Highlights of Tutoring Club’s Item 19 Financial Performance Representations (2013 FDD) – Part 2

Explanatory Notes on Expenses

Royalty Fees and Advertising Fees. For a Tutoring Center (Pro Formas 1-3), the Royalty Fee is based on 10% of gross monthly revenues shown in the tables, and the Advertising Fee is based on 1% of gross monthly revenues shown in the tables.

For an In-Home Business (Pro Forma 4), the Royalty Fee is based on 12% of gross monthly revenues shown in the tables, and the Advertising Fee is based on 1% of gross monthly revenues shown in the tables.

Rent Expense (Tutoring Centers Only). Property rentals can vary significantly among Tutoring Centers, based on a number of factors such as size, location, lease term, the local real estate market, and your negotiating ability. Any of these factors could result in your rent expenses being substantially different from those shown in the table.

Salary Expense (Tutoring Centers Only). The table includes salaries for 1 employee working a total of 16 hours per week at $18 per hour for each 25 students.

Your staffing choices and the nature of the labor market in your area could significantly affect your actual salary expenses. Likewise, if you choose to offer benefits to your employees, you will have additional expenses. The information provided also assumes that you work a minimum of 24 hours per week without pay.

Advertising Expense. The amount shown in the tables reflects the minimum amount for advertising expenses, and do not include grand opening marketing expenses. You will probably want to expend more on advertising for the best chance to grow your business.

Insurance Expense. Your insurance costs may vary due to: your location; your insurance claims history; your ability to qualify for premium discounts; and the level of insurance coverage required by your contractual obligations, such as your lease agreement.

Fuel (In-Home Businesses Only). If you have an In-Home Business, it is essential for you to have a vehicle so that you can travel to the homes of your students or to such other public places as your students may designate. Fuel expenses in Pro Forma 4 are estimated to cost $7.50 per student per month.

Your expenses may be higher if you live in an area with high fuel prices, or if you have to travel a long way to meet your students.

Maintenance. These tables do not show any expenses for maintenance. The typical Tutoring Center has minimal or no maintenance expenses, but your situation could be different.

Depreciation Expenses. These tables do not show any expenses for depreciation. You may want to consider depreciation expenses associated with the furniture, fixtures, leasehold improvements, vehicle(s) (if you have an In-Home Business), and other assets relating to your Franchised Business.

Debt Service. These tables do not include any expenses for interest or other debt service for any financing you may have. This information can vary substantially among franchisees. You should consider your own financial situation in determining the amount of any debt service expenses you may have.

Computer Expense. These tables do not include any expenses associated with any computer system maintenance or repair. You could have ongoing fees and other expenses associated with this type of equipment, such as the cost of Internet access.

Sales or Use Taxes. These tables do not include any revenues or expenses relating to the collection or payment of state or local sales or use taxes. If you collect the full amount of any applicable sales or use tax and pay the full amount to the relevant governmental offices, there would be zero net effect on the financial information in these tables.

Income and Franchise Tax. These tables do not include any provision for federal, state, or local income tax or state franchise tax.

Pro Forma 3: Monthly Revenues and Expenses for Tutoring Centers Only (Not Applicable to In-Home Businesses); $395 Monthly Tuition and $125 Testing/Registration Fee

25 Students

Revenues

To Access the Rest of This Article and Other Premium, Income-Enhancing Content, Subscribe Now or Log In.

Gain the Insider Information (and Actual Earnings Data) You Need to Make a Safe and Smart Franchise Investment. Click Here to Learn More.

Gain the Insider Information (and Actual Earnings Data) You Need to Make a Safe and Smart Franchise Investment - See more at: https://www.franchisechatter.com/register/#sthash.le7wKJKM.dpuf