Franchise Costs: Detailed Estimates of Fresh Coat Franchise Costs (2019 FDD)

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

1.  Initial Franchise Fee:  $44,900

• The amount of the initial franchise fee for a Fresh Coat franchise for a territory with a population of between 175,000 and 200,000 is $44,900. If the population of your territory exceeds 200,000, you must pay an additional $500 for each 1,000-population unit (or any portion of a 1,000-population unit) in excess of 200,000.

2.  Furniture and Equipment:  $0 to $1,000

3.  Website Fee:  $95

• You must pay a fee to cover the cost and maintenance of website(s) and web hosting services you will use in the operation of the business.

4.  Computer System:  $1,000 to $3,000

• The cost of the computer equipment and software you will need to operate your franchise will depend upon the manufacturer, the operating features, whether the equipment is new or used, and whether you purchase, rent, or lease it.

5.  Travel and Living Expenses While Training:  $500 to $1,500

• Fresh Coat does not charge an additional fee for the initial training, but you must pay the expenses of travel, lodging, food, wages, and workers’ compensation for you and/or your employees during the training program.

• Fresh Coat estimates that these expenses will range from $500 to $1,500, depending upon the distance and method of travel and the availability and quality of your hotel accommodations and living expenses during the training program.

6.  Initial Rent, Telephone, Bank, Licensing Fees, and Other Deposits:  $0 to $2,000

• Your telephone service provider may require a normally refundable deposit for commercial service. You are required to have a separate business telephone line for your franchise and either an employee to answer your line or a live answering service at all times during regular business hours.

• Some states also require a deposit for workers’ compensation coverage or a licensing fee.

7.  Insurance:  $2,000 to $6,000

• You must obtain and maintain the types and amounts of insurance coverage described in Item 8 under the heading “Insurance.”

• Fresh Coat estimates that the average total annual cost for the required insurance coverage will be between $2,000 and $6,000.

• The premium is typically due prior to the effective date of the coverage unless your insurance company offers installment payment terms.

• Insurance costs will vary depending upon the location and size of your office, the number of employees, the value of your equipment, your claims history, and other factors, and may change from time to time due to changes in insurance rates.

• You must also maintain workers’ compensation and employers’ liability coverage and any other insurance that may be required by law in your territory, but premiums for these coverages are not included in the estimate above.

8.  Grand Opening Promotion:  $3,000 to $4,000

• Before you open your Fresh Coat franchise, you must spend at least $3,000, as directed by Fresh Coat, on a Grand Opening Promotion. This will include marketing materials and advertising to promote the business.

• You may wish to spend more than $3,000 on the Grand Opening Promotion, depending upon the size of your market, the marketing techniques you use, and the cost of advertising in your market, but you must provide Fresh Coat with receipts confirming that you spent the required minimum amount as directed by it.

• No part of the Grand Opening Promotion expenses will be refundable. You will purchase the marketing materials and advertising from approved suppliers.

9.  Compliance with Regulations:  $450 to $1,350

• The Environmental Protection Agency requires certain training and certification for home improvement contractors that may encounter lead-based coating in buildings. Among other things, the EPA regulation requires the contractor to notify homeowners, be present during certain types of jobs, train employees, and maintain certain administrative documentation.

• Before you open your Fresh Coat franchise, you and your employees will need to be trained to comply with this regulation by a certified trainer. The training will be at or near your location and will require 8 hours of training for you and 4 to 8 hours for each of your employees.

• Fresh Coat estimates the registration to be $300 for the initial certification and an additional $150 to $325 for training.

10.  Additional Funds for 3 Months:  $2,000 to $10,000

• Fresh Coat estimates that you should have approximately $2,000 to $10,000 of additional funds for the ongoing costs of your business, such as payroll, utilities, advertising, taxes, and similar items, to the extent that business costs are not covered by revenues during the first 3 months of operation.

• These figures are estimates and Fresh Coat cannot guarantee that you will not have additional expenses starting the business, that these amounts will be adequate, or that additional investment by you will not be necessary during the 3 months of initial operation or afterwards. Your actual costs may be higher.

• You may also incur expenses for business license fees, legal fees, accounting fees, and local permits and operating authorizations necessary to start your business, which may vary considerably from one area to another.

• In formulating the amount required for additional funds, Fresh Coat relied upon the experience of its former affiliate, REM Painting, in starting and operating a business substantially similar to the franchised business.

11.  Monthly Office Rental Payment:  $0 to $1,000

• The terms of your lease will depend on the size, location, condition, and desirability of the premises. You will probably be required to pay a normally refundable security deposit, which is reflected in the figures above.

• Fresh Coat recommends that you operate your franchise from your home.

12.  Vehicle:  $0 to $2,000

• You will need a vehicle to move from site to site and to speak with clients and potential clients. It is anticipated and recommended that you and your employees will use their own vehicles. If necessary, Fresh Coat anticipates that you can lease a vehicle for $500 a month or less.

• Having a suitable vehicle may be a requirement of employment for your employees.

• Vehicles may need to be outfitted to accommodate ladders and tools.

13.  Total:  $53,945 to $76,845

• The estimates listed above relate only to costs associated with the franchised business, not personal, “living,” or other expenses you may have. The estimates do not include compensation for your time or labor, or take into account any finance charges, interest, debt service, or other costs that you may incur to finance all or any portion of your investment.