Detailed Estimates of Postal Connections Franchise Costs Based on Item 7 (Estimated Initial Investment) of Postal Connections’ 2015 Franchise Disclosure Document

1.  Initial Franchise Fee for Your Initial Outlet:  $12,450 to $24,900

• The initial franchise fee under the Franchise Agreement is $24,900. If you are a veteran of the U.S. Armed Services who was honorably discharged, Postal Connections will discount the initial franchise fee for your initial Store by $12,450 (or 50%).

2.  Real Estate (Rent and Security Deposit):  $1,500 to $3,000

• This is an estimate of the base rent only. Any security deposit you pay may be refundable.

• The approximate size of an Outlet is 800 to 1,500 square feet. Although they vary widely, typical minimum rental costs range from $1.80 to $3.50 per square foot per month.

• Percentage rents (if applicable) sometimes range from 0% to 8% of gross sales, but may vary.

• An Outlet will typically be located in a high profile, heavily trafficked strip center, or shopping center.

3.  Architect Fees:  $0 to $1,000

• Depending on location and local zoning laws, it may be necessary to use an architect to prepare detailed plans beyond the initial store design. The franchisor will assist you to determine if this is necessary before construction begins.

4.  Store Construction and Installation – Modular Cabinets, Fixtures, Retail Equipment, Mailboxes Development Costs, and Tenant Improvements (does not include freight):  $41,500 to $42,500

• Store construction and equipment installation of your Outlet will be performed by an approved contractor under your supervision and with the assistance of the franchisor. The store construction and equipment installation of your Outlet (does not include freight) must be arranged through the franchisor and it may receive compensation for its assistance in development, purchasing, and construction.

• The costs for store construction and equipment installation will be deposited into a separate account arranged by the franchisor. Store construction and equipment installation costs and expenses will be paid from this account according to usual and customary practices in the area where your Outlet is located.

5.  Store Build-Out – Signage (Interior and Exterior), Instant Postal Store Image and Identity Package, Grand Opening Materials:  $40,200 to $40,900

• The build-out of your Outlet and the elements required will be organized and performed by approved local contractors and vendors under your supervision and by you with the assistance of the franchisor. Store build-out, grand opening advertising materials, and image and identity packages for your Outlet must be arranged through the franchisor and it may receive compensation for its assistance in development, purchasing, and construction.

• The Store build-out costs will be deposited into a separate account arranged by the franchisor for disbursement to designated vendors and your Store build-out costs and expenses will be paid from this account (does not include freight).

• One half of these Store build-out costs (approximately $40,000 to $60,000) are due and payable when you sign the lease for the Outlet.

6.  Inventory, Supplies, and Miscellaneous Items:  $6,900 to $7,200

• Inventory of your Outlet will be organized by the franchisor, purchased by you directly from designated vendors, and then delivered directly to the Store location under your supervision and with the assistance of the franchisor.

• The inventory for your Outlet must be arranged through the franchisor and it may receive compensation for its assistance in the development and purchasing.

• The inventory costs will be deposited into an account arranged by you and the franchisor. The inventory costs and expenses will be deposited into an account and the inventory costs and expenses will be paid from this account.

7.  Point-of-Sale System:  $2,500 to $3,000

8.  Additional Equipment:  $3,500 to $5,150

• The other equipment described in this category is business equipment not included in the Instant Postal Center package. Specifically for your Outlet, you must lease or purchase one color and one black and white business copier that copies at a rate of 20 to 40 copies per minute, can make two-sided copies, and has an automatic document feeder and sorter.

• Additionally, a postage meter must be obtained (typical monthly cost is from $25 to $50 and this cost is not included in the table figures).

9.  Insurance:  $250 to $1,000

10.  Grand Opening Advertising:  $2,500 to $3,000

• You must spend from $2,500 to $3,000 in your territory on the Grand Opening Advertising promotion that the franchisor prescribes.

11.  Travel/Living Expenses for Initial Training:  $1,650 to $2,000

• There is no separate fee for the initial training of the first 2 attendees. Each additional attendee may be charged $750 for initial training. All costs in connection with training (travel, meals, lodging, etc.) are your sole responsibility.

• The estimate provided is based upon 2 people training for approximately 7 days and excludes transportation costs.

12.  Miscellaneous Opening Costs:  $1,900 to $2,500

• Includes security deposits, utility costs, costs associated with obtaining a lease on a postal meter, postal meter base and postal scale, business licenses, and permits.

13.  Additional Funds – 1st 3 Months:  $15,000 to $18,000

• This is only an estimate of certain funds you will need to pay your business (not personal) expenses during the first 3 months of operation of your Outlet.

14.  Totals:  $129,850 to $154,150

• This estimates the range of your anticipated initial start-up expenses. The franchisor relied on the related business experiences of its officers (more than 30 years).