Franchise Costs: Detailed Estimates of Hounds Town USA Franchise Costs (2019 FDD)

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

1.  Initial Franchise Fee:  $45,000

• The Initial Franchise Fee is $45,000 for the purchase of a Single Franchise.

• If you purchase a Multi-3 or Multi-5 Franchise, the only additional initial cost that you will incur over the purchase of a Single Franchise will be the increase in Initial Franchise Fee until you open the additional Hounds Town USA Businesses.

• The Initial Franchise Fee for a Multi-3 Franchise is $90,000 and allows you to open up to three Hounds Town USA Businesses. The Initial Franchise Fee for a Multi-5 Franchise is $120,000 and allows you to open up to five Hounds Town USA Businesses.

2.  Launch Fee:  $2,500 to $12,500

• The Launch Fee for your first Hounds Town USA Business is $12,500 and $2,500 for your second and each additional Hounds Town USA Business.

3.  Training Travel Expenses:  $2,000 to $3,000

• Hounds Town USA provides training at its corporate headquarters in Ronkonkoma, New York, or at another location designated by it (“Initial Training Program”).

• You must pay for airfare, meals, transportation costs, lodging, and incidental expenses for all Initial Training Program attendees.

• The Initial Training includes training for up to two people at no additional charge, including the managing owner; if additional initial training is required, or more people must be trained, an additional fee will be assessed.

4.  Rent – 3 Months:  $12,000 to $24,000

• This estimate is for the first three months’ lease rent for your Hounds Town USA Business (some landlords may require six months down payment). The Hounds Town USA Business will need approximately 4,000 to 6,000 square feet.

• The costs for your space will vary significantly from location to location and are dependent on such factors as the general cost, location, and availability of commercial real estate in your exclusive territory, the type of space selected, and the amount of space desired.

5.  Equipment:  $20,000 to $25,000

• The estimated initial investment includes costs related to the purchase of fencing for approximately 5 playrooms, grooming equipment, tables, tubs, washer, dryer, grooming tools, and facility cleaning equipment.

6.  Leasehold Improvements:  $90,000 to $180,000

• In most cases, you will need to build out the interior of your Hounds Town USA Business before opening. The costs will vary widely and may be significantly higher than projected in this table, depending on factors such as property location, population density, economic climate, prevailing interest rates and other financing costs, the conditions of the property, and the extent of alterations required for the property.

• All locations are required to maintain a minimum indoor temperature of 52 degrees Fahrenheit and a maximum indoor temperature of 82 degrees Fahrenheit. The high estimate assumes your building requires an HVAC system to meet these guidelines.

7.  Security and Utility Deposits:  $3,500 to $6,000

• Your actual deposit payments may vary depending upon your location and your market’s retail lease rates. Hounds Town USA Facilities will typically be 4,000 to 6,000 square feet in size.

• If you purchase instead of lease the premises for your Hounds Town USA Business, then the purchase price, down payment, interest rates, and other financing terms will determine your monthly mortgage payments.

• This estimate does not include any construction allowances that may be offered by your landlord.

• Building and construction costs will vary depending upon the condition and size of the premises for your Hounds Town USA Business and local construction costs.

8.  Opening Inventory:  $500 to $1,000

• This estimate is for your opening inventory of retail items (not including branded Hounds Town USA items included in the Grand Opening Marketing Package) and one pallet of approved dog food.

9.  Grand Opening Marketing Package:  $7,500

• This estimate includes three months’ worth of folders, brochures, business cards, envelopes, letter head, staff shirts, report cards, logo decals, banners, Hounds Town bandanas for dogs, plus 3-4 Hounds Town branded retail items such as Frisbees, coffee mugs, and dog toys.

• It also includes a video marketing package specific to your location, to be used to market your business.

10.  Business Licenses and Permits:  $200 to $2,500

• You may be required to obtain business licenses from local government agencies to operate your Hounds Town USA Franchise. You may also need a building permit while you are building out your Hounds Town USA Business.

11.  Fire Alarm System:  $2,500 to $15,000

• Your location must be centrally alarmed to your local fire department. You may be required to install a fire alarm system with this capability. Cost will depend on the laws and ordinances within the town in which your business is located.

12.  Signage:  $5,000 to $8,000

• This estimate is for a full signage on the front exterior of the building. This includes awnings over front exterior windows, illuminated awning along front entrance of building, and one road sign.

• The type and size of the signage you install will be based upon the zoning and property use requirements and restrictions. There could be an occasion where certain signage is not permitted because of zoning or use restrictions.

13.  Insurance – 3 Months:  $2,100 to $4,000

• This estimate includes three months of payments. You must obtain and maintain, at your own expense, the insurance coverage Hounds Town USA requires, and satisfy other insurance-related obligations.

• Insurance coverage must include comprehensive public liability, general liability, bodily and personal injury liability, death and property damage, automobile liability, business property at replacement cost, product liability, employer’s liability and workers’ compensation, commercial liability umbrella, errors and omissions, business interruption and rent insurance, and other types of insurance as Hounds Town USA may require in the future.

14.  Computer System:  $2,500 to $3,500

• This estimate includes the computer equipment, software and installation, license for the software, which also includes technical support, and hosting services for your Hounds Town USA Business.

• You must purchase the designated point-of-sale cash register system for your Hounds Town USA Business and pay for annual tech support from the supplier.

15.  Closed Circuit Camera Systems:  $10,000 to $12,500

• This estimate includes the cost to install a closed-circuit camera system in your Facility. This system is for internal use only (not for customers or third parties).

• The camera system must provide video coverage of all areas of your Facility including all entryways, parking lots, and outdoor areas. The system must be recorded through the use of a DVR or similar system, with the ability to access, playback, and save video.

16.  Professional Fees:  $2,500 to $5,000

• This estimate includes estimates for your architect to develop plans for the build-out of your Hounds Town USA Business.

• Hounds Town USA strongly recommends that you hire a lawyer, accountant, or other professional to advise you on this franchise offering. Rates for professionals can vary significantly based on area and experience.

17.  Grand Opening Advertising:  $10,000

• You must spend a minimum of $10,000 on grand opening advertising starting 30 days before your grand opening and 60 days after.

18.  Vehicle Lease, Signage, Insurance – 3 Months:  $6,000 to $8,000

• You must have a vehicle for your Hounds Town USA Business to transport dogs (“Vehicle”). Your Vehicle must be able to accommodate large-breed dogs, must be in good working order, and must be approved by Hounds Town USA in advance.

• Hounds Town USA’s estimates assume that you will lease your Vehicle. If you purchase the Vehicle, your initial investment will be higher than the figures listed in the chart.

• The cost of vehicle signage can range between $2,500 and $3,500, depending on the type of Vehicle the signage is being installed on and the size of the signage. Your Vehicle is required to be wrapped with the approved Hounds Town USA artwork prior to opening the Hounds Town USA Business.

19.  Additional Funds for 3 Months:  $30,000 to $50,000

• These amounts represent Hounds Town USA’s estimate of the amount needed to cover your expenses for the initial three-month start-up phase of your Hounds Town USA Business.

• They include payroll costs during the first three months of operation, but not any draw or salary for you, utilities, advertising, rent, accounting and other professional fees, memberships, and other operational expenses.

• Hounds Town USA’s estimates are based on its experience, the experience of its affiliates, and its current requirements for Hounds Town USA Franchises.

20.  Total Estimated Initial Investment:  $263,800 to $422,500