Detailed Estimates of Liquid Nutrition Franchise Costs Based on Item 7 (Estimated Initial Investment) of Liquid Nutrition’s 2014 Franchise Disclosure Document

1.  Initial Franchise Fee:  $49,500

2.  Leases and Security Deposit:  $1,200 to $2,000

• Typically, the Traditional Liquid Nutrition Store will range in size from 350 to 600 square feet.

• The low estimate is based on an assumption that you will have to pay a security deposit equal to 1 month’s rent and is based on leasing a facility of 350 square feet.

• The high estimate is based on an assumption that you will have to pay a security deposit equal to 1 month’s rent and is based on leasing a facility of 600 square feet.

• These rental rates are based on national averages of $30 to $50 per square foot in gross rental cost and Liquid Nutrition has used the midpoint of this range for purposes of the estimates above.

• Major metropolitan markets and high-traffic tourist centers and airports may have significantly higher rates.

• As a general guideline, Liquid Nutrition recommends that the total occupancy cost for the Store not exceed 15% of the forecasted base case for net sales revenue.

• Estimated costs for the first 3 months of rent are included in the category “Additional Funds.”

3.  Utility Deposit:  $500

• If you are a new customer of your local utilities, you will generally have to pay deposits to obtain services, including electric, telephone, gas, and water.

4.  Leasehold Improvements:  $70,000 to $120,000

• You are required to utilize Liquid Nutrition’s designated design firm or any other company the franchisor may designate in the future for design services.

• You must use licensed professionals, including contractors, plumbers, electricians, etc. to complete the work at your Traditional Liquid Nutrition Store.

• You may use Liquid Nutrition’s designated build out and construction management firm but you are not required to do so.

• The range indicated above is based on not exceeding a build out cost of $200 per square foot, which includes a fee of $16,500 that is charged by Liquid Nutrition’s designated build out and construction management firm.

5.  Office Equipment:  $500

• You must purchase general office supplies, including stationery, business cards, and typical office equipment.

6.  Insurance:  $2,000 to $3,000

7.  Local Travel and Lodging Expenses Related to Training:  $2,000 to $2,800

• The cost of initial training is included in the franchise fee for the first 2 trainees, but you are responsible for the trainees’ expenses incurred while attending training, including transportation, meals, and lodging.

• You may send additional trainees but you must pay Liquid Nutrition its then-current tuition fee for each additional trainee, in addition to paying all expenses incurred while attending training.

8.  Computer System, POS, A/V, Alarm System, and Surveillance Equipment:  $9,000

• You must purchase a computer system, surveillance equipment, POS system, and software as further described in Item 11. Estimated costs include shipping, cabling, and installation.

9.  Signage:  $5,000 to $10,000

• This range includes the cost of all signage used in the Traditional Liquid Nutrition Store.

10.  Equipment:  $27,500 to $32,500

• You must purchase and/or lease and install furniture, fixtures, and equipment necessary to operate your Traditional Liquid Nutrition Store. Equipment installation charges are also included in this range.

11.  Grand Opening Advertising:  $5,000

• Prior to the initial opening of the Traditional Liquid Nutrition Store and during the 3 months after opening, you must spend a minimum of $5,000 on grand opening advertising for your Liquid Nutrition Store, which includes the required purchase of a grand opening package from the designated third-party provider.

12.  Licenses and Permits:  $500 to $750

• State and local government agencies typically charge fees for occupancy permits, operating licenses, and construction permits.

13.  Initial Inventory:  $6,000

• You must purchase an initial inventory of food, nutritional bars, vitamins, supplements, and ingredients for preparation of smoothies, for use in the operation of the Traditional Liquid Nutrition Store, from designated suppliers.

14.  Dues and Subscriptions:  $300 to $500

• You are encouraged to join your local Chamber of Commerce or other related trade organizations.

15.  Professional Fees:  $1,000 to $3,000

• You will need to employ an attorney, an accountant, and other consultants to assist you in establishing your Traditional Liquid Nutrition Store.

16.  Design, Architecture, Mechanical, Electrical Engineering, and Permit Application Fees:  $13,500

• This estimate includes a fee of $2,000 to cover the cost of purchasing design services from the designated supplier, which is currently payable directly to the franchisor.

• This estimate also includes a fee of $11,500 paid to the designated supplier of mechanical, architectural, and electrical engineering and related services, as well as to cover the cost of permit applications.

17.  Permit Expedition:  $0 to $1,000

• This estimate covers the cost of engaging a permit expediter should your location require you to use one.

18.  Site Survey, Pre-Construction Due Diligence Report:  $3,850

19.  Additional Funds – 3 Months:  $20,00 to $25,000

• Liquid Nutrition recommends that you have a minimum amount of money available to cover operating expenses, including additional rent, utilities, and employees’ salaries for the first 3 months that the Traditional Liquid Nutrition Store is open.

• The franchisor cannot guarantee that its recommendation will be sufficient.

20.  Total:  $217,350 to $288,400

• In compiling this estimate, Liquid Nutrition relied on its and its affiliates’ industry knowledge and experience. The franchisor cannot guarantee that you will not have additional expenses in starting the Traditional Liquid Nutrition Store.