Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Drybar Franchise Costs (2017 FDD)

by Franchise Chatter on June 13, 2015

in Franchise Costs, Salon Franchise

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Drybar Photo by PrettyKateMachine

This post was updated on May 24, 2017 to reflect information from Drybar’s 2017 FDD (Item 7).

Detailed Estimates of Drybar Franchise Costs Based on Item 7 (Estimated Initial Investment) of Drybar’s 2017 Franchise Disclosure Document

1.  Initial Franchise Fee:  $50,000

2.  Initial Software License and Set Up, and Services (3 months):  $3,175

  • This figure represents the initial software license and set up of $2,500, plus 3 months of the monthly license fee charged by the approved provider.

3.  Call Center Program; Facility Management Provider Program; and Technology Fee/Set Up Fee and Services (3 months):  $9,390

  • This figure represents a current average estimate of $2,600 per month (subject to adjustment) for the first 3 months of Call Center Program services provided by the franchisor, and $500 per month for technology services.
  • The franchisor will bill you each month after the opening of the Shop.

4.  Security Deposits:  $9,750 to $60,000

  • These figures represent a lease security deposit equal to 2 months’ rent in a typical market and utility security deposit equal to 1 month’s utility charges. Although figures in the chart equal 2 months’ rent, some landlords may require a security deposit equal to 6 months’ rent in exchange for waiving the personal guaranty requirement.

5.  Lease Payments (3 months):  $12,375 to $28,875

6.  Leasehold Improvements:  $300,000 to $750,000

  • The figures in the chart include a general contractor’s fee (generally equal to 10% to 15% of total construction costs), contractor’s insurance, materials and supplies, tools, labor and subcontractor fees (including millwork), and other costs to construct leasehold improvements conforming to Drybar’s standards, and includes the estimated costs of fixtures, permitting costs, and incorporating interior design elements.
  • These figures do not take into account any tenant improvement allowance negotiated with the landlord.

7.  Architect, Engineer, and Drawings:  $30,000 to $45,000

8.  Signage:  $8,000 to $30,000

  • The figures include the potential for multiple exterior signage, a construction barricade sign (or blackouts), awning, interior signage, and window graphics/decals.

9.  Furniture and Fixtures:  $30,000 to $55,000

  • These figures include the cost to purchase required wash stations, stylist chairs, guest furniture, and industrial-grade washer and dryer machines and required design elements for your Shop.

10.  Office Equipment, Supplies, Accessories, and Customer Touchpoints:  $3,000 to $6,000

  • Includes items such as containers, trashcans, office equipment, kitchen equipment/supplies, food service items, opening food inventory, calculators, desk supplies, and office consumables.

11.  Computer Hardware and Software:  $24,000 to $50,000

  • Includes the cost of the equipment for the data rack for music, movie, and network security, laptop, iMac computers, television monitors, cameras, printer, router, Wi-Fi, SPABOOKER point-of-sale equipment, and costs of installation and wiring.

12.  Initial Inventory:  $30,000 to $50,000

  • Includes the cost of purchasing shampoos, conditioners, styling products, brushes, blow dryers, and other items used to provide services. Also includes initial inventory of products intended for merchandising and retail sale.

13.  Aprons/Shop T-Shirts:  $180 to $270

14.  Grand Opening Promotion:  $20,000 to $25,000

  • Beginning two months prior and continuing through the date six months after the opening of your shop, you shall invest in grand opening promotions. The marketing investment may include the costs for a local public relations firm, gratis blowouts, digital marketing, billboard/signage advertising, magazine or newspaper advertising, and strategic partnerships

15.  Marketing and Promotional Inventory:  $4,000 to $6,000

16.  Business Licenses, Permits, etc.:  $500 to $2,000

17.  Professional Fees:  $1,800 to $6,000

  • These figures represent the cost of hiring an attorney to assist you in evaluating the franchise opportunity, negotiating your lease, and in forming a business entity; and accountants’ cost of setting up a new business.

18.  Insurance Deposits and Premiums (first year):  $3,900 to $11,650

  • The low estimate accounts for the first semi-annual premium and the high estimate for the annual premium for the business policy, employment practices liability, and a 3-month allocation for the workman’s compensation premium.

19.  Initial Training Expense:  $4,000 to $15,000

  • The low figure includes the cost of 1 moderately priced, double-occupancy hotel room for 14 days and travel costs between the hotel and training site for 2 individuals, and 1 moderately priced hotel room for 7 days and travel costs for your proposed Shop educator.
  • The high figure includes the cost of 3 moderately priced, double-occupancy hotel rooms for 14 days, airfare, and travel costs between the hotel and training site for 3 individuals, and 1 moderately priced hotel room for 7 days and travel costs for your proposed Shop educator.

20.  Pre-Opening Stylist Training:  $5,000 to $10,000

  • You will incur pre-opening stylist training for between 20 and 30 stylists in the month before you open your Shop. These costs include wages for stylists, rent for space, and miscellaneous expenses for training. Each stylist should accrue approximately 40 hours of training before they are released on the floor and performing blowouts to customers.

21.  Working Capital (3 months):  $45,000 to $70,000

  • These estimates do not include managerial salaries or any payment to you.
  • Drybar relied on its and its affiliates’ operating experience in opening 53 Shops over the past 7 years in compiling these working capital estimates.

22.  Total:  $594,070 to $1,283,360

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