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Franchise Costs: Detailed Estimates of Gymboree Play & Music Center Franchise Costs (2014 FDD)

by Franchise Chatter on February 26, 2015

in Child-Related Franchises, Franchise Costs

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Gymboree Play and Music from tellgymbo.com

Detailed Estimates of Gymboree Play & Music Center Franchise Costs Based on Item 7 (Estimated Initial Investment) of Gymboree’s 2014 Franchise Disclosure Document

1.  Initial Franchise Fee:  $45,000

2.  Lease Rental and Deposits (3 months rent):  $3,000 to $15,000

  • You are responsible for locating, negotiating, and obtaining your own lease. Estimated lease costs are based upon Gymboree’s own experience and that of its franchisees.

3.  Broker Commissions, Key Money for Real Estate:  $0 to $2,000

  • The landlord of the premises may require that you pay “key money” in an indeterminable amount in order to secure a lease, especially in desirable locations or when vacancies are low.
  • It is extremely difficult to quantify the amount of any key money. In Gymboree’s experience, you should be able to find a suitable location that does not require payment of any key money.

4.  Construction, Architectural Fees, Related Expenses:  $0 to $75,000

  • Leasehold improvements and related build-out costs, including fixtures, will be approximately $0 to $7,500, depending upon the existing condition of the approved location, local market conditions, and the cost to make any required tenant improvements.

5.  Equipment:  $46,208 to $49,700

  • You must purchase certain equipment from Gymboree at an approximate cost of $46,208 to $49,700, depending on the size of your Play & Music Center.
  • Actual costs depend on shipping charges and your decision to purchase optional equipment. Estimated shipping costs and taxes are not included in the above estimated costs; actual shipping costs will depend on the delivery destination and the amount of equipment actually purchased.

6.  Decor and Signage:  $4,000 to $9,000

  • You must purchase and install a decor package and indoor and outdoor signs as further described in the Franchise Agreement and Operations Manual.

7.  Opening Inventory:  $10,200 to $12,000

  • The required opening inventory includes print and audio/visual materials; toys, music, apparel, and other consumer products; and program aids for all mandatory programs.
  • Estimated shipping costs are included in the above estimated costs; actual shipping costs will depend on the delivery destination and the amount of product actually purchased.

8.  Pre-Opening Salaries and Training (travel and living expenses):  $250 to $4,000

  • You will incur salary, travel, and lodging expenses and related costs for yourself and your personnel in connection with initial training.
  • You will need to arrange for transportation, lodging, and food for yourself and any additional employees, and pay wages to any employees who attend initial training with you. Your actual costs will depend on, among other things, the distance you must travel and the type of accommodations you choose.

9.  Office Equipment and Supplies:  $1,800 to $7,900

  • Gymboree estimates that you will incur expenses of between approximately $100 and $600 to purchase an initial quantity of office supplies, including stationery.
  • You will also incur expenses of between approximately $1,700 and $7,300 for the installation and purchase or lease of telephones and answering equipment, fax machine, computer, printer, and software.

10.  Insurance:  $1,900 to $3,000

  • You will need to obtain the necessary insurance required by the Franchise Agreement before opening your Center site. The cost of insurance may increase in future years depending on the number of enrollees and/or revenues at your Play & Music Center.

11.  Utility Deposits:  $0 to $250

  • Gymboree estimates that you may need to provide deposits for utilities. The amount of such deposits will vary depending upon the practices of the utility companies and your landlord.

12.  Professional Fees:  $1,000 to $5,000

  • You should employ an attorney, accountant, or other professional consultants to assist you in connection with your purchase of the franchise.

13.  Music Rights:  $450 to $600

  • The ASCAP and BMI music rights fees are collected by Gymboree and then paid directly to ASCAP and BMI to cover your use of the music played at your location. The ASCAP license fee is due in January and BMI is due in September of each year.

14.  Additional Funds for First 3 Months:  $30,000 to $45,000

  • You will need additional funds in the form of working capital to support ongoing expenses, such as payroll and utilities, to the extent that these costs are not covered by revenue.
  • These amounts are only an estimate, and there is no assurance that additional funds will not be necessary during this initial start-up phase or afterwards.

15.  Total:  $143,808 to $273,450

  • These figures are estimates only. Gymboree does not, and cannot, guarantee that you will not have other categories of expenses, or additional expenses, in opening your Play & Music Center.

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