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Franchise Costs: Detailed Estimates of Kiddie Academy Franchise Costs (2016 FDD)

by Franchise Chatter on March 22, 2017

in Child-Related Franchises, Childcare Franchise, Education Franchise, Franchise Costs

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

For a Leased Kiddie Academy Facility

1.  Total Initial Fees:  $120,000

  • You must pay Kiddie Academy initial fees of $120,000. You will pay Kiddie Academy a fee of $20,000 when you enter into a Preliminary Agreement. You will pay Kiddie Academy a fee of $100,000 when you enter into a Franchise Agreement, which is payable in installments.
  • You may only enter into a Franchise Agreement after you have entered into a Preliminary Agreement.

2.  Lease Deposit:  $16,000 to $100,000

  • This is Kiddie Academy’s estimate of the range of security deposit amounts that will be required if the premises for your Academy are leased. However, your deposit may be higher or lower depending upon your landlord’s requirements.

3.  Tenant Contributions for Improvements and Construction Soft Costs:  varies

  • Kiddie Academy recommends, if you intend to lease your Academy premises, that you enter into an agreement with your landlord for a “build-to-suit” program whereby the landlord pays for (and may perform) all or most of the build out of the Academy, and those costs are included in the monthly rent and/or additional rent paid by you during the term of your lease.
  • A build-to-suit agreement will increase the monthly payments you make to your landlord under your lease, but will significantly lower your initial, out-of-pocket costs and the amount of your debt service.
  • This amount ranges from $0 to $300,000 and varies greatly.

4.  Professional Fees and Loan Fees:  $22,000 to $50,000

  • You may decide to obtain advice from professionals, such as an attorney, an accountant, an architect, a civil engineer, design professionals, and others, regarding the meaning of the terms of your agreements with Kiddie Academy, the terms of your lease and/or purchase agreement, and other issues with respect to the overall design and development of your Academy.
  • In addition, based upon the type of Academy you decide to develop and build, the size of your loan will vary. The size of your loan will determine the size of the loan fees you will be required to pay. Loan fees and professional fees will increase significantly as the size of your loan increases.

5.  Kitchen Equipment and Supplies:  $18,000 to $26,000

  • You are required to acquire commercial grade kitchen equipment, appliances, and kitchen supplies (i.e. pans, smallware, and initial food inventory) for your Academy.
  • You may purchase these items, or a leasing arrangement may be available through a vendor for all or some of them.

6.  Supplies/Equipment for Inside of Academy, Playground, and Online Training Component:  $90,000 to $125,000

  • You must purchase classroom supplies and equipment from a list of supplies and equipment (the “Supplies and Equipment List”) Kiddie Academy provides. The Supplies and Equipment List will include, for example, window blinds, appliances, children’s tables and chairs, shelves, carpets, active play equipment, books, arts and crafts supplies, cribs and cots, changing tables and supplies, cleaning supplies, swings and high chairs, toys, riding toys, balls, language development materials, wall coverings, music and movement materials, science and discovery materials, and teacher resource materials.
  • You will also be required to pay for an online training program to a third-party vendor that will cost approximately $500.

7.  Outdoor Fixed Playground Equipment:  $46,000 to $85,000

  • You must purchase outdoor play equipment for your Franchised Business. The costs may be included in your rent expenditures during the lease term, if paid for by your landlord. Accordingly, your initial out-of-pocket costs for such purchases may be zero.

8.  Computer Hardware and Software and Classroom Technology:  $20,000 to $35,000

  • You must purchase (or lease) at least one desktop computer and at least two tablet computers for each three-year-old, four-year-old, five-year-old, and school-age classroom area of your Kiddie Academy Franchise in order to offer the computer instruction in Kiddie Academy’s Curriculum to the children enrolled in your Academy.
  • In addition, you must purchase one tablet computer per classroom for parent communication through AcademyLink.

9.  Office and Lobby Furniture, Office Equipment and Supplies, and Telephone System:  $10,000 to $25,000

  • You must purchase basic office and lobby furniture, equipment and supplies, and a telephone system. You also may purchase and install, at your option, a security system, the cost of which is not included in this estimate.

10.  Indoor and Outdoor Signage:  $15,000 to $20,000

  • Kiddie Academy will provide you with specifications for your signs which will be built to conform to Kiddie Academy’s requirements as well as those of your lease and local authorities.

11.  Travel and Living Expenses While Training and Plan Review:  $1,000 to $3,000

  • You are responsible for the costs incurred by you and your Academy Director to attend Kiddie Academy’s mandatory training courses and for the Plan Review meeting.
  • The estimated cost presented for Owner Training, Plan Review, and Director Training is for transportation, meals, and lodging for two people for six days, as well as one person for one week for Director’s Training.

12.  Transportation Vehicles and Equipment:  $0 to $5,000

  • You are responsible for the costs relating to the purchase and maintenance of all transportation vehicles and equipment utilized by you and your Academy for a before and after school program, should you choose to operate such a program at your Franchised Business.

13.  Insurance and Utility Deposits:  $3,500 to $7,000

  • These amounts are for initial deposits that will be required for insurance policies, telephone service installation, utilities, and related items. These amounts are payable as incurred to third parties.

14.  Business Licenses:  $500 to $1,500

  • Many states and localities, but not all, impose license or permit fees on local businesses, including child care license fees. These fees vary from state to state.

15.  Start-Up Marketing and Advertising Expenses:  $35,000

  • You must spend at a minimum this amount on your pre-opening and post-opening marketing and advertising programs.
  • This is for your pre-opening marketing campaign in your targeted market area, other pre-opening marketing items, and certain promotional items, including a Start-Up Marketing Kit.
  • This is also for the marketing that will occur in support of special promotional events that occur during the initial period after your Academy opens.

16.  Additional Funds/Working Capital – 3 Months After Opening:  $25,000 to $100,000

  • This range estimates your startup expenses and working capital needed for the first three months of the operation of your Franchised Business. These expenses include payroll costs for operations, but do not include any allowance for a franchisee’s remuneration or the payment of any personal expenses of the franchisee.

17.  Total:  $422,000 to $737,500

  • Kiddie Academy relied on its franchising and child care experience to compile these estimates.

For a Purchased Kiddie Academy Facility

  • The total estimated initial investment necessary to begin operation of a purchased Kiddie Academy Facility ranges from $2,516,000 to $3,737,500.

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