franchisor does not sell computer equipment.

9.  Rent – First 3 Months Rent:  $3,000 to $45,000

10.  Prepaid Expenses – Security Deposit, Dues, Permits, Subscriptions, and Other Prepaid Expenses – $3,000 to $15,000



11.  Opening Inventory:  $150,000 to $600,000

  • The above assumes the Opening Inventory is purchased through Ace.

12.  Initial Supplies:  $500 to $2,500

13.  Insurance:  $2,500 to $20,000

  • Insurance purchased through Ace Insurance Agency, Inc. is refundable on an earned basis if canceled after the effective date.

14.  New Investor Retail Training:  $0 to $30,000

  • New Investor Retail Training is only required if you are a new member opening your first Ace store. If you are already a member and are opening a branch store, New Investor Retail Training is not required.

15.  Additional Funds – Working Capital for the First 90 Days:  $15,000 to $50,000

  • This estimate is for the initial working capital, or cash reserve, necessary for you to have available during the first 90 days of operation. Working capital acts as a cash flow buffer in the event operating expenses exceed initial projections due to deficient sales.
  • Ace cannot guarantee these estimates. Factors considered in formulating the need for working capital include competition, prevailing economic or climatic conditions which might exist at the time your store opens for business, and the level of sales obtained during the first 90 days of operation.
  • The working capital has been calculated by analyzing information obtained during the past 20 years by Ace and comparing them to industry averages.

16.  Total Estimated Initial Investment:  $243,500 to $1,081,500

Start-Up Business – New Construction

1.  Initial Franchise Fee – Processing Charge:  $5,000

2.  Initial Franchise Fee – Capital Stock Subscription:  $5,000

3.  Exterior Signage:  $2,500 to $25,000

4.  Interior Decor:  $7,000 to $14,000

5.  Land Purchase Costs (20% Down Payment):  $4,000 to $200,000

  • The estimated low-high range for the purchase price of land is $20,000 to $1,000,000. The amount shown is a 20% down payment for this low-high range.

6.  Building Purchase Costs (20% Down Payment):  $29,000 to $240.000

  • The estimated low-high range for the purchase price of a building is $145,000 to $1,200,000. The amount shown is a 20% down payment for this low-high range.

7.  Improvements – Construction Costs, Fixtures, Decorating, and Other Improvements:  $5,000 to $250,000

8.  Prepaid Expenses – Security Deposit, Dues, Permits, Subscriptions, and Other Prepaid Expenses – $3,000 to $5,000

9.  Telephone and Other Equipment:  $10,000 to $20,000

10.  Computer:  $0 to $80,000

11.  Electronic Ordering System:  $0 to $50,000

  • You are required to transmit orders electronically. If you do not already own equipment, you must purchase the equipment from a supplier of your choice; the franchisor does not sell computer equipment.

12.  Opening Inventory:  $150,000 to $600,000

  • The above assumes the Opening Inventory is purchased through Ace.

13.  Initial Supplies:  $500 to $2,500

14.  Insurance:  $2,500 to $20,000

  • Insurance purchased through Ace Insurance Agency, Inc. is refundable on an earned basis if canceled after the effective date.

15.  New Investor Retail Training:  $0 to $30,000

  • New Investor Retail Training is only required if you are a new member opening your first Ace store. If you are already a member and are opening a branch store, New Investor Retail Training is not required.

16.  Additional Funds – Working Capital for the First 90 Days:  $15,000 to $50,000

  • This estimate is for the initial working capital, or cash reserve, necessary for you to have available during the first 90 days of operation. Working capital acts as a cash flow buffer in the event operating expenses exceed initial projections due to deficient sales.
  • Ace cannot guarantee these estimates. Factors considered in formulating the need for working capital include competition, prevailing economic or climatic conditions which might exist at the time your store opens for business, and the level of sales obtained during the first 90 days of operation.
  • The working capital has been calculated by analyzing information obtained during the past 20 years by Ace and comparing them to industry averages.

17.  Total Estimated Initial Investment:  $238,500 to $1,596,500

Start-Up Business – Conversion

1.  Initial Franchise Fee – Processing Charge:  $5,000

2.  Initial Franchise Fee – Capital Stock Subscription:  $5,000

3.  Exterior Signage:  $2,500 to $25,000

4.  Interior Decor:  $7,000 to $14,000

5.  Decorating:  $1 per square foot; $5,000 to $15,000

6.  Other Equipment:  $0 to $10,000

7.  Computer:  $0 to $80,000

8.  Electronic Ordering System:  $0 to $50,000

  • You are required to transmit orders electronically. If you do not already own equipment, you must purchase the equipment from a supplier of your choice; the franchisor does not sell computer equipment.

9.  Opening Inventory:  $0 to $600,000

  • The above assumes the Opening Inventory is purchased through Ace.

10.  Initial Supplies:  $0 to $2,500

11.  Insurance:  $0 to $20,000

  • Insurance purchased through Ace Insurance Agency, Inc. is refundable on an earned basis if canceled after the effective date.

12.  New Investor Retail Training:  $0 to $30,000

  • New Investor Retail Training is only required if you are a new member opening your first Ace store. If you are already a member and are opening a branch store, New Investor Retail Training is not required.

13.  Total Estimated Initial Investment:  $24,500 to $856,500


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