Franchise Costs: Detailed Estimates of Pet Supplies Plus Franchise Costs (2019 FDD)

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

• Unless otherwise stated in this Item, all payments to Pet Supplies Plus are non-refundable. For any amounts paid to third parties, the availability and conditions under which you may obtain refunds will depend on the terms offered by those third-party suppliers.

• Pet Supplies Plus does not offer direct or indirect financing.

• If you already operate a retail pet store that Pet Supplies Plus approves for conversion to a Pet Supplies Plus Store, your estimated initial investment will be lower, but will vary depending on what is required to conform your existing business to Pet Supplies Plus’s standards for a Store.

1.  Initial Franchise Fee:  $49,900

• The Pet Supplies Plus Employee Initial Fee is not included in the estimated range.

2.  Inventory:  $140,000 to $230,000

• You must maintain a minimum amount of inventory ranging from $140,000 to $230,000 depending on the location and size of your Store, as set forth in Pet Supplies Plus’s Operations Manual.

• Approximately 35% to 65% of this amount ($49,000 to $120,250) is paid to Pet Supplies Plus’s affiliate, PSP Distribution LLC, and the remainder is paid to third-party suppliers.

3.  Equipment:  $126,700 to $234,800

• Pet Supplies Plus will provide you, prior to opening, with copies of its specifications for all equipment required for your Store. You may purchase equipment from any source approved by Pet Supplies Plus if the equipment complies with Pet Supplies Plus’s specifications.

• This estimate includes, without limitation, expenses for interior and exterior signage, computer hardware, and accessories that are not included as part of the equipment sublease (including, but not limited to, wireless access point for internet connectivity, cabling, monitor and printer for office computer, grooming salon computer for Stores with full-service grooming, and sales floor price checker where required by local law).

4.  Training:  $4,000 to $8,000

• The low estimate assumes you are able to secure financing from a third party and the high estimate assumes you will purchase the equipment outright.

• The costs in the chart above represent one person’s estimated travel, meal, and lodging expenses associated with attending Pet Supplies Plus’s initial training program.

5.  Advertising Grand Opening:  $30,000

• Pet Supplies Plus will collect $30,000 for the grand opening advertising requirement and use those funds to implement an advertising/promotional program for the initial launch of your Store on your behalf based on Pet Supplies Plus’s knowledge and experience in marketing this type of business.

• Pet Supplies Plus will spend the amount it determines necessary for the grand opening advertisement and will refund any unspent amounts to you within 90 days after the opening of your Store.

• Pet Supplies generally collects the grand opening advertising requirement on the 10th day of the month in which Store set-up begins. The grand opening advertising requirement may be reduced for conversion franchisees.

6.  Insurance:  $2,000 to $7,000

7.  Leasehold Improvements:  $25,000 to $552,500

• The costs listed above represent an estimate of the cost of site selection as well as the costs incurred by you to get an existing leased facility to comply with Pet Supplies Plus’s standards for a Store, including architectural and engineering costs and expenses in connection with the same. The cost will vary depending on the size and condition of your Store.

• Your negotiations with your landlord will determine whether you or your landlord bears these expenses. In some cases, you may recoup all or part of the cost of any leasehold improvements that you pay for in the form of credits against your rent or below market rents once the term of the lease commences.

8.  Prepaid Rent/Security Deposit:  $0 to $10,000

• The figures above assume that you will lease the location for your Store. Your Store is typically a retail store in sound condition, of approximately 3,000 to 8,000 square feet.

9.  Legal and Accounting:  $3,000 to $8,000

10.  Pre-Opening Labor:  $10,000 to $35,000

• The estimated range for Pre-Opening Labor includes, without limitation, those costs incurred by you to recruit and hire the management team for your Store.

11.  Set Up Fee:  $10,000

• Before opening, you must pay Pet Supplies Plus a set up fee of $10,000 (“Set Up Fee”).

12.  Additional Funds – Initial Period (6 Months):  $40,000 to $140,000

• You will need additional capital to support on-going expenses, such as payroll, rent, wages, replacement inventory, licenses, security, repairs and maintenance, and miscellaneous expenses. New businesses often generate a negative cash flow.

• Your actual costs may vary considerably, depending on factors including: local economic conditions; the local market for the products you will offer and sell; the length of time it may take to obtain permits and then build space for your Store; the prevailing wage rate; competition; the sales level achieved during the initial period of operation; and, your management and training experience, skill, and business acumen.

• Your credit history could impact the amount (and cost) of funds needed during the initial period.

• Pet Supplies Plus estimated the amount of required Additional Funds that you may need during the initial period of operation, which Pet Supplies Plus projects as 6 months from the opening of your business. This estimate is based on Pet Supplies Plus’s experience in franchising for over 5 years and its predecessor’s experience in franchising for over 23 years.

• This is only an estimate, however, and there is no assurance that additional working capital will not be necessary during this start-up phase or after.

13.  Total:  $440,600 to $1,315,200