Detailed Estimates of Goosehead Insurance Franchise Costs Based on Item 7 (Estimated Initial Investment) of Goosehead Insurance’s 2020 Franchise Disclosure Document
1. Initial Franchise Fee: $25,000 to $60,000
- The Initial Franchise Fee will range between $25,000 and $60,000.
- Because the Initial Franchise Fee may be paid with a down payment of $10,000 and then 60 months of monthly installments, the minimum amount of cash needed for the Initial Franchise Fee to commence operations (and for the first three months) is $10,000.
2. Leasehold Improvements, Furniture, Fixtures, Utilities: $2,000 to $6,000
- The franchisor expects that you will lease commercial or retail office space.
- Depending on space availability and your landlord, you may need to arrange for improvements to the premises, the cost of which you may pay for up front or in the form of an increased rental rate.
- You will need to acquire general office furniture and fixtures. You will also need to arrange for the installation and hook-up of all utilities, including phone and Internet.
3. Rent: $1,000 to $4,000
- The franchisor expects that you will lease 200 to 1,200 square feet of office space, storage, and sufficient parking. The franchisor expects that your monthly cost of rent will be between $500 and $2,000, but may be higher or lower.
- The cost of leasing a site can vary considerably depending upon such factors as location, size, and the local real estate market. For example, the franchisor expects that most franchisees will obtain their own office space of about 500 to 1,000 square feet and in that event, the franchisor expects the rent costs would be in the high end of the range provided.
- Under appropriate circumstances, a franchisee may sublet as little as 200 square feet of space from another business (like a mortgage company or a real estate brokerage) with whom the franchisee may have or may develop a referral relationship. In that case, the franchisor expects the rent costs would be in the low end of the range.
- The estimate in the chart includes a security deposit and your first month’s rent payment for a total of two months’ rent.
4. Signage and Media: $500 to $2,500
- You must purchase signs and branded merchandise as the franchisor deems appropriate.
- If you operate a retail location, you will also be required to purchase external signage and your costs will be at the higher end of the range.
- If you do not operate a retail location, you are only required to purchase internal signage and your cost should be between $500 and $1,000.
5. Office Equipment and Startup Supplies: $3,000 to $6,000
- Your equipment and startup supplies include a computer and certain general office or business software. Your computer must have a secure, continuous connection to the Internet. You will also need other office equipment, including a desk, color printer, phone, and backup drive. You should also have a cell phone and a land line.
- You will pay a monthly fee to the franchisor of $350 for the first user and $275 for each additional user, to use the “Salesforce.com” customized software, the “EZLynx” and/or other comparative rater software, Microsoft Office, Adobe Acrobat, e-mail accounts, spam filter, and virus protection. This fee will also include access to the franchisor’s helpdesk, which is open 24 hours a day, 7 days a week, for assistance with network, PC/laptop, printer, and mobile device issues.
- The estimate above includes one month’s payment of the computer and support fee for 1 user. If you have more than 1 user, your costs will be higher.
- Other than the computer and support fee, all fees for office equipment and startup supplies must be paid before opening. The first payment of the Technology Fee will be due to the franchisor on the first day of the month which may fall either on the day your Franchised Business opens, or after your Franchised Business opens.
- You should expect the amount of this Technology Fee to increase each year based on the cost of additional software and processes made available to you.
- The estimates in the chart reflect the costs for 1 to 2 computers/computer users; if you need more, your costs may be higher.
6. Insurance: $2,000 to $5,000
- You must obtain certain insurance, as the franchisor determines necessary. Currently, the franchisor requires the following coverages: Commercial General Liability Insurance (minimum of $1,000,000 per occurrence and $1,000,000 general aggregate per location) and Professional Liability (Errors & Omissions) Insurance (minimum of $1,000,000 of coverage for every $5,000,000 of annual premium written by you with a floor of $1,000,000 of coverage and a maximum deductible of $15,000 allowed).
- The franchisor may also require you to obtain the following types of insurance: Business Automobile Liability Insurance covering all owned, non-owned, and hired automobiles; Employer’s Liability and Worker’s Compensation Insurance; Umbrella Liability; Property Insurance; and data theft and/or Cyber Risk Insurance.
- You may choose to obtain some or all of the required insurance policies through TWG, but you are not required to obtain any through TWG. From time to time, the franchisor may expand the insurance requirements and your coverage amounts.
- The estimate in the chart represents all premium payments for one year for all insurance policies currently required.
7. Licenses: $500 to $1,000
- You must obtain a general business license, if applicable in your state. You will also need to obtain a license to sell insurance for your state and any other states for which you may issue or service insurance policies.
- Some states may require multiple licenses for different types of insurance. Consult your attorney regarding requirements in your state.
8. Professional Fees: $1,000 to $5,000
- You may wish to engage a lawyer or an accountant to assist you in the review of this offering, the purchase of the franchise, forming a legal entity, or in obtaining any necessary permits or licenses. Your costs may be higher if you wish for your advisor to be heavily involved in the start-up process.
9. Training Expenses: $500 to $7,000
- You will not be required to pay any fees to attend the franchisor’s initial training program, but you will be responsible for all travel and living expenses which you, your Manager, and any of your Producers incur and for your employees’ wages while they are training.
- The costs will vary depending on the distance (if any) traveled, choice of accommodations and travel arrangements, and other similar factors.
10. Additional Funds for 3 Months: $6,000 to $20,000
- This estimate includes your start-up expenses during your first three months of operation. These expenses include out-of-pocket expenses, like payroll taxes and expenses, royalty, and other fees collected by the franchisor, rent, repairs and maintenance, advertising and marketing expenses, bank charges, state taxes, depreciation/amortization, and other miscellaneous items.
- This range does not include an estimate of your (or your Manager’s) salary. If you intend to draw a salary (or if you wish to employ a Manager who is not you) during the initial phase of business, you should modify these estimates accordingly.
11. Total: $41,500 to $116,500
- In formulating these estimates, the franchisor has relied on information provided to it by its franchisees who began operating before the date of the Disclosure Document, its experience, and TWG’s experience in the insurance services industry, and its officers’ and directors’ experience in the insurance services industry.