Franchise Costs: Detailed Estimates of Fleet Feet Franchise Costs (2019 FDD)

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

1.  Initial Franchise Fee:  $19,000 to $38,000

• Fleet Feet’s standard initial franchise fee is $38,000. If you purchase a second or subsequent Fleet Feet franchise, your initial franchise fee would be $19,000.

2.  Inventory:  $60,000 to $100,000

• You will need an initial inventory of products for retail sale. The cost of these items may vary based on manufacturers’ discounts and specials at the time of purchase and other factors.

• Fleet Feet does not know if the amounts you pay for other initial inventory items are refundable. Factors determining whether other inventory items are refundable typically include the condition of the items at time of return, level of use, and length of time of possession.

• You should inquire about the return and refund policy of the suppliers at or before the time of purchasing.

3.  Real Estate and Improvements:  $30,000 to $100,000

• This estimate includes rent, leasehold improvements, and deposits, if applicable, from time of signing through opening.

• The low estimate assumes that you receive 3 months of free rent from your landlord but will pay the first month’s rent and a security deposit equal to one month’s rent in advance.

• The high estimate assumes you will have to pay the first month’s rent and a security deposit of 2 months’ rent in advance.

• The franchisor includes 3 additional months of rental costs in the category “Additional Funds” to address rent during the post-opening 3-month period.

• Market conditions will dictate whether the landlord will require that you pay the last month’s rent and security deposit up front.

• The high estimate assumes that you will rent a new dark shell space that has never been built out and the low estimate assumes a warm vanilla shell or 2nd generation upfitted space.

• Both the low and high estimate are net of any applicable landlord contributions.

• These are expenses to improve the space to brand-specific standards.

• These projections assume the space is being leased. The franchisor does not require you to purchase or build a facility to house the franchise, and the cost for purchasing the real estate is not included in these cost estimates. Your cost may increase over Fleet Feet’s projections should you choose to purchase or build.

• The typical new store is between 1,200 and 2,000 square feet in size. If you elect to open a larger location, it will increase your operating costs, and you may spend more than Fleet Feet’s estimates here.

• The actual costs you will incur in leasing is difficult to quantify because there are a myriad of factors that will impact what you pay. These factors include the facility’s location, its square footage, cost-per-square foot, renovation costs, and any required maintenance fees.

• Your landlord may refund your security deposit, but most will not refund rental payments.

• Your costs will vary depending on many factors, including the size, condition, and location of the facility, local wage rates, and the cost of materials.

• The low estimate assumes that your landlord will provide a partial build-out allowance. The amounts you pay for leasehold improvements are typically non-refundable.

4.  Store Fixtures:  $30,000 to $90,000

5.  Furniture and Equipment:  $4,500 to $6,000

• You must purchase furniture and equipment necessary for providing the various services offered by Fleet Feet stores and other required equipment such as a surveillance system, computer system, and phone system.

• Although some of these items may be leased, the range shown represents an estimated purchase price.

6.  Computer System Equipment:  $2,656 to $9,590

7.  FIT ID Hardware:  $4,250 to $4,750

8.  Technology Fee:  $594 to $660

9.  Travel and Living Expenses While Training:  $4,000 to $6,000

10.  Miscellaneous Costs:  $3,700 to $7,700

11.  Additional Funds for 3 Months:  $25,000 to $40,000

• Fleet Feet estimates the start-up phase to be 3 months from the date you open your business.

• The estimate of costs and startup working capital assumes a franchisee is leasing the location for their store.

• The additional funds estimate includes rent for the initial 3 months of operations post-opening. The estimate of additional funds does not include an owner’s salary or draw.

• You will need additional funds during the start-up phase of your business to pay employees, purchase supplies, pay utilities, taxes, loan payments, and other expenses. These amounts do not include any estimates for debt service. You must also pay the royalty and other related fees described in Item 6 of the disclosure document.

• These figures are estimates based on Fleet Feet’s affiliate’s historical experience in operating Fleet Feet stores, and Fleet Feet cannot guarantee you will not have additional expenses either in starting the business or during the first three months.

• Your costs will depend on factors such as: how closely you follow Fleet Feet’s methods and procedures; local economic conditions; the local market for your products and services; the prevailing wage rate; competition; the size of your territory; and the sales level reached during the initial period.

• In putting together these estimates, Fleet Feet relied on the experience of its existing franchisees.

• Your actual expenses incurred in the start-up phase of your business may be different from the estimated expenses, particularly if you decide to add services that are beyond those Fleet Feet initially recommends you provide.

12.  FFS Digital Monthly Payments – 3 Months:  $300

13.  Legal, Accounting, License/Registration Fees:  $3,000 to $10,000

14.  Total:  $187,000 to $413,000