Franchise Costs: Detailed Estimates of Engineering for Kids Franchise Costs (2015 FDD)

This post was updated on August 17, 2015 to reflect information from Engineering for Kids’ 2015 FDD (Item 7).

Detailed Estimates of Engineering for Kids Franchise Costs Based on Item 7 (Estimated Initial Investment) of Engineering for Kids’ 2015 Franchise Disclosure Document

1.  Initial Franchise Fee:  $11,250 for Half-Territory; $22,250 for Standard Territory

2.  Rent:  $0 to $2,500 for Home Based Business (HBB); $7,500 to $15,000 for Center Based Business (CBB)

• If you operate your Franchised Business as a Home Based Business, it can be run from an office located in your home or another location that you may wish to use for that purpose. You are not required to lease space to serve as an office, and Engineering for Kids assumes that you will not do so.

• As to the Programs you will provide, you will need to find and secure suitable sites to serve as your Third Party Sites. Third Party Sites may include, among other locations, public schools, private schools, preschools, daycare centers, and recreational centers.

• For some of these facilities, you may not have to pay a fee to offer a Program in such locations. Some locations may charge you a fee for using their facilities. The fees will vary depending on the arrangements you negotiate and may include hourly charges or fees based on the number of students who enroll in your Programs at that facility, or on the amounts that you collect from those students.

• If your Franchised Business will be a Learning Center Based Business, you must identify and secure a suitable site at which to develop and operate your Engineering for Kids location. The franchisor expects an Engineering for Kids Location to occupy approximately 1,200 square feet of activities/open space, with 3/4 as front of the house and 1/4 as back of the house.

• Engineering for Kids Center Locations can be located in strip shopping centers, shopping malls, free-standing units, and other venues in downtown commercial areas and in residential areas. The figures in the table are based on the estimated range from $15 to $30 per square foot per year, and consist of one month security deposit, one month pre-opening rent, and the first three months’ rent — for a total of five months’ rent.

• These estimates assume that the location for the Engineering for Kids Center Location will be a leased, improved, unfurnished commercial space.

3.  On-Site Location Review:  $0 for HBB; $0 to $500 for CBB

• If you will operate a Learning Center Based Business, you must identify the physical site for your Engineering for Kids Center Location. The franchisor will review your proposals for your Location. The franchisor is not required to conduct an on-site evaluation of the proposed Location, but it may do so if it deems it advisable. If the franchisor conducts an on-site evaluation, it has the right to charge you for that on-site evaluation, which amount will be its actual costs (but not less than $500).

4.  Leasehold Improvements:  $0 for HBB; $10,000 to $15,000 for CBB

• If you operate your Franchised Business as a Home Based Business, you will not have a location devoted solely to operating Programs, and lease improvements will not be necessary. If you operate as a Learning Center Based Business, you will incur costs for leasehold improvements.

• Leasehold improvement costs include floor covering, wall treatment, counters, ceilings, painting, window coverings, electrical, carpentry and similar work, and architect’s and contractor’s fees.

5.  Furniture, Fixtures, and Equipment:  $0 to $500 for HBB; $5,000 to $7,500 for CBB

• These amounts include the furniture needed for the classroom, such as desks, chairs, tables. Also included is shelving and the equipment necessary for the core class curriculum that you must use.

• If you operate a Home Based Business, the cost estimates reflect that you are using a school or community center space where you will not need to purchase furniture.

6.  Office Equipment and Supplies:  $1,150 to $3,700

• You must lease or purchase various office equipment and supplies for the operation of an Engineering for Kids Business, including a computer, printer, facsimile machine, scanner, telephone, internet connection, related miscellaneous items, and software and related merchant and credit card processing gateway services (these will be part of a website interface that customers will use to sign up and pay for classes with your Franchised Business).

7.  Opening Inventory and Supplies:  $5,000 to $9,000

•  This includes consumables and non-consumables needed to teach your Programs for the first three months.

8.  Classroom Laptop Computers:  $2,600 to $4,500

• This includes a set of 10 classroom computers needed for curriculum fields that require computer use.

9.  Initial Marketing Campaign:  $1,000 minimum

• The franchisor recommends that you spend at least $1,000 on Initial Marketing Activities during the first 3 months of operation of the Engineering for Kids Franchise.

10.  Training Expenses:  $900 to $1,500

• This estimate is for out-of-pocket costs for travel, food, and lodging costs for up to 2 people to attend 5 days of training, and the costs are paid to the providers of those services.

11.  Insurance (3 months):  $200 to $500

• You must obtain and maintain certain types and amounts of insurance. The estimate contemplates insurance costs for 3 months.

12.  Business Licenses:  $50 to $200

• The estimate is for certain business licenses that you will need to obtain to operate the Franchised Business, including state incorporation, and state and local business permits.

13.  Professional Fees:  $500 to $2,000

• You may need to employ an attorney, accountant, and other consultants. Legal and accounting fees may include incorporating your company and setting up its books and records, and reviewing the franchise documents.

14.  Utility Deposits:  $0 for HBB; $0 to $500 for CBB

15.  Technology Fee (3 months):  $225

16.  Additional Funds (3 months):  $4,000 to $10,000

• Additional Funds is an estimate of the funds needed to cover business (not personal) expenses during the first 3 months of operation of an Engineering for Kids Business. You will need capital to support ongoing costs of your Franchised Business such as payroll, utilities, taxes, loan payments, and other expenses.

17.  Total Estimated Initial Investment:  $26,875 to $46,875 for Half-Territory HBB; $38,125 to $58,125 for Standard Territory HBB; $49,375 to $82,375 for Half-Territory CBB; $60,625 to $93,625 for Standard Territory CBB

• Engineering for Kids relied on its prior experience in the business in compiling these estimates. These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses.