Franchise Costs: Detailed Estimates of LearningRx Franchise Costs (2018 FDD)

Updated April 21, 2018.

Detailed Estimates of LearningRx Franchise Costs Based on Item 7 (Estimated Initial Investment) of LearningRx’s 2018 Franchise Disclosure Document

Standard Franchise (100K plus in 10 mile radius)

1.  Initial Franchise Fee:  $35,000

• LearningRx will approve or decline your application within 45 days of its receipt of your completed application and your attendance at Discover 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. LearningRx does not finance any fee.

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

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

3.  Initial Marketing Fee:  $33,000

• At the same time and in the same manner you pay your Initial Franchise Fee, you must pay the franchisor an Initial Marketing Fee of between $20,000 and $33,000 (depending on the size of the Territory) for an initial sales and marketing opening campaign with the franchisor’s approved marketing consultant for media, print, and marketing materials and products.

• The franchisor reserves the right to transfer up to $3,000 of these funds into a specific brand management fund, which it may use in any way to maintain or enhance the brand, including resolving any outstanding customer or training issues when a Center is closed.

4.  Travel and Living Expenses While Training:  $1,500 to $5,000

5.  Security Deposit, First and Last Months’ Rent, or Real Estate and Improvements:  $20,000

• 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 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, the franchisor requires you to include certain lease provisions.

6.  Furniture and Fixtures:  $15,000

7.  Signage:  $6,000

8.  Miscellaneous Opening Costs:  $5,000

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

9.  Opening Inventory:  $5,000

• You must purchase an initial inventory of the student kits and/or workbooks (“Products” currently offered). Each student will need one or more kits and/or workbooks, 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 in amounts as specified by the franchisor 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 the franchisor does not require any specific vendors for computer equipment or Internet Service Providers, it may require a phone vendor and equipment, as well as requiring that you meet certain minimum standards established periodically in the Operations Manual.

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

• You will be required to use LearningRx’s proprietary software and pay to the franchisor 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):  $55,000

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

13.  Totals:  $194,500 to $198,000

• The franchisor 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 ranges from $91,500 to $95,000.