Detailed Estimates of Merle Norman Cosmetics Franchise Costs Based on Item 7 (Estimated Initial Investment) of Merle Norman Cosmetics’ 2015 Franchise Disclosure Document
For Regional Mall Locations
- Except for the initial inventory of Merle Norman (MN) Products, supplies, and other items that must be purchased from Merle Norman Cosmetics (MNC) and the optional purchase of the MN POS software program designed for use in the Merle Norman Studios (which is available only from MNC), all of these costs are paid to others, so the amount, terms, and refundability of the payment will depend on each supplier.
1. Real Estate: Variable
- Most regional shopping mall Studio locations are in rented spaces of 400 to 600 square feet. Studio locations in strip shopping centers and other locations are typically in rented space of 800 to 1,800 square feet.
- MNC understands that rents for a suitable site vary from $24 to $95 per square foot per year, depending on the location of the Studio.
2. Initial Package of Inventory and Supplies: $17,000 to $26,000
- There is no initial franchise fee; however, you must purchase one of several initial packages of MN Products and supplies.
3. Travel and Other Expenses Incident to Training: $1,800 to $3,000
- You or your manager must satisfactorily complete a training program in the operation of a Studio that is currently offered in part online and in part at MNC’s Home Office (“Initial Training”). MNC does not currently charge a fee for the initial training.
- MNC pays for some of the meals during the portion of the Initial Training at Home Office. You are responsible for hotel charges, the cost of travel to and from the training center, and all other expenses while attending the portion of the Initial Training at Home Office.
4. Fixtures and Furnishings: $16,573 to $28,800
- MNC’s Studio Development Staff, if provided with accurate measurements and other requested information, will assist you in developing preliminary design concept plans for your Studio. The Studio Design Staff will also assist you in determining the necessary fixtures for your Studio.
- There is no charge for this assistance; however, MNC reserves the right to limit the amount of the assistance it provides.
- The range of costs does not include freight costs and any applicable sales taxes.
- If you meet MNC’s credit standards, MNC may finance up to $40,000 of the cost of your purchase of furnishings, fixtures, and equipment for the Studio.
5. Flooring: $2,000 to $4,000
- This range of costs represents the cost of tile and carpet for a 750 square foot Studio location.
6. Lighting: $1,500 to $2,500
7. Exterior Signage: $3,500 to $6,000
8. Construction: $15,000 to $65,000
9. Computer (Hardware/Software): $1,800 to $4,900
- This includes the cost of the optional MN POS software program designed for use by Merle Norman Studios and some computer hardware. As of the date of the Disclosure Document, the cost of the MN POS software program (which can only be purchased from MNC) is $1,800.
- You may purchase the computer hardware from MNC or any other source. If purchased from MNC, the cost currently ranges from $1,500 to $2,400, depending on the computer and printer you select.
10. Working Capital, Deposits, Insurance, and Advertising: $35,000 to $50,000
- This includes items such as security deposits, initial utility deposits, advertising, insurance, licenses, supplies, and the like. This also estimates your initial start-up expenses for 6 months. This does not include any salary for you or payment of your living expenses.
11. Total: $94,173 to $190,200 (does not include real estate costs)
For Non-Mall Locations
- The total estimated initial investment necessary to begin operation of a Merle Norman Studio at a non-mall location ranges from $61,173 to $115,200 (does not include real estate costs).