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Franchise Costs: Detailed Estimates of Huntington Learning Center Franchise Costs (2016 FDD)

by Franchise Chatter on August 8, 2015

in Education Franchise, Franchise Costs

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This post was updated on February 14, 2017 to reflect information from Huntington Learning Center’s 2016 FDD (Item 7).

Detailed Estimates of Huntington Learning Center Franchise Costs Based on Item 7 (Estimated Initial Investment) of Huntington Learning Center’s 2016 Franchise Disclosure Document

1.  Initial Franchise Fee:  $22,000

  • This is the amount you pay the franchisor when you sign the Franchise Agreement.

2.  Development Fee:  $0

  • If you sign a Development Agreement, you should expect to incur the costs in this table for each franchised business that you develop.

3.  Travel and Living Expenses While Training:  $0 to $6,000

  • For transportation and lodging for one person attending the franchisor’s Oradell, NJ-based in-person initial training program. You may also incur salary and related expenses.

4.  Curricula:  $15,700 to $19,500

  • The lower figure is for Tutoring Services start-up curricula you buy before opening. The upper figure is for additional Tutoring Services curricula ($3,000) that you buy about 12 months after opening, and Test Prep curricula ($800), which you buy before offering Test Prep Service.
  • Price depends on vendor pricing and inventory availability.
  • Upper and lower figures do not include the price for plastic sheet protectors, which you typically acquire after three to six months after opening.
  • Typically nonrefundable.

5.  Furniture, Equipment, Computers:  $22,720 to $25,110

  • Includes furniture, equipment, phones, computers, third-party software. Includes the software and hardware in Exhibit P, which includes two eCenter tablets, one for electronic sign-in by students and teachers and one for use with visits to schools and others, plus a secure mount for the sign-in.
  • Includes $500 to $2,000 for network wiring and internet connection; the higher estimate is for more complex environments, such as with more networked computers.
  • Since you may choose to offer Test Prep before your second year of operation, the estimate includes three mobile devices for use by Test Prep teachers.
  • Payment to the franchisor for the items in Exhibit P is not refundable. Payments to others typically are nonrefundable.

6.  Start-Up Supplies:  $4,000 to $8,000

  • Office and consumable supplies, forms, marketing materials, student workbooks, appointment books, file folders, paper, pens, etc., some of which you are required to buy from the franchisor.
  • Typically nonrefundable.

7.  Local Advertising:  $9,000 to $11,500

  • You spend it within three months after opening the Franchised Business. The lower amount assumes you only offer Tutoring Services. The upper amount assumes you offer both Tutoring Services and Test Prep Services.
  • Typically nonrefundable.

8.  Training and Technology Fee:  $380 to $1,520

  • Estimates are for a new franchise for 3 and 6 months, with the first payment due the 3rd full month after the Agreement Date.
  • Renewals and transfers pay the maximum Training and Technology Fee beginning on the 1st full month.

9.  Architect Design:  $500 to $3,000

  • An architect designs the premises and signs based on the franchisor’s requirements and the requirements that the landlord and municipality may impose.
  • These additional requirements may include those for structure, electrical, heating, and air conditioning, as well as on the individual who develops these drawings; for example, a municipality may require a state-licensed architect seal the drawings.
  • Typically nonrefundable.

10.  Security and Utility Deposits; License Fees:  $500 to $3,000

  • Typically, you give your landlord and utility companies deposits that typically are refundable.
  • Landlords typically require 2-3 months’ rent, or more, as security.
  • The lower amount assumes you give the landlord no security.
  • If you obtain any licenses or permits, you may have to pay related fees; typically, they are not refundable.

11.  Real Estate and Improvements:  $0 to $45,000

  • Generally when you negotiate the lease, you attempt to negotiate concessions with your landlord. These concessions include improvements and free rent. If the landlord pays for improvements, you might eliminate or reduce your initial construction costs. However, in return, your monthly rent might be higher.
  • The lower estimate assumes the landlord pays for all improvements and the first three months of your rent. The upper estimate assumes improvement costs at $35 per square foot for 1,400 square feet.
  • Improvement costs depend on many factors and your costs may be substantially higher. These factors include premises size, extent of improvements, and the physical condition of the premises before you begin improving it.
  • These factors include items like demolition, flooring, walls, painting, doors, windows, ceiling, sprinklers, lights, electricity, heating and air conditioning, plumbing, the presence or absence of interior bathrooms, and many other items.
  • Your rent depends on many factors, like location, size, condition, utilities, and common area maintenance charges, as well as the geographic area in which you locate your Franchised Business.
  • The average first year’s rent that franchisees negotiated in 2015 was approximately $3,500, which included base rent and common area maintenance charges. Your rent could be higher.

12.  Exterior Signs:  $1,000 to $6,000

  • You install signs according to the franchisor’s standards and your landlord’s and municipality’s requirements. You buy signs from vendors of your choosing.
  • Typically nonrefundable.

13.  Center Graphics:  $2,000 to $2,500

  • You buy and install on walls and windows according to the franchisor’s standards using a vendor it specifies. Custom graphics may cost more.
  • Typically nonrefundable.

14.  Professional Fees:  $500 to $3,000

  • Professionals include attorneys, accountants, and other consultants; typically nonrefundable.

15.  Insurance – 3 Months:  $375 to $4,500

  • Estimate for first three months of operation. You may have to pay the entire annual premium initially. Your expense may be more.

16.  Financing Fees:  $0 to $3,800

  • The franchisor offers up to $100,000 to finance opening your Franchised Business. Financing fees are nonrefundable.
  • The low estimate assumes you do not obtain financing from the franchisor or its affiliates.

17.  Additional Funds – 3 Months:  $18,000 to $40,000

  • Estimates the following expenses for a three-month start-up period:  recruitment; supplies; cleaning services and supplies; additional funds of $15,000; and miscellaneous expenses, like equipment leasing, repairs and maintenance, postage, credit card fees, loan discount fees, and payroll service.
  • It does not include any other expense, including rent, utilities, part or full-time payroll, any amount you pay yourself, payroll taxes, employee benefits, financing expense, Royalty, Ad Fund contributions, or any other expense you or others may consider vital or necessary during this three-month period or any other longer start-up period you may experience.

18.  Total:  $96,675 to $204,430

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