Franchise Costs: Detailed Estimates of ZIPS Dry Cleaners Franchise Costs (2019 FDD)

Updated September 25, 2019.

Detailed Estimates of ZIPS Dry Cleaners Franchise Costs Based on Item 7 (Estimated Initial Investment) of ZIPS Dry Cleaners’ 2019 Franchise Disclosure Document

1.  Initial Fees – Development Fee and Initial Franchise Fee:  $30,000 to $40,000 (per Franchised Business)

• The Development Fee is $10,000 per Franchised Business and is payable only if you have entered into a Development Agreement with ZIPS Dry Cleaners.

• The Initial Franchise Fee of $30,000 must be paid when the Franchise Agreement is signed.

• If you qualify for the VetFran Program, ZIPS Dry Cleaners will reduce by 20% the Initial Franchise Fee.

2.  New Store Marketing:  $10,000

• During the period beginning 90 days before the scheduled opening of the Franchised Business and continuing for 120 days after the Franchised Business first opens for business, you must conduct new store opening advertising for the Franchised Business that has been approved by ZIPS.

3.  Real Property/Rent:  $10,000 to $40,000

• You must lease or purchase a suitable facility for the operation of the Franchised Business. Typically, a ZIPS Dry Cleaners Business requires approximately 2,750 to 3,600 square feet of space.

• The estimated cost range to enter into a lease agreement includes the first month’s rent and a security deposit equal to one month’s rent.

• Estimated rental costs for an additional 5 months are included with the category “Additional Operating Funds.”

• ZIPS Dry Cleaners cannot estimate the cost to purchase a suitable facility.

4.  Utility Deposits:  $0 to $6,000

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

5.  Leasehold Improvements:  $250,000 to $400,000

• The cost of the leasehold improvements assumes the space is tenant ready, which ZIPS considers to be the “vanilla box” stage.

• Your actual costs for this item may be reduced by contributions or reimbursements agreed to by the landlord. The landlord’s willingness to provide tenant improvements and the form in which it is provided will vary.

6.  Architectural and Engineering Fees:  $19,000 to $35,000

• This range is for the cost for you to take the generic layout that ZIPS provides and have that layout reviewed by a licensed architect, have the architect provide a site-specific layout, and have a set of construction documents, including mechanical, electrical, and plumbing drawings, prepared by the architect for the Franchised Business.

7.  Construction Management Services:  $0 to $20,000

• Construction management services include project scheduling, coordination with general contractor and third-party vendors and suppliers, budget tracking, bid solicitation and review, assessment of quality control, project status reviews, and disbursement of project funds.

8.  Furnishings, Fixtures, Marketing Materials, Supplies, and Other Branded Items:  $13,000 to $17,000

• You will be required to purchase and install fixtures, furniture, items of decor, marketing materials, supplies, and other branded items necessary to outfit and operate your Franchised Business, according to ZIPS’ specifications, including the counter stations, lighting, and other items. The cost of these items includes sales tax at the rate of 5%.

• You may be able to lease from or finance through a third party a portion of these purchases.

9.  Insurance:  $3,000 to $7,000

• Factors that may affect your cost of insurance include the location of the premises, value of the leasehold improvements and equipment, number of employees, and history of claims.

10.  Signage:  $20,000 to $25,000

• This range includes the cost of all signage used in the Franchised Business and sales tax at the rate of 5%. The typical sign package includes exterior channel letters signage, interior light boxes with graphics, vinyl applied window graphics, pylon signage, and any other signage required by the Sign Manual.

11.  Point of Sale System/Technical Equipment:  $40,000 to $50,000

• This item also includes the server, computer hardware, digital surveillance system, alarm system, wall mounted televisions, telephones, printers, scanners, and sales tax at the rate of 5%

12.  Software:  $7,500

• ZIPSoft will license to you the ZIPSoft Software and you must pay the ZIPSoft Software Initial License Fee. The Fee is payable with the Initial Franchise Fee.

13.  Office Equipment and Supplies:  $1,200 to $4,000

• You must purchase general office supplies and purchase or lease office equipment including a safe, lockers, and other items. Sales tax at the rate of 5% is included.

14.  Dry Cleaning/Laundry Production Equipment and Installation:  $400,000 to $475,000

• You must purchase or lease dry cleaning/laundry production equipment for your on-premises physical plant. The range of costs represents the estimated purchase price and cost of installation of the equipment, including the machines, conveyors, rail systems, estimated freight, and sales tax at the rate of 5%

15.  Initial Production Supplies:  $10,000 to $20,000

• You will need to purchase an initial inventory of dry cleaning and laundry supplies. Sales tax at the rate of 5% is included.

16.  Training:  $500 to $30,000

• You must pay any travel expenses, living expenses, wages, and other expenses incurred by you and your employees while attending ZIPS’ training programs. The total cost will vary depending on the number of people attending, how far you travel, and the type of accommodations you choose.

17.  Licenses, Permits, and Professional Fees:  $1,500 to $13,500

• You should check with the relevant regulatory agencies to identify costs for required building permits, impact fees, taxes, bonds, licenses and other fees, which can vary significantly depending on the location.

• These figures also represent the estimated costs of engaging an attorney or other business professionals to review the disclosure document and the accompanying agreements, assist you in organizing a business entity, and help you obtain required licenses and permits.

18.  Additional Operating Funds – 6 Months:  $200,000 to $250,000

• These figures are an estimate of the additional funds that you may require for certain expenses during the initial period, which ZIPS considers to be 6 months after opening.

• This estimate does not include payments for, among other things, taxes, loan payments (including interest), depreciation, Local Store Marketing obligations, National Marketing Fund contributions, Regional Marketing Fund contributions, ongoing software fees, and royalty fees.

• This estimate does include the following expenses: payroll (but not for the owner), insurance premiums, rent, cost of supplies, and payments to utility companies.

• These figures are estimates and ZIPS cannot guarantee that you will not have additional expenses starting the business.

19.  Total Estimated Initial Investment:  $1,015,700 to $1,450,000

• This is an estimate of your initial investment and is based on ZIPS’ estimate of average costs and market conditions prevailing as of the date of the Disclosure Document and is based on ZIPS’ and its affiliates’ experience.