Franchise Costs: Detailed Estimates of Maaco Franchise Costs (2019 FDD)

Detailed Estimates of Maaco Franchise Costs Based on Item 7 (Estimated Initial Investment) of Maaco’s 2019 Franchise Disclosure Document

1.  Initial Franchise Fee:  $40,000

• You must pay Maaco an initial franchise fee of $40,000 for a Maaco Center. The initial franchise fee is payable to Maaco and is non-refundable.

2.  Initial Training and Opening Fee:  $5,000 for 1 person

• You must pay Maaco the applicable Initial Training and Opening Fee when you arrive at the initial training program (or 30 days before your scheduled opening if you are an existing franchisee and not attending the initial training program).

• The Initial Training and Opening Fee covers expenses Maaco incurs in providing pre-opening and opening assistance, including the initial training program for you (or your majority investor), real estate selection assistance, and financing assistance.

• Additional people may attend the initial training program if you pay Maaco’s then-current training fees for any additional attendees (currently, $2,500 per attendee).

• You are responsible for the attendees’ travel, lodging, meal, and other expenses during initial training.

3.  Initial Advertising Contribution:  $20,000

• You must pay Maaco a non-refundable Initial Advertising Contribution when you arrive at the initial training program or, if you are an existing franchisee and will not attend initial training, 30 days before opening.

• Maaco uses the Initial Advertising Contribution for your pre-opening and grand opening promotions, post-opening promotion, promotional materials, initial marketing of the Center (including during the first 13 weeks of the Center’s operation), and other related activities, including search engine and digital assets.

• The actual costs of these programs may exceed your Initial Advertising Contribution, in which case Maaco will charge you the difference.

4.  Equipment, Signage, and Initial Computer Hardware:  $204,000

5.  Opening Inventory and Supplies:  $18,250

• Maaco will provide you with specifications for the initial inventory, supplies, equipment, and signs required for the opening of the Center. You can purchase these items directly from Maaco’s affiliate.

• Maaco’s affiliate does not manufacture these items, but it purchases them from various suppliers, in many cases at discount volume prices, and resells them to Maaco franchisees at or below the supplier’s suggested retail prices.

• The amounts stated above represent the estimated costs should you purchase these items from Maaco’s affiliate and include installation of equipment. The amounts stated may vary considerably should you elect to purchase these items from any other source or third party due to such factors as price differentials between suppliers, shipping distances, and installation charges.

• The amounts stated include the cost of purchasing computer hardware.

6.  Miscellaneous Opening Costs, Including Tenant Improvements:  $0 to $200,000

• This item estimates costs for architectural and engineering fees, permits, deposits for and installation of telephones and indoor signs, miscellaneous office furniture, equipment and supplies, fax machine, copy machine, miscellaneous shop equipment and supplies, security deposit on lease, and deposits for insurance, gas, electric, and related items, and are payable as incurred to third parties.

• These costs also include tenant improvements on your Center.

7.  Initial Software License Fee:  $0 to $5,000

8.  Additional Funds for 3 Months:  $75,000

• This item estimates your initial start-up expenses for a 3-month period (including leasehold improvements, rent, and advertising) and working capital needed for the start-up period. The start-up period can last as long as 12 to 18 months following the opening of the Center.

• Expenses for the Center include payroll costs but do not include any draw or salary for you. These figures are also intended to cover utilities, telephone, legal/accounting expenses, rubbish and hazardous waste removal, local advertising and materials, supplies, and parts.

• These figures are estimates, and Maaco cannot guarantee that you will not have additional expenses starting the Center or during the start-up period.

• If you operate a traditional Maaco Center, you must lease an appropriate building to operate the Center. Most leases are triple net, and the term of the lease is usually 15 years (an initial 5-year term, plus two 5-year options).

• Typical locations for a Maaco Center are general business districts and commercial/industrial-zoned suburban markets. The typical building for a Maaco Center will be of masonry or metal construction, having approximately 7,200 to 10,000 square feet of floor space with appropriate access for automobiles.

• Rents can range from $4,500 per month to $12,500 per month, or more, depending on market conditions. The rent will be paid to a third-party landlord or to Maaco or its affiliate where Maaco owns or holds the prime lease for the Center’s premises.

• Landlords customarily require that you personally guaranty the lease for the premises.

• The costs of leasehold improvements and related services needed for the Center’s premises may vary depending on the size, condition, and location of the premises leased, and are paid to third-party landlords and other suppliers of goods and services.

• However, Maaco estimates that the typical leasehold improvements for a Maaco Center will range from $50,000 to $200,000, to be amortized over the initial term of the lease, and/or third-party financing, and/or from cash reserves.

9.  Total Estimated Initial Investment:  $362,250 to $567,250

• Maaco relied on its predecessors’ experience of over 40 years in this business to compile these estimates and on information Maaco has obtained from franchisees.

• Maaco does not offer financing directly or indirectly for any other part of the initial investment.