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

by Franchise Chatter on December 29, 2015

in Franchise Costs, Printing Franchise

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Alphagraphics Photo by Diversified Construction

This post was updated on October 11, 2016 to reflect information from AlphaGraphics’ 2016 FDD (Item 7).

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

For a New Business Center

1.  Initial Franchise Fee:  $40,000

  • If you sign a Franchise Award Letter and subsequently sign a Franchise Agreement with AlphaGraphics, then any amounts paid under the Franchise Award Letter will be applied toward your initial fees.

2.  Training Fee:  $8,000

3.  Sales and Marketing Opening Campaign:  $15,000

  • During the first 12 months after the opening of your Business Center, you agree to conduct a sales and marketing opening campaign, which will include a grand opening event and other activities, and will spend a minimum of $15,000 for sales and marketing activities in connection with the opening campaign.

4.  Ramp-In Office:  $7,800 to $14,400

  • During the Ramp-In process, AlphaGraphics will designate the location where you will operate from, but you will sign the lease. AlphaGraphics estimates that the rent will range from $650 to $1,200 based on geographic location.
  • You may be housed in an existing AlphaGraphics location, or in other office space, which is Regus Office Suites. In the event that neither one of these options is available, AlphaGraphics will find an alternative solution for you, or instruct you to forego the Ramp-In process.
  • The cost of rent through AlphaGraphics’ current preferred provider is not shared, and if you operate during the Ramp-In process from an existing AlphaGraphics location, you will pay rent that is equivalent to the rent you would pay if obtaining other office space.
  • You will not share office space with any other franchisee undergoing the Ramp-In process.

5.  Real Estate Deposits and Leasehold Improvements and Construction:  $5,000 to $50,000

  • The typical permanent Business Center site is approximately 1,700 to 1,900 square feet.
  • The disclosed low-high range includes deposits and costs for Business Centers opened at permanent sites from 2013 through 2015 for the Business Centers in AlphaGraphics’ recommended size range, but not the purchase of land and building (because AlphaGraphics does not require you to purchase your premises).
  • This range includes items related to leasehold improvements such as architectural and permit fees, telephone, networking and basic construction, which combined can be up to approximately $25,000.
  • Monthly rent might range from approximately $1,800 to $5,000.
  • Deposits, costs, and rent may vary significantly depending on factors such as region of the country, size, condition, location of the property, and negotiations with the landlord.

6.  Equipment, Furniture, Fixtures, Signs, Inventory, Remodeling, and Decorating Costs:  $130,000 to $145,000

  • The amount listed is an estimate based on currently known costs and equipment specifications, not including sales tax, and includes the cost of your new Business Center equipment package.
  • The equipment package is typically financed through a third party and covers the basic decor and millwork package, computer equipment, software (including $15,000 for the MIS System License Fee), marketing materials, miscellaneous supplies, Business Center administered training materials, printing and bindery equipment, inventory, and interior and exterior signs.
  • You must also lease digital printing equipment that meets AlphaGraphics’ specifications. The digital printing equipment consists of one high-speed digital black and white printer with print controllers and one digital color printer with color printer controller. This equipment is leased at a monthly cost of between approximately $2,400 to $3,500.
  • You must purchase service contracts for all of the digital printing equipment. The typical monthly service base on this equipment is approximately $300. In addition, there is a per impression service charge.
  • Should you choose to purchase the digital printing equipment instead of leasing, the cost ranges from approximately $75,000 to $90,000.
  • Some Business Center franchisees elect to purchase additional equipment later, such as an offset press, which can cost approximately $32,500 for used equipment or approximately $80,000-$100,000 for new equipment.

7.  Finance Costs:  $0 to $17,000

  • You could incur these costs if you finance your initial investment.

8.  Miscellaneous Opening Costs:  $5,000 to $15,000

  • This item covers miscellaneous opening costs and expenses, including utility deposits, licenses, attorneys’ and accountants’ fees, travel and living expenses that you will incur in training, and salaries prior to opening.

9.  Additional Funds – 12 Months:  $50,000 to $90,000

  • This estimate includes your Royalties, AIM fees, Managed Services Program fees, AGAlliance Program fees, and the cost of using one of AlphaGraphics’ approved accounting advisors for your first 12 months of operation.
  • This estimate also includes insurance, supplies, and payroll costs, but not any draw or salary for you or your living expenses.
  • If you hire a full-time employee to satisfy the 40 hours per week outside sales requirement, you might need additional funds. A new Business Center will typically open with just the owner during the Ramp-In process and then with 2-3 employees in addition to the owner once the permanent Business Center site is open.

10.  Total (excluding real estate purchase costs):  $260,800 to $394,400

  • To compile these estimates, AlphaGraphics relied on its franchisees’ experience in operating the same type of business, its experience in franchising the same type of business, and its franchisees’ performance.

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