Franchise Costs: Detailed Estimates of Learning Express Toys Franchise Costs (2017 FDD)

Detailed Estimates of Learning Express Toys Franchise Costs Based on Item 7 (Estimated Initial Investment) of Learning Express Toys’ 2017 Franchise Disclosure Document

1.  Initial Franchise Fee:  $35,000

• The Initial Franchise Fee for the first Local Store Franchise is $35,000.

• $5,000 is paid to Learning Express Toys at the time that you enter into a Reservation Agreement. Once you have secured a site which Learning Express Toys has accepted, you will sign the Franchise Agreement and pay the $30,000 balance of the Initial Franchise Fee.

• Learning Express Toys does not schedule Training until the Franchise Agreement is signed and payment of the Initial Franchise Fee is paid in full.

2.  Lease:  varies

• It is not expected that you will purchase real estate to operate the Local Store Franchise. Therefore, there is no initial investment included in the summary above for real estate.

• Nevertheless, you should be aware of the rents you likely will pay for the premises for your Local Store Franchise. You should anticipate leasing approximately 2,000 to 3,000 square feet of space.

• While Learning Express Toys does not specify where you must locate the Local Store Franchise, you and Learning Express Toys both must agree upon a suitable location, and you must obtain its acceptance.

• Learning Express Toys anticipates that, in most parts of the country, you will pay an annual base rent of approximately $18 to $40 per square foot. Most leases will carry additional common area maintenance, insurance, and tax expenses, which Learning Express Toys estimates will be an additional annual expense of $3 to $12 per square foot.

• You will generally be required to pay a rent deposit and security deposit (each equal to approximately one month of your rent). Some utility companies also require service deposits.

3.  Leasehold Improvements:  $5,000 to $80,000

• Learning Express Toys estimates that you will spend between $5,000 and $80,000 for leasehold improvements. This figure will vary depending upon the size and condition of the premises.

• The interior must be renovated to conform to Learning Express Toys’ Store Design Standard.

• Many landlords provide a portion of the leasehold improvements as consideration for the lease, known as Tenant Allowance or Tenant Improvement. Historically, Tenant Allowances have ranged from $0 to over $100,000, depending on local market conditions.

4.  POS Equipment & Software:  $12,550

5.  POS Software License Fee:  $4,950

• Learning Express Toys estimates that you will spend a minimum of $17,500 for the hardware and software for your Point-of-Sale system based on a standard configuration of 2 POS Registers and a backroom workstation.

• Your POS software is provided and billed by Learning Express Toys under its corporate license. The access fee for the standard 3-user system is $4,950. The remaining cost of $12,550 includes all required hardware, non-POS software (such as Microsoft Office and anti-virus software), and Delivery Services provided and billed directly by a third-party dealer.

6.  Signage:  $4,000 to $8,000

• Signage includes exterior and interior signage. Prices will vary depending upon the size and style of signage. Local ordinances and landlord requirements will govern the style of the exterior signage.

• This estimate does not include sales tax, freight, or installation, which will vary based on distance and local conditions, and will range between 15% to 25% of the total sign purchase.

7.  Furniture, Fixtures, and Equipment:  $20,000 to $42,775

• Learning Express Toys estimates that you will spend between $20,000 and $42,775 for the furniture, fixtures, and equipment necessary to open your Local Store Franchise.

• This estimate excludes POS equipment and signage. It also excludes sales tax, freight, and installation, which will vary based on distance and local conditions and will range between 15% to 25% of the total fixture purchase.

8.  Organizational and Training Costs:  $3,500 to $7,000

• You should expect to spend between $1,000 and $2,500 on professional fees for an attorney and an accountant during the period before you open your Local Store Franchise.

• You are responsible for all transportation, living costs, and salaries for your training and your employees who attend training, which will be held at Learning Express Toys’ headquarters in Devens, Massachusetts and its affiliate store in Bedford, Massachusetts when it is opened.

9.  Opening Inventory:  $90,000 to $150,000

• You should expect that the value of your opening inventory order will be between $90,000 and $150,000. The actual value of your initial inventory will depend upon the size of the premises for your Local Store Franchise and the time of year you open. A pre-holiday opening, for example, will require a more sizeable inventory.

• This estimate does not reflect the discounts and free goods that Learning Express Toys negotiates on your behalf.

10.  Grand Opening Advertising:  $7,500

• This figure includes print advertisements, in-store events, digital marketing, and email marketing.

• Learning Express Toys will create a Grand Opening Advertising Campaign with you for your Local Store Franchise. Costs may vary depending on local media costs and demographics.

11.  Initial Gift Card Program Setup Fees:  $475

• You are required to participate in the Gift Card Program currently in place. The initial fees associated with the setup of this Gift Card Program are $475, which includes program signage, 500 Gift Cards, 500 Gift Card Holders, and the acrylic fixture, which will be invoiced within 10 days after your Store’s Grand Opening.

12.  Insurance:  $2,000 to $6,000

• The estimated cost of insurance for the first year of operation, which is paid directly to the insurance company, is $2,000 to $6,000 depending on the state where your Store is located.

13.  Additional Funds (Working Capital) (1st 3 to 6 Months):  $15,000 to $30,000

• The amount of additional funds which you should anticipate having available during the first three to six months of operation is between $15,000 and $30,000 depending on the time of year.

• This figure includes back-up capital for rent, suppliers, and payroll expenses. This figure does not include owner’s benefit, which you should provide for separately.

14.  Total:  $199,875 to $384,150