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Franchise Costs: Detailed Estimates of Children’s Lighthouse Learning Centers Franchise Costs (2016 FDD)

by Franchise Chatter on July 30, 2014

in Childcare Franchise, Franchise Costs

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Children's Lighthouse Learning Center Photo

This post was updated on February 28, 2017 to reflect information from Children’s Lighthouse Learning Centers’ 2016 FDD (Item 7).

Detailed Estimates of Children’s Lighthouse Learning Centers Franchise Costs Based on Item 7 (Estimated Initial Investment) of Children’s Lighthouse Learning Centers’ 2016 Franchise Disclosure Document

For Leased Centers

1.  Franchise Fee:  $70,000

2.  Real Estate and Improvements:  Amount Not Specified

  • If you lease your Learning Center, you may have to pay a security deposit equivalent to 2 to 3 months’ rent. Rent is estimated to be approximately $156,000 to $276,000 per year, depending on factors such as the location of the property and your personal credit worthiness.
  • No dollar amount for leasehold improvements is included in this line item. Children’s Lighthouse’s business model dictates that the real estate developer pays for all build-out and/or leasehold improvement costs.

3.  Utility and Security Deposits:  $4,000 to $6,000

4.  Real Estate Fee:  $15,000

  • The real estate fee covers the cost of Children’s Lighthouse’s proprietary architectural plans for use in building your Learning Center. This fee is also paid to Children’s Lighthouse in return for providing information and counsel to you in helping you identify potential locations that meet its general standards, taking into account traffic patterns, size, layout, and other characteristics, including lease terms.
  • The information provided to you will include, in part, an analysis of demographic studies, competitors in the market, review of licensing and zoning requirements, and general compliance with state and local regulations which may help you prepare a comprehensive business plan to give to lenders.

5.  Furniture, Fixtures, and Equipment:  $203,500 to $278,500

  • These amounts include costs for tables, chairs, lighting fixtures, cabinets, decor items, and curriculum required for the Learning Center; costs for computer hardware and software system; and for a security system. These figures are Children’s Lighthouse’s best estimate based on equipment costs and financing conditions in several metropolitan areas.
  • These amounts include interior and exterior signage, including a pole or monument sign, as well as the cost of a Children’s Lighthouse facade. The cost of signage may vary significantly depending on the location of the Learning Center, landlord and municipal requirements, and market conditions.

6.  Playground Equipment:  $85,000 to $175,000

7.  Financing Costs:  $13,000 to $16,000

  • This is an estimate of finance charges and SBA charges you may incur prior to and at the closing of your loan. There may be additional costs and expenses incurred in obtaining financing imposed by your lender.

8.  Administration Assistance Fee:  $10,000

  • This fee covers Children’s Lighthouse’s transportation, lodging, and food expenses that it incurs when it provides you assistance in opening your Learning Center. Its assistance is for a period of up to 10 days.

9.  Buses:  $2,500 to $90,000

  • You must use a bus that meets Children’s Lighthouse’s specifications and requirements in the operation of your Learning Center. Buses must comply with all state and federal guidelines and they can be leased or purchased.
  • Under a lease/purchase arrangement, Children’s Lighthouse estimates you will pay monthly installments of approximately $650, plus another $650 as a security deposit.
  • Likewise, if you purchase a bus, Children’s Lighthouse estimates the cost to be $45,000 per bus, and depending on your credit history and purchase terms, it estimates the monthly installment to be $500 per month, plus an initial down payment of $5,000.

10.  Additional Funds (3 months):  $170,000

  • The amounts provided will be used by you to cover costs and expenses such as rent, debt service, wages, insurance, and other occupancy costs and operating expenses during the initial three months of operations. These amounts are estimates and Children’s Lighthouse cannot guarantee that you will not have additional expenses starting the Learning Center.

11.  Promotional and Pre-Opening Expenses:  $35,000

  • You must spend at least $30,000 in promotional expenses prior to opening. Children’s Lighthouse estimates this amount will be sufficient to cover necessary pre-opening advertising and marketing materials necessary to building advance enrollments.
  • This investment also covers proprietary products (such as t-shirts, brochures, and flyers), teaching aids, and advertising and promotional materials for the first three months of operations.
  • Additionally, you must spend at least $5,000 for one post-opening grand opening event.

12.  Travel and Living Costs While Training:  $4,000 to $6,000

  • This estimate reflects the cost of two persons to attend and complete the initial training. These amounts include transportation costs, the cost of lodging and meals, employee wages (but no salary for you if you are the franchisee), and incidental expenses.
  • Your costs may be greater depending upon your distance from Fort Worth, Texas, lodging and meals chosen, and your employee wages.

13.  Professional Fees:  $2,000 to $4,000

  • These amounts are Children’s Lighthouse’s best estimate of legal and accounting fees associated with the review of the Disclosure Document and other organizational costs and expenses associated with the start-up of the Learning Center.
  • Your actual costs may vary substantially depending on the individual professionals you use and the entity structure you choose.

14.  Development Deposit:  $20,000 to $40,000

15.  Total:  $634,000 to $915,500

  • Children’s Lighthouse relied on its management team’s more than 150 combined years of experience in the childcare business to compile these estimates. Still, it cannot assure you that you will experience the same level of costs.

For Owned Centers

  • The total estimated initial investment necessary to begin operation of an owned Children’s Lighthouse Learning Center ranges from $2,781,000 to $3,998,500, inclusive of real estate improvements costs ($1,600,000 to $1,969,000) and land costs ($550,000 to $1,000,000).

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