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

• As a Dogtopia franchisee, you will operate a business that offers services for dogs such as daycare, boarding, and training, and that offers related products for retail sale.

1.  Initial Franchise Fee:  $38,250 to $42,500

• If you are in good standing under your first franchise agreement and sign one or more additional franchise agreements, or if you are a qualified veteran and qualify for the Dogtopia franchise, the franchisor will reduce the initial franchise fee by 10%.

2.  Real Estate/Rent:  $9,000 to $24,000

• You must lease or otherwise provide a suitable facility for the operation of the franchised business. A Dogtopia Business will generally range from 5,000 to 8,000 square feet.

• Lease costs will vary based on square footage, cost per square foot, and required maintenance costs. You may be required to pay a security deposit equal to one month’s rent in advance.

• The estimate includes rent for the first 3 months of operation of the franchised business. These costs are typically not refundable, but a security deposit may be refundable in certain circumstances.

3.  Utilities:  $2,000 to $5,000

• The estimate shown includes utility charges for the first 3 months of operation of the franchised business and, if applicable, utility deposits.

• If you are a new customer of your local utilities, you will generally have to pay deposits in connection with services such as electric, telephone, gas, and water. The amount of deposit will vary depending upon the policies of the local utilities.

4.  Leasehold Improvements:  $135,000 to $300,000

• To convert an existing facility into a Dogtopia Business, it must be renovated according to the company’s standards and specifications. The cost of the leasehold improvements will vary depending upon the size and location of the franchised business, local wage rates, and the cost of materials.

• The low estimate assumes that your landlord will provide a partial build-out allowance. The high estimate reflects the potential need to add an HVAC system, or occupying a new “warm lit shell” location which entails full mechanical, electrical, and plumbing costs.

5.  Insurance:  $600 to $2,000

• Factors that may affect your cost of insurance include the size and location of the franchised business, value of the leasehold improvements, number of employees, and other factors.

• The estimate does not include workers’ compensation insurance, which will vary based on payroll and experience rating.

6.  Computer Hardware, Software, Office Equipment, and Supplies:  $8,000 to $12,000

• You must purchase general office supplies, including stationery and business cards and typical office equipment. You also must purchase a webcam system.

7.  Expenses During Initial Training:  $0 to $3,500

• The cost of initial training for 2 people is included in the initial franchise fee, but you are responsible for your trainees’ transportation and expenses for meals and lodging while attending training.

• The cost will vary depending on the number of people attending, how far you travel, and the type of accommodations you choose.

8.  Signage:  $3,000 to $6,000

• This range includes the cost of all exterior signage used in the franchised business. The signage requirements and costs will vary based upon the size and location of the franchised business, local zoning requirements, and local wage rates for installation, among other things.

9.  Furniture, Fixtures, and Equipment:  $10,000 to $14,000

• You must purchase and/or lease and install certain fixtures, furniture, and equipment to outfit and equip the franchised business according to the company’s specifications. The cost of the furniture, fixtures, and equipment will vary according to local market conditions, the size of the premises, suppliers, and other related factors.

10.  Initial Inventory:  $5,000 to $10,000

• You must purchase an initial inventory of supplies and products for retail sale, such as dog food, collars, leashes, and toys from the franchisor or from its buying cooperative should one be established.

• The franchisor will provide you with a required initial inventory list and a standard planogram, and will assist in customizing the layout of the retail space based on the size and layout of your location.

11.  Grand Opening:  $10,000

• You must spend a minimum of $10,000 on Grand Opening Marketing and Advertising during the first 3 months of operation. You may choose to spend more.

• Factors that may affect the actual amount you spend include the type of media used, the size of the area you advertise to, local media cost, location of the franchised business, time of year, and customer demographics in the surrounding area.

• About $5,000 of this amount (plus the cost of shipping to your location) is for the in-store marketing kit that you must purchase from the franchisor about 1 month before you open.

12.  Site Evaluation:  $0 to $3,750

• The franchisor has made arrangements with a qualified real estate broker with whom it has negotiated rates to assist you with demographics, site selection, lease negotiation, and obtaining zoning variances, as necessary. You are not required to use this real estate broker, but there is no additional fee to you if you use their services.

• If you choose to perform these services yourself or use another company to perform these services, you must pay the designated real estate broker a site evaluation fee (currently, $3,750) to ensure that the demographics, site selection criteria, lease terms, and zoning variances for your proposed site comply with the company’s required specifications.

13.  Licenses and Permits:  $1,000 to $2,500

• Local government agencies typically charge fees for such things as construction permits and operating licenses. Your actual costs may vary from the estimates based on the requirements of local government agencies.

14.  Legal and Accounting:  $1,500 to $3,500

• You will need to employ an attorney, an accountant, and other consultants to assist you in establishing the franchised business. These fees may vary from location to location depending upon the prevailing rates of local attorneys, accountants, and consultants.

15.  Additional Funds (3 months):  $30,000 to $40,000

• The franchisor recommends that you have a minimum amount of money available to cover operating expenses, including employees’ salaries, for the first 3 months that the franchised business is open. However, it cannot guarantee that its recommendation will be sufficient. Additional working capital may be required if sales are low or operating costs are high.

16.  Total:  $253,350 to $478,750

• In compiling this chart, the franchisor relied on its and its affiliates’ combined industry experience and over 10 years of experience in operating a dog daycare business and managing multiple locations. The amounts shown are estimates only.