Franchise Costs: Detailed Estimates of LearningRx Franchise Costs (2019 FDD)

Updated April 16, 2019.

Detailed Estimates of LearningRx Franchise Costs Based on Item 7 (Estimated Initial Investment) of LearningRx’s 2019 Franchise Disclosure Document

Standard Franchise (100K plus in 10-mile radius)

1.  Initial Franchise Fee:  $25,000

• LearningRx will approve or decline your application within 45 days of its receipt of your completed application and your attendance at Discovery Day.

• Your Franchise Fee will be due upon signing the Franchise Agreement and is fully earned upon payment. LearningRx will not refund the Initial Franchise Fee under any circumstances.

2.  Initial Training and Materials Fee:  $10,000

• The Initial Training and Materials Fee covers approximately 8 days of initial training for up to 4 people and about 2 to 4 days of onsite training (varies based on whether it is a Micro or Standard Franchise).

3.  Marketing Launch Fund:  $25,000

• At the same time and in the same manner you pay your Initial Franchise Fee, you must pay LearningRx a Marketing Launch Fund of between $17,000 and $25,000 (depending on the size of the Territory) for an initial sales and marketing opening campaign with LearningRx’s approved marketing consultant for media, print, and marketing materials and products. You will have approval of the placement of advertising with the spending of the funds.

• LearningRx may apply the Marketing Launch Fund to your minimum Local Advertising Requirement of 5% of Gross Revenues or $2,000 for Micro Franchise and $3,000 for Standard Franchise per month, whichever is greater; the Boost Marketing requirement of $3,000 per year, and/or any Cooperative Advertising Requirement, for the first four months that your Center is open and operating.

• You are also required to contribute the greater of either 3% of Gross Revenues per month, or the Minimum MDRF Payment, up to $15,000 per calendar year to the Marketing Development and Research Fund. This contribution is paid in addition to the Marketing Launch Fund.

4.  Travel and Living Expenses While Training:  $3,000

5.  Security Deposit, First Month’s Rent, or Real Estate and Improvements:  $10,000

• If you do not own adequate space, you must lease space for your Business. Generally, this will include first and last months’ rent, plus a security deposit.

• Typical locations for Centers are outdoor malls and office buildings. The typical size of a Standard Center is 1,200 to 1,800 square feet.

• The terms and conditions of all agreements relating to the purchase, lease, and alteration of the property will be negotiated solely by you; however, LearningRx requires you to include certain lease provisions.

6.  Furniture and Fixtures:  $10,000

7.  Signage:  $2,000

8.  Miscellaneous Opening Costs:  $2,000

• These costs include other deposits, utility costs, telephone, Internet and communications costs, and incorporation fees.

9.  Opening Inventory:  $3,000

• You must purchase an initial inventory of the student kits and/or workbooks (“Products” currently offered). Each student will need 1 or more kits and/or workbooks (workbooks may become fully through digital-only access), depending on the program.

• You must also purchase a trainer kit for each trainer in your Center.

10.  Insurance Policies:  $3,000

• You must maintain insurance policies covering you and LearningRx Franchise Corporation as an “additional insured” and “grantor of franchise” in amounts as specified by LearningRx in the Operations Manual. Insurance coverage must include property insurance, general liability including Hired and Non-Owned Auto Liability, corporal punishment coverage, child sex abuse and molestation coverage, and special coverage if you offer In-Home Training.

• An Umbrella Liability policy is also recommended.

11.  Computer Equipment and Proprietary Software:  $6,000

• While LearningRx does not require any specific vendors for computer equipment or Internet Service Providers, it reserves the right to require a specific equipment or services provider, including, but not limited to, a phone vendor or specific merchant services provider used for processing payments from LearningRx clients, upon notice to you, as well as requiring that you meet certain minimum standards established periodically and as specified in the Operations Manual.

• LearningRx does require that you have or purchase at least 1 computer system (LearningRx recommends that you have or purchase 2 systems) for the operation of your Business.

• Other equipment for running a digital Brain Lab and for trainers to use the Training Management System will also be needed. You will also be required to use LearningRx’s proprietary software and pay to LearningRx a Quarterly Technology Fee (ranging from $1,800 to $2,400 per year depending on the size of your Territory).

12.  Additional Funds (initial 3 months):  $50,000

• This estimates your initial startup expenses for an initial 3-month period, and does not include any revenue generated by the operation of your Business. These figures are estimates and LearningRx cannot guarantee that you will not have additional expenses starting your Business.

13.  Totals:  $149,000

• LearningRx relied on 50 years of experience in the cognitive training business to compile these estimates.

Micro Franchise (below 100K in 10-mile radius)

• The total estimated initial investment necessary to begin operation of a LearningRx micro franchise is $90,000.