Detailed Estimates of Lodie’s Shaved Ice Franchise Costs Based on Item 7 (Estimated Initial Investment) of Lodie’s Shaved Ice’s 2014 Franchise Disclosure Document

• The franchisee will operate a business specializing in shaved ice products, ice cream, frozen or semi-frozen beverages and treats, toppings, and related products under the marks “Lodie’s” and “Lodie’s Shaved Ice Shack.”

1.  Initial Franchise Fee:  $15,000

• The Initial Franchise Fee is $15,000. If you already own and operate a Lodie’s Shaved Ice Business, your Initial Franchise Fee is $12,000.

2.  Lease Deposit and Rent:  $100 to $500

• This estimate is based on historical numbers for the Summer Snow (affiliate) location. Lease deposit often requires first and last months’ rent for a short-term lease.

3.  Vehicle/Trailer:  $16,000

4.  Architect Fees and Improvements/Construction/Interior Design: Amount Not Specified

• When a site has been selected, Lodie’s Shaved Ice will provide you with layout, drawings, and design of a typical Lodie’s Shaved Ice Business.

• The cost of construction, improvements, or buildings varies widely by the size of the space, the existing improvements, and local construction rates.

• Until a specific site is located and evaluated, a reliable estimate of costs cannot be projected. Sometimes, you may receive a construction allowance from the landlord or you may lease a location which was already built out as a restaurant and if so, the costs may be reduced accordingly.

• Construction site improvements may include installation of utilities necessary for operation.

5.  Signage:  $100 to $500

6.  Initial Inventory:  $1,600 to $1,700

• These costs include your initial inventory of the food and beverage products you will sell at your Business, including the cost of the products that you buy from Lodie’s Shaved Ice or its affiliates.

7.  Equipment, Furniture, Fixtures, Smallwares, Uniforms:  $6,900 to $7,600

• This estimate includes 1 shaved ice machine at approximately $2,500 (minimum amount for a typical size Lodie’s Shaved Ice Business), chest freezers, refrigerators, registers, and other equipment used in operating the Business and the furniture, fixtures, smallwares, wall decor, and uniforms for the Business and your employees.

• The costs shown are for all new equipment. The cost is turn-key, including installation.

• Also included is the POS system that is described in greater detail in Item 11.

8.  Licenses, Dues, Deposits, Etc.:  $1,100 to $1,200

• These amounts represent the business license and estimated utility deposits and sales tax deposits. The amount of your actual deposits will vary depending on the size of your Business, the number of utility companies that require a deposit, and the state in which your Business is located and its regulations concerning sales tax deposits.

• Usually, a landlord will require you to pay all utilities servicing your Business. Typically, utility providers require a deposit equal to 1 month’s average charge for that utility.

9.  Travel and Living Expenses While Training, Per Person:  $1,000 to $1,500

10.  Office Equipment:  $0 to $50

11.  Professional Fees:  $300 to $500

12.  Insurance:  $500 to $1,500

• These amounts represent 100% of the annual premium for the required insurance, including statutory workers’ compensation deposits your state may require. The type of insurance you are required to maintain is described in Section IX of the Franchise Agreement.

• Typically, the annual premiums paid to your insurance company will range from $500 to $1,500 per year. The amount of workers’ compensation deposits will vary depending on the state in which your Business is located.

13.  Additional Funds – 4 Months:  $10,000 to $12,000

• This item estimates your expenses during the initial period of operation of the Business (other than the items identified separately in this table). These expenses include estimated rent, payroll costs, benefits, utilities, additional inventory requirements, supplies, etc. but do not include Royalty Fees, Advertising Fees, or an owner’s draw or salary.

• These figures are estimates and you may have additional expenses in order to start the business. Your costs will depend on factors similar to these:

• how closely you follow Lodie’s Shaved Ice’s methods and procedures;
• your management skill, experience, and business acumen;
• local economic conditions;
• the local market for your products and services;
• the prevailing wage rate;
• competition; and
• sales level reached during the initial period.

14.  Grand Opening Advertising:  $100 to $300

15.  Total:  $52,700 to $58,350

• Costs and expenses can vary depending on factors like local real estate values, cost of labor, and supplies.

• These figures were based on the experience of the shaved ice business operated by Lodie’s Shaved Ice’s affiliate in the Eau Claire, Wisconsin metropolitan area since 2010, and the expenses may differ in other parts of the country.

• Except as described above, none of the fees listed in this Item are refundable.

• Your financial condition and arrangements negotiated by you, and the business decisions made by you, will also affect these costs.