Detailed Estimates of Relax the Back Franchise Costs Based on Item 7 (Estimated Initial Investment) of Relax the Back’s 2019 Franchise Disclosure Document
1. Initial Franchise Fee: $29,500
- In addition to the Initial Franchise Fee of $29,500 for your first location, subsequent single-unit stores have an Initial Franchise Fee ranging between $5,000 and $20,000.
2. Real Property, Lease Payments, and Improvements: $21,000 to $88,000
- You either must own or lease acceptable space to operate your Relax the Back business. The typical Relax the Back store has between 2,250 and 3,000 square feet. Costs may vary greatly depending upon location, terms of lease (if applicable), market conditions, space, and numerous other factors.
- You will be required to build out the premises to conform to Relax the Back’s standards and specifications. Build-out costs may be included in lease costs or installed by you at your own cost. The range provided includes estimated construction/remodel costs, architectural fees, and other related expenses.
- Your actual costs may vary significantly from estimated expenses due to a variety of factors, including landlord and deposit requirements, construction wages and prevailing labor costs, the extent of architectural and design services employed, and any loan packaging fees, among others.
- The range provided is intended to reflect a typical real estate environment. It does not reflect possible high-end real estate market costs or extensive/high-end store remodels or buildouts, which are not required or recommended.
3. Equipment, Fixtures, and Supplies: $35,500 to $60,000
- You are required to buy certain equipment meeting Relax the Back’s specifications, including decoration, carpet, fixtures, and lighting. This estimate does not include taxes or shipping.
4. Initial Inventory: $5,100 to $7,000
- You must purchase an initial inventory package from the franchisor consisting of certain seating and massage chair products. Inventory can vary from store to store, depending on a variety of factors, including store size, geographic area, and market preferences, among others.
5. Other Inventory: $74,900 to $93,000
- Relax the Back also requires you to purchase from its approved suppliers a minimum opening inventory of core products designated by it. Core inventory can vary from store to store, depending on a variety of factors, including store size, geographic area, and market preferences, among others.
- The range provided above is the estimated cost of such required opening inventory. Your costs will vary depending upon the quantity and costs of items selected by you for purchase in addition to the opening inventory amount and/or to replace any products sold.
6. Training-Related Expenses: $2,000 to $7,500
- The Initial Franchise Fee covers an initial training program that is mandatory for you and your initial Relax the Back store manager.
- You are responsible for all costs associated with attendance at the program, such as travel, lodging, meals, transportation, and incidental expenses incurred by you and your manager.
- The range provided assumes attendance by 2 people. However, costs can vary significantly depending upon the distance you are required to travel and your personal travel preferences.
7. Grand Opening Expenses: $7,000 to $12,000
- You will spend at least $7,000 on a grand opening marketing program, using marketing, advertising, and public relations programs, media, and materials approved by Relax the Back.
- Relax the Back will furnish advice and guidance to you with respect to the program for you to follow.
8. Insurance: $3,000 to $5,000
- You must maintain policies of insurance issued by carriers approved by Relax the Back covering various risks: (1) comprehensive general liability insurance against claims for bodily and personal injury, death, and property damage caused by, or occurring in conjunction with, your Relax the Back Store; (2) all risk property and casualty insurance for the replacement value of your Relax the Back store and all associated items; and (3) business interruption insurance.
- Relax the Back may reasonably require different and/or additional kinds of insurance at any time.
- Relax the Back currently requires comprehensive general liability insurance with not less than $1,000,000 single limit coverage and a $2,000,000 aggregate, and (for stores with annual Adjusted Gross Sales of $1,000,000 or more), supplemental “umbrella” coverage of an additional $1,000,000.
9. Signs: $5,000 to $16,500
- You must purchase exterior signage meeting Relax the Back’s specifications.
10. Computer Hardware and Software: $5,300 to $5,500
- You must purchase and use an electronic point-of-sale and computer system meeting Relax the Back’s specifications.
11. Initial Software License Fee: $1,400 to $3,300
- Before the initial training program commences, you will pay to Relax the Back an amount ranging from $1,400 to $3,300 for the initial software license fee and first year maintenance fee.
12. Visual Merchandising Fee: $0 to $4,000
- The Visual Merchandising Fee covers the services Relax the Back provides to you in connection with the set up and merchandising of your store. This fee is included in the initial franchise fee for your first location, but you must pay Relax the Back a Visual Merchandising Fee for your subsequent stores prior to commencing operations at the subsequent stores.
- The Visual Merchandising Fee is payable in the following amounts: (1) $4,000 for a new store, (2) $3,000 if you acquire rights to an existing store that must be remodeled, or (3) $2,000 if you acquire rights to an existing store that must be remerchandised.
13. Additional Funds for 6 Months: $30,000 to $60,000
- This is an estimate of the funds needed to cover certain business (not personal) expenses during the first 6 months of operation of the franchised business. These funds are in addition to those other expense items shown on the chart.
- You need capital to support ongoing costs of your business, such as payroll, utilities, taxes, loan payments, inventory purchases, and other expenses, to the extent that revenues do not cover business costs. New businesses (franchised or not) often have larger expenses than revenues.
- This is only an estimate. You may need additional funds during the 6 months of initial operation or afterwards.
14. Estimated Total: $219,700 to $391,300
- Relax the Back relied on its and its staff members’ experience in compiling this estimate. Relax the Back cannot guarantee that you will not have additional expenses other than that listed in this Item 7.