Detailed Estimates of Lemon Tree Franchise Costs Based on Item 7 (Estimated Initial Investment) of Lemon Tree’s 2018 Franchise Disclosure Document
1. Initial Franchise Fee: $35,000
- The initial franchise fee is $35,000. The initial franchise fee is due upon execution of the Franchise Agreement and is non-refundable.
2. Equipment: $19,500 to $23,000
- The equipment package for a typical Salon includes: 6 styling stations, 2 shampoo basins, and other related equipment.
- An Equipment Package is available from the franchisor’s Approved Supplier listed in the Confidential Operations Manual; you may request permission to purchase equipment from a third-party vendor; however, it must be of like quality, color, and design to that offered by the Approved Supplier.
3. Prepaid Rent and Security Deposit: $3,900 to $9,000
- You will need between 800 and 1,200 square feet of interior space for the franchised Lemon Tree Salon. The cost per year for leasing commercial space varies considerably depending upon the location and market conditions affecting commercial property.
- The franchisor estimates the cost of leasing commercial space per year to be anywhere from $15,600 to $36,000 per year. This figure does not include the cost of electricity.
- Security deposits could be 1-3 months of rent which may be required by the landlord.
4. Leasehold Improvements, Construction Costs: $25,000 to $50,000
- The cost of leasehold improvements is dependent on the condition of the leasehold site when you (the tenant) take possession. The cost will vary depending on the condition of the Premises.
- You may need to install plumbing and lighting systems and electrical wiring before you begin business. The potential estimated expense of plumbing, lighting, and electrical is included in the $25,000 to $50,000 range disclosed above.
5. Computer Equipment (Point-of-Sale System): $2,000 to $3,000
- You are required to purchase the Point-of-Sale System (hardware and software) and Security and Surveillance System (video cameras, hard drive, hardware, and software) the franchisor designates.
6. Signage: $6,000 to $8,000
- You will need to install indoor and outdoor signage. All signs must be approved by the franchisor. Specifications for signs are contained in the Operations Manual.
7. Opening Inventory: $3,000 to $4,000
- You must purchase opening inventory from the franchisor’s Approved Supplier. This includes hair care and styling products and accessories, among other things (as set forth in the Operations Manual), which are accounted for in the $3,000 to $4,000 estimate.
8. Opening Advertising: $3,000 to $6,000
- Prior to opening the Franchised Business, you are required to participate in a grand opening advertising program, which may include purchasing promotional point-of-sale items, displays, and other advertising materials the franchisor designates.
- The range in the table includes an estimate of your required grand opening advertising expenditures, including the cost for the promotional point-of-sale items, displays, and designated advertising materials.
9. Pre-Operating Salaries, Travel, and Initial Training Expenses: $1,000 to $2,500
- Training for up to two people is included in the franchise fee. Additional persons may attend initial training for a $500 per person fee.
- You are responsible for all of your costs for transportation, lodging, and food for yourself and employees and for any wages for the employees. The cost will depend on the distance you must travel and the type of accommodations you choose.
10. Insurance: $500 to $3,500
- You must obtain insurance before you open for business.
- The range above includes an estimate of your initial insurance payments for the period leading up to the opening of your Salon and the three-month period following the date you open your Salon for business.
11. Utilities: $600 to $1,500
12. Professional Fees: $3,500 to $5,000
- This is an estimate of your professional fees, including fees payable to third parties for preliminary plans and specifications relating to the design and layout of your Salon, and other professional fees, such as legal fees in reviewing the franchise offering and lease agreement.
13. Business Licenses/Permits: $800 to $1,500
14. Additional Funds for First 3 Months: $25,000
- This is an estimate of your Additional Funds, which includes other required expenses you will incur before operations begin and during the initial three-month period following the date your Salon opens for business.
15. Total: $131,800 to $179,000
- You will need capital to support ongoing expenses, such as payroll and utilities, rent, inventory, and local advertising, to the extent that these costs are not covered by sales revenue for your first three months of operation.