Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Great Play Franchise Costs (2015 FDD)

by Franchise Chatter on December 10, 2015

in Child-Related Franchises, Franchise Costs

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Great Play Photo

Detailed Estimates of Great Play Franchise Costs Based on Item 7 (Estimated Initial Investment) of Great Play’s 2015 Franchise Disclosure Document

1.  Initial Franchise Fee:  $40,000

2.  Interactive Arena Software License Fee:  $19,000

3.  Initial Training Travel Expenses:  $1,000 to $10,000

  • There is no fee for the initial training program for you for owner training or for two lead instructors (one of which may be you) for instructor training. However, you must pay for the travel and living expenses incurred by you and your trainees during the initial training program.
  • The 3-week instructor training takes place at an approved Great Play Unit that the franchisor may designate. The owner’s training takes place in the Stamford, CT or Denver, CO area or at another location that the franchisor designates.
  • The low estimate is based on the trainees residing near the training location and therefore being able to commute.

4.  Site Design and Architect Fees:  $10,000 to $15,000

  • The low estimate is for site design and architectural drawings. The high estimate includes a site visit by a third party for a pre-lease space review and miscellaneous related expenses.

5.  Great Play Leasehold Improvements:  $100,000 to $135,000

  • Great Play Leasehold Improvements are the improvements necessary to turn a space that is in the franchisor’s specified “vanilla shell” configuration into a Great Play Unit.
  • This includes material for and installation of the specialty gym floor and entrance floor, carpentry, insulation, painting and wall covering, electrical wiring, lighting fixtures, lighting controller, installation of custom fixtures (“Store in a Box” items), and installation of electronics, along with an allowance for site supervision, general contractor and construction management overhead, and profit.

6.  Additional Site Preparation:  $0 to $40,000

  • Additional Site Preparations include costs for work that may be necessary to get a space to a “vanilla shell” if the landlord does not provide the space fully to spec as part of your lease, such as plumbing and/or HVAC work, and potentially certain construction work.

7.  Tenant Improvement Contribution from Landlord:  ($100,000 to $30,000)

  • The franchisor assumes in the estimate that you will be able to negotiate some Tenant Improvement contribution beyond having the landlord deliver the space, or pay you to prepare the space, in “vanilla shell” condition.
  • On the high end, you might be able to negotiate a lease in which your landlord contributes the full build out expense or delivers a “turnkey” space to you, building out the space to the franchisor’s specifications. Generally, this might be a tradeoff for a higher rent.

8.  Permits and Expediting:  $2,500 to $7,500

  • Once you lease a space, before build out begins, you will need to obtain building permits, and you may use an expediter to manage the permit process for you.

9.  Signs:  $5,000 to $12,000

  • The estimates are for a single exterior sign that you will need for your Unit.

10.  Gym Equipment:  $22,000 to $28,000

11.  Arena Technology:  $22,000 to $28,000

  • The estimates are for the equipment you will need to open a Unit, such as the computer system, electronics, and gym equipment for your Interactive Arena.

12.  “Store in a Box” Fixtures and Equipment:  $19,000 to $23,000

  • This includes certain custom pieces of furniture, fixtures, and equipment for your Unit, which must be purchased from an approved supplier.

13.  Office Furniture and Shelving:  $1,000 to $3,000

  • The estimates are for the purchase of office furniture and storage room shelving.

14.  Computer/POS:  $1,000 to $2,000

  • The estimates are for the front desk and business computer systems described in Item 11, and the required software.

15.  Grand Opening Promotion:  $7,000 to $10,000

  • You must spend at least $7,000 for grand opening advertisement and promotion of your Unit according to the System standards during the period before and/or within 30 days after your Unit first opens for business.

16.  Lease Security Deposit:  $4,000 to $10,000

  • Your landlord will probably require a security deposit, which is typically refundable at the end of the lease.

17.  Professional Fees:  $2,000 to $5,000

  • The franchisor does not require you to consult with a lawyer, accountant, or other professional before beginning operations. However, it strongly suggests that you do.

18.  Music Licensing Fees:  $1,500 to $3,000

  • You must use in the Unit certain music that the franchisor requires. In order to use this music, you must purchase certain music files and enter into music license agreements with third parties, and pay the associated license fees.
  • The estimate is for the initial set of song files and first year’s license fees.

19.  Inventory, Supplies, and Miscellaneous Opening Expenses:  $500 to $3,000

  • Inventory is the purchase of logo t-shirts and other items for resale to your customers and is optional. Supplies include estimates for the supply items you will need to have on hand when you open.

20.  Insurance:  $0 to $2,000

  • The cost of your insurance may vary with a number of factors, such as your location, your enrollment, and your previous insurance claims history.

21.  Additional Funds for First 3 Months:  $30,000 to $60,000

  • These are an estimate of the funds needed to cover business (not personal or living) expenses during the first 3 months of operation of a Great Play Unit.
  • If the revenues of the Unit do not cover them, you will need additional working capital to support the operating costs of your business, including expenses such as rent, payroll, utilities, insurance, taxes, advertising, supplies, inventory, and other expenses.

22.  Initial Total Estimated Investment:  $189,000 to $426,500

  • To date, Great Play Units have been opened primarily in suburban markets. The franchisor has based its estimates in Item 7 on that experience.

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