Franchise Costs: Detailed Estimates of Pinot’s Palette Franchise Costs (2017 FDD)

Updated April 13, 2018.

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

For Two Room Pinot’s Palette Studio

1.  Franchise Fee:  $27,500

2.  Artist Training Fee:  $2,000 to $4,000

• You must pay the franchisor an Artist Training Fee of $500 per day, plus its actual costs of lodging, food, and travel arrangements for an artist trainer, for which it will provide such artist trainer who will conduct on-site initial artist training to all artists you have hired to perform classes for the Franchised Studio.

• Currently, the franchisor’s initial artist trainers will conduct a minimum of 25 to 35 hours of training over a period of four days.

3.  Business Licenses and Permits:  $500 to $5,000

• Local, municipal, county, and state regulations vary on the licenses and permits you will need to operate a Pinot’s Palette Studio. You will pay these fees to governmental authorities before starting business.

• You will be required to obtain all necessary and applicable alcoholic beverage permitting and licensing or any other permitting or licensing that will allow your customers to bring (and consume) their own beer, wine, or spirits to the Franchised Studio.

• In the event such licensing or permitting is not available in your jurisdiction, in the alternative, the franchisor will require you to obtain all necessary and applicable alcoholic beverage permitting and licensing to offer beer, wine, and spirits for sale and consumption at the Franchised Studio.

4.  Leasehold Improvements:  $54,200 to $61,900

• You will need to employ a qualified licensed general contractor, who is acceptable to the franchisor, to construct the improvements to, or “build out,” the premises.

• The franchisor’s estimates are based on the assumption that the location is in a retail strip or in-line shopping center approximately 1,900 to 2,300 square feet for a Two Room Studio (1,200 to 1,800 square feet for a One Room Studio), and that your lessor will provide a shell space that includes, at a minimum, a level concrete floor suitable for floor covering, demising walls, and air-conditioning, electricity, sewers, bathroom facilities, and water and plumbing suitable for a retail business.

• Lessors may, instead of constructing or installing some of the improvements themselves, provide you with credits towards your future rent payments and/or tenant improvement allowance. The franchisor’s estimates do not account for any rental credits or tenant improvement allowance.

5.  Bar Build Out:  $0 to $10,800

• You will need to employ a qualified licensed general contractor, who is acceptable to the franchisor, to construct the improvements to, or “build out,” the bar area of your studio.

• The franchisor may approve or disapprove adding a bar to your location.

• The franchisor’s estimates are based on the assumption that the bar area will be approximately 7 feet by 11 feet, no special ceiling is required, and cement or existing floor is acceptable.

• The estimate includes costs for the bar die wall, bar cabinets, countertops, tile on bar walls, bar plumbing, bar sinks and faucets, and electrical for the bar area.

6.  Fixtures, Furnishings, and Equipment:  $18,500 to $25,000

• You must purchase all fixtures, furnishings, equipment, signage, and supplies that the franchisor specifies as required for a Pinot’s Palette Studio.

• This estimate includes fixtures and equipment required for a Pinot’s Palette Studio, including (without limitation) a custom reception desk, ice machine, dishwasher, lighting, audio/video equipment, among other fixtures, furnishings, and equipment, including smallwares.

• This estimate also includes the cost of your office furniture, filing cabinet, and miscellaneous office supplies and equipment.

• This estimate also includes the costs for interior and exterior signage.

7.  Computer System:  $4,000 to $6,700

• You must purchase or lease specified computers and related hardware necessary to operate the Franchised Studio, from the franchisor’s affiliate, PASS.

• The franchisor requires you to use certain software, hardware, and/or support services in connection with the operation of the Franchised Studio.

• The franchisor provides proprietary cloud, mobile, and desktop-based software for management of your Pinot’s Palette Studio. This is provided at a monthly subscription fee of $125, which fee is subject to change in the franchisor’s discretion.

8.  Architect/Engineering Fees:  Included in Leasehold Improvements

• The franchisor will provide you or the approved design firm and/or architect with its prototype plans and specifications for the construction of a Pinot’s Palette Studio and for the exterior and interior design and layout, fixtures, equipment, furnishings, and signs.

• You must hire a qualified and licensed architect and engineer to prepare all required construction plans and specifications to suit the shape and dimensions of the site.

• The franchisor will have its architect consultant provide you with prototype drawings specific to your Approved Location that your architect will use for the preparation of construction drawings.

9.  Rent, Security Deposits, and Utility Deposits:  $0 to $7,300

• Locations for Pinot’s Palette Studios will typically need approximately 1,900 to 2,300 square feet for a Two Room Studio (1,200 to 1,800 square feet for a One Room Studio). The estimate includes your first month’s rent payment, security deposits, and utility deposits (for example, telephone, electricity, and water).

• The franchisor anticipates that Pinot’s Palette Studios will typically be located in retail strip or in-line shopping centers in high traffic urban and suburban areas, preferably near large residential communities, office buildings, and other commercial areas.

• The estimates assume that you will lease the premises for your Franchised Studio and, therefore, do not include costs related to the purchase of land or the construction of any buildings.

10.  Other Professional Fees:  $1,000 to $5,000

• The estimate assumes that you will employ an attorney to help you negotiate your lease for the Franchised Studio premises.

11.  Insurance Deposit:  $200 to $1,000

• The estimate represents an initial deposit for the coverage necessary to operate the business and represents approximately three months of coverage.

12.  Initial Inventory of General and Art Supplies:  $6,000 to $10,000

• These expenses include an initial inventory of art supplies, as well as general supplies. You will need to replenish your initial inventory on an as needed basis as supplies are used.

13.  Training Expenses:  $500 to $5,000

• You will incur expenses associated with the franchisor’s training program. For this training program, the franchisor provides instructors and instructional materials at no charge for up to 3 persons, but you must pay for transportation, lodging, meals, wages, and workers’ compensation insurance (if you send any employees) for your trainees.

• As to the amounts shown, the low end of the estimate assumes that the trainees are within driving distance to the training location, and the high end assumes that other travel will be needed, and includes travel expenses, although these may vary significantly depending upon factors such as the distance traveled and mode of transportation.

14.  Grand Opening Advertising:  $10,000 to $15,000

• This advertising and marketing promotion is intended to provide initial awareness and momentum for your new Franchise Studio.

15.  Additional Funds (for the initial 3 months of operations):  $5,000 to $20,000

• You will need additional capital to support on-going expenses, such as payroll, rent, and utilities, to the extent that these costs are not covered by sales revenue.

• The franchisor estimates that the amount shown will be sufficient to cover ongoing expenses for the start-up phase or initial period of the business, which the franchisor calculates to be 3 months.

16.  Total Estimated Initial Investment:  $129,400 to $204,200

For One Room Pinot’s Palette Studio

• Total Estimated Initial Investment:  $63,400 to $188,400

For Mobile Studio

• Total Estimated Initial Investment:  $16,000 to $36,000