Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Signarama Franchise Costs (2016 FDD)

by Franchise Chatter on October 1, 2015

in Franchise Costs, Sign Franchises

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This post was updated on February 21, 2017 to reflect information from Signarama’s 2016 FDD (Item 7).

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

If Equipment is Leased

1.  Initial Franchise Fee:  $49,500

  • A $5,500 binder is due before Signarama begins its efforts in assisting you to locate a site for your franchise. The remaining $44,000 will be due at the signing of your franchise agreement. This $5,500 binder fee is refundable up to the time that you sign your franchise agreement.
  • If you are an existing storeowner, you will pay a reduced franchise fee of $25,500 for your additional outlet.

2.  Travel and Living Expenses While at Training School:  $210 to $490 ($15 to $35 per day)

  • Signarama provides your transportation to its Florida Corporate Headquarters where it holds its training. It also provides your hotel accommodations and one daily meal. The only cost that you will incur will be for your daily meals and your entertainment.

3.  Real Estate (rental payments vary from location to location):  $4,500

  • A typical new Signarama Center generally occupies 1,100 to 1,500 square feet of interior space with HVAC, lighting, fixtures, electrical outlets, and telephone wiring installed for your business.
  • Signarama will help you find your location and then you and Signarama must agree that it is the right place for you to open up your new business.
  • Signarama’s affiliate, Franchise Real Estate, assists you in locating and negotiating the lease for the premises, with construction management, store design and layout, obtaining building renovation costs and, in some cases, will receive compensation from the landlord.

4.  Real Estate Service Charge:  $0 to $2,500

5.  Leasehold Improvements:  $0 to $10,000

  • You will need to improve your Center premises to meet Signarama’s specifications and standards, including changes to flooring, ceiling and walls, paint, and electrical.
  • The cost of leasehold improvements will depend on a number of factors including the layout and condition of the premises, labor and material costs in the market where your Center will be located, and the landlord’s contribution to the cost of improvements.
  • In some cases, Franchise Real Estate may be able to negotiate with the landlord to pay for all or a substantial portion of the improvements.
  • Some required improvements such as exterior signage, including installation, window graphics, and slatted walls for displays are provided by Signarama as part of the equipment package.

6.  Equipment Package Initial Payments and Processing Fee (if leased):  $4,088

  • You must acquire Signarama’s complete equipment package. You may obtain this equipment by paying cash or obtaining a lease or loan.
  • If you lease the equipment package, you will be required to pay, upon execution of your franchise agreement, a deposit of $12,500 which will be refunded upon funding of your lease by the leasing company or credited against any deposit required by the leasing company.
  • Signarama does not guarantee the terms of any lease, loan, or note executed by you for the financing of your initial investment, equipment, or continuing the operation of your franchise.
  • Outside leasing companies do not pay Signarama to refer you to them.
  • Signarama has arranged for equipment leasing through VFS, LLC, a division of Crestmark Bank (“VFS”). If you choose to lease through VFS, you will be required to pay approximately $3,588 monthly, plus any applicable sales and use taxes for a period of 48 months.
  • Depending on your personal credit status, the leasing company may approve you for less than the full amount of the purchase price of the complete equipment package. If you are approved for a lesser amount, you will be required to pay the remaining balance, plus any applicable sales tax, directly to Signarama.
  • There is a “buyout” or residual amount of 15% of the original financed amount due at the end of the payment term.
  • VFS also will require you, upon execution of the lease, to pay one monthly payment as first month’s rent and a processing fee of $500.

7.  Insurance:  $1,000 to $2,000

  • You are obligated under your franchise agreement to hold certain business insurance policies including a comprehensive general liability policy, a policy covering “all risk” of physical loss, and additional policies as may be required under your local laws or ordinances.
  • The amount listed in this table reflects Signarama’s estimate of basic insurance for your first 6 months of operation.

8.  Security Deposit/Utility Deposits/Licenses:  $0 to $3,000

  • You will need to provide deposits for your real estate and your utilities. The amounts of these deposits will vary depending on the practices of your landlord and/or utility company.
  • You must also register your business with the local county along with a fictitious name and other requirements of your local or state government. Each of these entities may charge a fee for your registration and/or certain taxes.

9.  Additional Funds (0 to 6 months):  $35,000 to $55,000

  • You will need capital to support your ongoing expenses, e.g. payroll and utilities, to the extent that these costs are not covered by sales revenue when you first open. This figure does not include sums necessary for living or personal expenses nor payments for your debt service.

10.  Totals:  $94,298 to $131,078

  • These amounts are based on Signarama’s estimate of average costs and market conditions prevailing as of the date of the Disclosure Document and its 30 years of experience in the business.

If Equipment is Purchased

  • The total estimated initial investment necessary to begin operation of a Signarama franchise, if equipment is purchased, ranges from $235,490 to $272,270.

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