Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Pak Mail Franchise Costs (2016 FDD)

by Franchise Chatter on February 6, 2015

in Franchise Costs, Shipping Franchise

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Pak Mail Photo from proVanceTek

This post was updated on January 6, 2017 to reflect information from Pak Mail’s 2016 FDD (Item 7).

Detailed Estimates of Pak Mail Franchise Costs Based on Item 7 (Estimated Initial Investment) of Pak Mail’s 2016 Franchise Disclosure Document

1.  Initial Franchise Fee:  $29,950

  • If you qualify and are approved to operate a second or subsequent Pak Mail Center, you may pay a discounted initial franchise fee.
  • When you sign a Development Agreement to open four or more Centers, you must pay an initial franchise fee of $29,950 for the first Pak Mail Center plus a development fee equal to $10,000 multiplied by the number of additional Centers to be developed, in a geographic territory reserved for your development of Centers.
  • Pak Mail offers discounted initial franchise fees if you purchase the rights to develop more than 4 Centers.
  • Pak Mail applies the nonrefundable development fee paid toward the initial franchise fee for the second and each additional Center to be developed, the balance of which is paid at a later date.

2.  Initial National Convention Fee:  $1,000

3.  Build-Out Program (Retail Center):  $56,500 to $60,500

  • If you do not already own or lease a suitable location for the Center, then you will need to purchase or lease suitable facilities. A typical Franchised Location has 1,200 to 1,400 square feet of space; however, other sizes may be acceptable.
  • This is the cost for constructing the leasehold improvements and furnishing the Center in accordance with the Build-Out Program, including counters, tables, storage areas, carpeting, tile, graphics, and painting.
  • If your space is larger than 1,400 square feet, your costs to construct the improvements and to furnish the Center will likely be higher.
  • This estimate assumes an unimproved retail space exists in “vanilla condition” and no demolition or major construction is necessary. If demolition or major construction is required, your costs may be higher than the estimate in the chart.
  • You may choose to include 24-hour access to mailboxes as part of your leasehold improvements, but Pak Mail does not require or recommend it. If you choose to include 24-hour access to mailboxes, Pak Mail estimates your costs will increase by $3,000 to $6,000.
  • None of these payments are refundable.
  • For mailboxes and accessories, career apparel, logo door mats, interior and exterior signs, floor plans, furniture and fixtures, a dunnage dispenser, paint, carpet and tile, rules posters, lightbulbs, and a stamp set, the franchisor estimates your Build-Out Program expenses will range from $56,500 to $60,500.
  • The Build-Out Fee will be paid to Pak Mail in consideration for its completion of the Center development in accordance with the Build-Out Program. Pak Mail may delegate the build-out of your Center to an area franchisee.
  • If you operate your Center as a Warehouse Model, the total cost of the Build-Out Program ranges from $29,500 to $52,500.

4.  Networked POS System:  $8,500 to $10,500

  • Subject to price increases, this is the cost to purchase the required networked POS System on which Pak Mail has installed the Program and additional software.
  • You must pay the cost of the hardware components when you order the POS System. These costs are subject to change.
  • You must also pay an annual fee to Pak Mail’s designated provider, the licensor of the Program, to update and maintain the Program.

5.  Website:  $300 to $360

  • Pak Mail requires that you establish and maintain a website for your Center that is linked to its website.
  • Pak Mail estimates that the total initial cost of creating your website and registering a domain name will range from $300 to $360.
  • You must pay this amount to Pak Mail and it will pay its designated supplier on your behalf.

6.  Equipment and Office Supplies:  $1,225 to $2,650

  • This item includes the estimated costs for equipment and initial office supplies for a typical Center. These costs include renting or buying a photocopier, subscribing to Endicia Online postage metering system, purchasing a back office laptop computer, including software that meets Pak Mail’s specifications, and acquiring related equipment.
  • None of these payments are refundable.

7.  Vehicle:  $1,000 to $10,000

  • Pak Mail requires that you purchase or lease a van, box truck, trailer, or other similar commercial vehicle. The vehicle is used to pick up and deliver freight from customers and transport freight to carrier facilities.
  • Pak Mail estimates the cost to purchase a used vehicle will range from $1,000 to $10,000.
  • Pak Mail estimates the annual insurance premium to be $500 to $3,400, although this amount will vary based on automobile insurance rates in your area and other factors.

8.  Opening Inventory and Supplies:  $4,575 to $7,750

  • This item includes the estimated costs for initial box inventory, retail planograms inventory, greeting card program (optional), and control tickets (imprinting optional).

9.  Security Deposits, Utility Deposits, Business Licenses:  $2,500 to $4,000

  • This item includes a lease security deposit and utility deposits, and any other business or vehicle license or deposits that may be required.

10.  Initial Marketing Materials:  $1,500

  • You pay the cost of the initial marketing materials to Pak Mail or to the Advertising Fund, as it designates, during your initial training program. This payment covers your marketing materials inventory for your initial operation.
  • You will incur additional advertising expenses in your first year of operation. Pak Mail includes an allowance for the advertising expenses for a Center under “Additional Funds” described below.

11.  Additional Funds – 3 Months:  $25,000 to $40,000

  • This estimates your pre-operational expenses, which Pak Mail has not listed above, as well as additional funds necessary for the first three months of your business operations.
  • This item includes a variety of expenses and working capital items during your start-up phase, such as:  legal and accounting fees; training expenses; insurance premiums; advertising, promotional, and grand opening expenses and materials; employee salaries; rent; and other miscellaneous costs. However, this item excludes your salary.
  • You must pay for all travel and living expenses you incur while you attend the initial training program.
  • These figures are estimates and Pak Mail cannot guarantee that you will not have additional expenses starting the business.

12.  Total Estimated Initial Investment:  $132,050 to $168,210

  • Pak Mail relied on its 32 years of experience in the industry to prepare these figures.

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