Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of The Little Gym Franchise Costs (2015 FDD)

by Franchise Chatter on April 10, 2016

in Child-Related Franchises, Franchise Costs

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The Little Gym

Detailed Estimates of The Little Gym Franchise Costs Based on Item 7 (Estimated Initial Investment) of The Little Gym’s 2015 Franchise Disclosure Document

For a Standard Territory

1.  Initial Franchise Fee:  $24,750 to $49,500, plus any Area Development Fee

2.  Start-Up Equipment and Inventory Package:  $38,000 to $48,000

  • The Start-Up Equipment and Inventory Package price includes shipping and a $11,000 to $12,000 technology package that includes the following:  an initial software license fee, a franchise website fee, an initial setup fee for the online enrollment software, an initial setup fee for the Automated Communication Touchpoint System, and an initial license fee for the Customer Management System.

3.  Signs and Fixtures:  $6,000 to $14,000

4.  Tenant Improvements:  $0 to $100,000

  • You may choose to spend more for leasehold improvements, though this is not something the franchisor normally recommends.
  • Typical fixed premise locations are located in strip centers, office and retail business parks, or other retail parks.
  • Standard Territory franchises have approximately 3,200 to 3,600 square feet of space. Small Market Territory franchises have approximately 2,600 to 3,200 square feet of space.
  • Rent varies substantially based upon the size of the facility, its geographic location, and other factors. The franchisor provides the necessary guidelines and criteria for you to consider when making a location decision. The franchisor must approve your location.
  • The lease negotiation and selection of the premises are your sole responsibility, and the franchisor will not become involved in the negotiation of your lease or purchase.
  • The amount required for equipment, fixtures, and improvements to the real estate premises will be determined principally by the size and type of premises. The figures given above represent the best information known to the franchisor for lease costs, assuming the landlord pays for the basic build-out. The landlord is not obligated to pay for any leasehold improvements.
  • For a Standard Territory, the franchisor estimates from $6,000 to $14,000 for interior and exterior signs and gym dress.
  • The build-out cost, including improvements and fixtures, generally ranges between $0 and $100,000, but you might spend more.

5.  Furnishings, Computers, Security Surveillance System, Other Equipment and Supplies:  $15,500 to $22,000

  • The amount shown for furnishings, computers, security surveillance system, other equipment and supplies includes necessary computers, information processing and communications system hardware and non-proprietary software of $2,000 to $3,000; security surveillance system of $8,000 to $11,000; miscellaneous gym equipment of $700 to $1,000; office and waiting room furniture and supplies of $1,500 to $2,500; stationery and office supplies of $500 to $1,000; and initial pro-shop supplies of $500.
  • These costs are approximations and may vary.

6.  Initial Sales Promotion:  $10,000 to $18,000

  • Initial sales promotion costs include advertising and promotional expenses, labor, and related expenses for your initial opening.

7.  Security Deposits and Other Prepaid Expenses:  $5,000 to $20,000

8.  Training Related Expenses:  $5,000 to $10,000

9.  Insurance Premiums:  $2,500 to $3,500

  • You must maintain insurance of the kinds and in the minimum amounts as the franchisor specifies, including comprehensive public, auto, property, casualty, product, sport accident, sexual harassment, abuse and molestation, employment practices, errors and omissions, and general liability insurance in which the franchisor is named as an additional named insured.

10.  Miscellaneous Payments and Expenses Before Beginning Operations:  $4,000 to $11,000

  • Other expenses you may have to pay include legal, accounting fees, and other professional fees. You will pay your own legal and other expenses in connection with the review and negotiation of your lease.

11.  Additional Funds – 3 Months:  $35,000 to $70,000

  • These amounts represent the amount required for initial operating expenses and working capital. These are estimates of your other initial three-month start-up expenses, less income earned, but not including salary for you, finance costs, debt service, personal expenses for you, or reimbursements or other payments to you.
  • These figures are just estimates and the franchisor cannot guarantee that you will not have higher costs.

12.  Total:  $145,750 to $366,000

  • The franchisor relied on its experience in this business to compile these estimates.

For a Small Market Territory

  • The total estimated initial investment necessary to begin operation of a small market territory The Little Gym ranges from $117,250 to $299,500.

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