Franchise Costs: Detailed Estimates of ZIPS Dry Cleaners Franchise Costs (2017 FDD)

This post was updated on November 29, 2017 to reflect information from ZIPS Dry Cleaners’ 2017 FDD (Item 7).

Detailed Estimates of ZIPS Dry Cleaners Franchise Costs Based on Item 7 (Estimated Initial Investment) of ZIPS Dry Cleaners’ 2017 Franchise Disclosure Document

1.  Initial Fees – Development Fee and Initial Franchise Fee:  $30,000 to $60,000 (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 must be paid when the Franchise Agreement is signed.

• If you have not entered into a Development Agreement, the Initial Franchise Fee for the second and each additional ZIPS Dry Cleaners Business is $30,000.

• If you sign a Development Agreement, the Initial Franchise Fee for each ZIPS Dry Cleaners Business that you develop under the Development Agreement will be:  $50,000 for the first ZIPS Dry Cleaners Business and $30,000 for each additional ZIPS Dry Cleaners Business.

• 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 30 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 3,400 to 4,300 square feet of space.

• The estimated cost range includes the costs to rent the facility for one month and your costs to enter a lease agreement, including 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 $1,500

• 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 on the policies of the local utility providers.

5.  Leasehold Improvements:  $250,000 to $325,000

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

6.  Architectural and Engineering Fees:  $16,000 to $27,000

• 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:  $7,500 to $16,500

• 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.

• 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. 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:  $40,900 to $47,100

• This item also includes the server, computer hardware, digital surveillance system, alarm system, wall mounted televisions, telephones, printers, and scanners.

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 $2,500

• You must purchase general office supplies and purchase or lease office equipment including a safe, lockers, and other items.

14.  Dry Cleaning/Laundry Production Equipment and Installation:  $385,000 to $420,000

• 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, and rail systems.

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

• You will need to purchase an initial inventory of dry cleaning and laundry supplies.

16.  Training:  $500 to $5,000

• 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 and Permits and Professional Fees:  $750 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:  $50,000 to $100,000

• 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:  $855,350 to $1,139,600

• 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 2016 Disclosure Document and is based on ZIPS’ and its affiliates’ experience.