Franchise Costs: Detailed Estimates of Dream Dinners Franchise Costs (2014 FDD)

Detailed Estimates of Dream Dinners Franchise Costs Based on Item 7 (Estimated Initial Investment) of Dream Dinners’ 2014 Franchise Disclosure Document

1.  Initial Franchise Fee:  $35,000

• Your Initial Franchise Fee is non-refundable once paid. Dream Dinners will discount the Initial Franchise Fee for a second or subsequent Store. It may also discount the Initial Franchise Fee if you are converting an existing home meal replacement business to a Dream Dinners Store.

• If you are an existing franchisee signing a renewal franchise agreement, you must pay a renewal fee of $3,000 and Dream Dinners will waive the Initial Franchise Fee.

2.  Training Expenses:  $2,500 to $5,000

• This is an estimate of travel and living expenses that two people will incur while attending Basic Management Training, the cost of which is included in the Initial Franchise Fee. You must pay all living expenses, including accommodations, food, travel, and any wages incurred during training.

• This estimate does not include tuition (Dream Dinners’ current charge is $1,000 per person) and additional out-of-pocket expenses that would apply if you send more than two people to the training program.

3.  Local Architecture and Other Permits; Business Licenses:  $10,000 to $50,000

• You will incur fees for local architectural review and approval of the initial design plans that Dream Dinners provides to you for your Store. This estimate also includes costs of other licenses and permits necessary to open your Store and start your business.

• You should obtain information from your local and state authorities about the specific legal requirements for business and professional licenses and related types of expenses in your state and local area.

4.  Grand Opening and Design Fee:  $10,000

• This amount is paid to Dream Dinners for grand opening marketing materials and the initial design plans that Dream Dinners provides to you for your Store premises. This amount does not include any expenses for final architectural design and approvals or local regulatory approvals, nor does it cover all of your grand opening costs.

5.  Leasehold Improvements:  $80,000 to $140,000

• Your initial investment for leasehold improvements will depend on the size and location of the leased premises, the type of improvements made, and the amount of usable improvements already in place at the location.

• The requirements of your local health department could cause these expenses to exceed the projected investment.

• Store space should be approximately 1,400 to 1,600 square feet, in a well-lit and secure location, with ample adjacent parking.

• Typical leasehold improvements include construction build-out, interior remodeling, painting, flooring, HVAC, electrical, design, and other improvements.

6.  Signage:  $7,000 to $15,000

• Signage includes an exterior sign, interior graphics, and various window designs identifying your Dream Dinners Store. Signage costs depend on the size and location of your Dream Dinners Store, the ability to erect a pylon sign, the particular requirements of your landlord, and local ordinances and zoning requirements.

7.  Initial Inventory:  $9,000 to $12,000

• You must open with and maintain an adequate inventory of certain food and non-food staples such as spices, dry goods, packaging (foil, resealable bags), and cleaning supplies.

8.  Merchant Account System:  $200 to $500

• You must obtain a merchant account system for credit card processing through Dream Dinners’ designated supplier. As of the date of the 2014 Disclosure Document, the supplier charges a $200 set-up fee and monthly fees based on monthly revenues and on each transaction.

9.  Insurance:  $2,000 to $3,000

• This is an estimate of the annual insurance premiums, excluding workers’ compensation coverage, which is included in “Additional Funds.”

10.  Equipment, Furniture, and Fixtures:  $80,000 to $100,000

• You must either purchase or lease certain equipment necessary to provide in-store meal assembly capabilities, including refrigerators, kitchen equipment, and other items required for meal assembly, storage, processing, and packaging in accordance with Dream Dinners’ specifications.

• Except for a microwave/convection oven, cooking equipment is not part of the recommended kitchen equipment for a Store.

• If Dream Dinners determines that additional or substitute equipment is needed because of a change in required goods or services to be offered by all franchisees, you must install new equipment within a reasonable time.

• The estimates in the chart also include the costs for purchases of furniture and meal assembly stations and other fixtures through approved or designated suppliers.

11.  Office Computer Equipment and Supplies:  $4,500 to $6,500

• You must have an office computer, printer, and software, including the then current version of Microsoft Office Professional and Quickbooks. You will need to obtain and maintain high-speed Internet access, and participate in Dream Dinners’ Intranet communications network.

• Dream Dinners reserves the right to require the purchase and installation of an in-store point-of-sale system, and the right to require that you purchase and use proprietary operating software if Dream Dinners develops it.

• The costs described in the chart do not include the cost of electrical installations or additional telephone lines which may be necessary for the operation of your computer system.

12.  Initial Advertising:  $8,000 to $10,000

• This is an estimate of your grand opening costs and related initial advertising and marketing costs in addition to the Grand Opening and Design Fee described in No. 4 above.

• Additional initial advertising costs include costs for mailing invitations, tasting parties, promotional sessions, prizes or giveaways, and other advertising and promotional activities you may conduct, with Dream Dinners’ approval.

13.  Additional Funds (3 months):  $35,000 to $70,000

• This estimates your pre-operational expenses that Dream Dinners has not listed above, as well as additional funds necessary for the first three months of your business operations. These figures are estimates and Dream Dinners cannot guarantee that you will not have additional expenses or overhead when you start the business.

• This item includes a variety of expenses and working capital items during your start-up phase, such as site selection and approval; legal and accounting fees; additional advertising and promotional expenses and materials; rent; telephones; employee salaries and workers’ compensation insurance; and other miscellaneous costs.

• This item does not include your salary or living expenses.

14.  Total Estimated Initial Investment:  $283,200 to $422,000

• These cost estimates are based on Dream Dinners affiliates’ experience operating Dream Dinners Stores since 2002 and Dream Dinners’ 12 years experience in the home meal replacement business. However, the stated range is merely an estimate.