Detailed Estimates of Online Trading Academy Franchise Costs Based on Item 7 (Estimated Initial Investment) of Online Trading Academy’s 2014 Franchise Disclosure Document
1. Initial Franchise Fee: $80,000 to $250,000 based on population and DMAs (Designated Marketing Areas)
- The range of fees begins at $80,000 and increases based upon additional population and other demographic, marketing, and economic factors of the territory.
2. Grand Opening Costs: $5,000
3. Travel and Related Expenses for Training: $5,000 to $8,000
- You must pay for your transportation, accommodations, meals, and other expenses associated with the initial training program. The initial training will take place at Online Trading Academy’s headquarters in Irvine, California and your actual expense will depend on the cost of traveling from your home to Irvine, California and the number of people you bring to training.
- Online Trading Academy reserves the right to assess a reasonable training fee not to exceed $250/day per person for training more than 3 attendees.
4. Computer, Office Equipment, Furnishings, and Related Equipment: $35,000 to $45,000
- You must purchase or lease certain computer hardware/software and related equipment for the operation of the Franchised Business. The specific quality and brand of the equipment is described in the Franchise Agreement, or the Manuals, though the source of equipment is up to you.
- The estimate assumes purchase of the equipment, although leasing would lower these investment figures.
- You must also ensure that your personnel are trained to use the Quickbooks software.
5. Real Estate Lease Fees: $10,000 to $15,000
- It may be possible that the cost of the build out may be subsidized by the landlord or paid for by the landlord and amortized over the life of the lease. You are advised to work with your real estate advisors in this respect.
- The estimate does not reflect an amount for investment in real estate or build out of your Center since you may either lease or buy business premises. Online Trading Academy anticipates that the facility will generally be leased.
- Costs reflect a lease deposit plus monthly rent through the start-up phase.
6. Inventory and Supplies: $7,000 to $9,500
7. Permits and Licenses: $3,500 to $4,000
8. Telephone Equipment and Internet Installation: $7,000 to $8,000
9. Signage, Promotional, and Marketing Materials: $7,500
- Before opening your center, or within 30 days of acquiring an existing Franchised Business if needed, you will purchase from Online Trading Academy’s approved vendor, and install, a “Franchise Start-Up Kit” which will include certain required signage, plaques, and other center merchandising and art work.
10. Legal and Accounting: $2,500 to $4,000
11. Insurance: $800 to $1,500
- You shall have in effect on the Effective Date and maintain during the term of the Franchise Agreement, insurance in the types and amounts outlined in the Manual. You must pay for all insurance premiums including comprehensive general liability insurance and workman’s compensation.
12. Establish a Live Trading Account for Education Only with Approved Broker Dealer: $5,000 to $26,000
- This Item is required to perform live trading in your Online Trading Academy classes. You must have an open Trading Account with an Online Trading Academy-approved Broker Dealer.
- At the date of this Disclosure Document, Online Trading Academy has made arrangements for its franchisees to use educational only trading platforms using sub accounts under its master agreement with its currently approved Broker Dealer.
- Online Trading Academy requires you to pay a deposit to it of $5,000 to use sub accounts under its master account, and the deposit may increase if additional accounts are opened for other asset classes.
- These arrangements are not guaranteed to continue and Online Trading Academy will make commercially reasonable efforts to maintain these arrangements throughout the term of the Franchise Agreement. If Online Trading Academy is unable to maintain this type of arrangement with a Broker Dealer, you may have to open your own account which would require a minimum of $26,000 to open, and this amount could change.
- At all times, you must work with Online Trading Academy’s approved Broker Dealers to provide live trading experience in the classroom in order that the learning experience your students receive will be uniform throughout the system.
- You may be required to sign a written agreement with the Broker Dealer.
- You may be required to pay commissions, if any, and fees for transactions in your sub accounts. Your students will not experience a loss or gain in their practice trades, but have the opportunity to experience a “real time” trading experience. This process is essential to the risk management learning experience you provide your students.
13. Additional Operating Funds for 3 Months: $150,000
- This is an estimate of certain funds needed to run your business (excluding personal expenses) during the first 3 months of operation of the Franchised Business. You will need capital to support on-going costs of your business, such as payroll, utilities, taxes, loan payments, and other expenses, to the extent that revenues do not cover business costs. New businesses (franchised or not) often have larger expenses than revenues.
- This is only an estimate and Online Trading Academy cannot guarantee that the amounts specified will be adequate.
- The estimates presented relate only to costs associated with the Franchised Business, reflect minimal employee wages, and do not cover any personal, “living” unrelated business or other expenses you may have such as royalty payments, Marketing Fund contributions, debt service on any loans, state sales and/or use taxes on goods and services, and a variety of other amounts not described above.
14. Total Estimated Initial Investment (Excluding Real Estate): $318,300 to $533,000
- Online Trading Academy relied on its experience in compiling these estimates.