Franchise Costs: Detailed Estimates of Code Ninjas Franchise Costs (2018 FDD)

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

1.  Initial Franchise Fee:  $20,000 to $24,000

• When you sign the Franchise Agreement, you must pay the franchisor a Franchise Fee of $24,000, unless you are executing an Area Development Agreement under which you are committing to develop 2 or more Code Ninjas Centers, in which case you must pay the franchisor an Area Development Fee of $24,000 for the first Franchised Center plus the product of $20,000 multiplied by the number of additional Code Ninjas Centers to be developed under the Area Development Agreement, and you will not pay a Franchise Fee.

2.  Business Licenses and Incorporation:  $200 to $1,000

• These are general estimates for permits and licensing that may be required by local and state governments, as well as forming and registering an entity to operate as the franchisee.

3.  Leasehold Improvements:  $25,000 to $126,000

• You will need to employ a qualified licensed general contractor to construct the improvements to, or “build out,” the premises that is acceptable to the franchisor.

• The franchisor’s estimates are based on the assumption that the location is in a retail strip or in-line shopping center and approximately 1,600 to 2,400 square feet.

• Assumptions herein are based on a 1,800 square foot Franchised Center, which is the franchisor’s recommended size (subject to real estate demands) and includes, at a minimum, a level concrete floor suitable for floor covering, air conditioning, electricity, gas, sewers, bathroom facilities, and water and plumbing suitable for a retail business.

• Lessors may, instead of constructing or installing some of the improvements itself, provide you with credits towards your future rent payments and/or a tenant improvement allowance.

• The low range of the franchisor’s estimates assume that you obtain a tenant improvement allowance or that your landlord agrees to conduct a large portion of your buildout. One of these arrangements may or may not be available through your landlord.

4.  Fixtures, Furnishings, and Equipment:  $30,000 to $120,500

• This estimate includes fixtures and equipment required for a Code Ninjas Center, including (without limitation) computers, computer-related equipment, student laptops, desks, working stations, chairs, storage systems, coffee systems, lounge furniture, various trade dress and décor items, and other fixtures, furnishings, and equipment.

• This estimate also includes the cost of your office furniture, filing cabinet, and miscellaneous office supplies and equipment.

• This estimate also includes the costs for interior and exterior signage.

• The high end of this estimate assumes that you choose to add a Dojo2Go mobile trailer as part of the operations of your Franchised Center, and purchase the trailer and equipment for this service without financing.

5.  Computer and Point of Sale System:  $940 to $2,770

• You must purchase or lease specified computers and related hardware for your business operations, along with required third-party software necessary to operate the Franchised Center. The estimate includes the costs for the items that the franchisor currently requires.

• This includes Email and Hosting Fees you will pay to the franchisor prior to your opening.

6.  Architect/Engineering Fees:  $2,500 to $10,000

• You will be required to retain the services of a qualified architect and engineer, whom the franchisor has approved or designated for use by its franchisees, to adapt the franchisor’s standardized plans and specifications based on the prototype(s) of Code Ninjas Centers for the remodeling or finish-out of your Franchised Center.

7.  Rent, Security Deposits, and Utility Deposits:  $4,000 to $12,000

• Locations for Code Ninjas Centers will typically need approximately 1,600 to 2,400 square feet.

• The estimate in the chart above includes your first month’s rent payment, security deposits, and utility deposits (for example, telephone, electricity, gas, and water).

• The franchisor has assumed the security deposit to your landlord will equal one month’s rent, although this may vary from landlord to landlord.

• The estimates assume that rent commences upon the Franchised Center’s opening. You, however, will need to lease a space in advance to build out the Franchised Center. However, you may attempt to negotiate an abatement from the lessor for this period.

• The franchisor anticipates that Code Ninjas Centers will typically be located in in-line shopping centers, in high traffic urban and suburban areas, preferably near large residential communities.

• The estimates assume that you will lease the premises for your Franchised Center and, therefore, do not include costs related to the purchase of land or the construction of any buildings.

8.  Other Professional Fees:  $500 to $3,000

• The estimate assumes that you will employ an attorney to help you negotiate your lease for the Franchised Center premises. In addition, you may choose to employ an attorney, accountant, and other consultants to help you evaluate the franchise offering. In addition, you may also form a corporation or other entity to operate the business.

• The estimate represents an initial deposit for the coverage necessary to operate the business, and represents approximately three months of coverage.

• The high end of this estimate assumes that you choose to add a Dojo2Go mobile trailer as part of the operations of your Franchised Center.

10.  Initial Inventory of Products and Supplies:  $5,000 to $12,000

• You must purchase an initial inventory of certain items, including rank stickers and patches, laptop bags, pencils, pens, notepads, presentation folders, binders, among other items.

• You will need to replenish your initial inventory on an as-needed basis as such items and other supplies are used.

11.  Training Expenses:  $1,000 to $2,500

• You will incur expenses associated with the franchisor’s training program.

• For this training program, the franchisor provides instructors and instructional materials at no charge for up to 3 persons, but you must pay for transportation, lodging, meals, wages, and worker’s compensation insurance (if you send any employees) for your trainees.

• As to the amounts shown, the low end of the estimate assumes that you will be operating the Franchised Center and attend the training program yourself and are within driving distance to the training location, and the high end assumes that you bring an employee, other travel will be needed, and includes travel expenses, although these may vary significantly depending upon factors such as the distance traveled and mode of transportation.

12.  Grand Opening Advertising:  $5,000

• This advertising and marketing promotion is intended to provide initial awareness and momentum for your new Franchised Center. You must spend a minimum of $5,000 on this advertising.

• A portion of this amount must be spent with the franchisor’s designated public relations firm for PR services surrounding your opening.

13.  Additional Funds (for the initial 3 months of operations):  $15,000 to $30,000

• You will need additional capital to support on-going expenses, such as payroll, rent, and utilities, to the extent that these costs are not covered by sales revenue. The franchisor estimates that the amount shown in the chart above will be sufficient to cover ongoing expenses for the start-up phase or initial period of the business, which it calculates to be three months. Such amounts are the minimum recommended levels and are only estimates.

• The franchisor relied on its affiliate-owned operations in estimating these amounts.