Franchise Costs: Detailed Estimates of Urban Air Adventure Park Franchise Costs (2020 FDD)

Detailed Estimates of Urban Air Adventure Park Franchise Costs Based on Item 7 (Estimated Initial Investment) of Urban Air Adventure Park’s 2020 Franchise Disclosure Document

2.0 Version – Indoor Adventure Park

• The figures shown below are based on a single 2.0 Park that is 30,000 to 40,000 square feet or a single 2.5 Park that is 45,000 to 60,000 square feet.

1.  Initial Franchise Fee:  $75,000

2.  Security Deposits for Commercial Lease:  $36,000 to $57,000

• Based on Urban Air’s experience developing Adventure Parks, the security deposit for the Adventure Park premises is equal to one month’s base rent. The security deposit estimate is based on development of a 2.0 Park that is 30,000 to 40,000 square feet.

• These estimates assume that you will not be required to commence making monthly base rent payments until your Adventure Park opens for business to the public.

3.  Other Security Deposits:  $5,000 to $10,000

4.  Business License/Government Approval:  $300 to $1,500

• This cost will vary greatly depending on the legal jurisdiction in which your facility is located. Expenses typically incurred include, but are not limited to, filing fees for the organization of your business entity, building permits, certificates of occupancy, regulatory compliance, and food handler’s permits and required training.

• If your facility is not zoned for the appropriate use, you will need to rezone the facility in order to operate an Urban Air Adventure Park. Typical fees incurred to rezone your facility include the cost for legal fees, filing fees, engineering fees, traffic and parking studies, and third-party consultants.

5.  Leasehold Improvements:  $990,000 to $1,560,000

• The estimate for a 2.0 Park is based on a $33 per square foot cost for leasehold improvements and assumes a 30,000 to 40,000 square foot facility.

• The high side of the range includes an interior, 2nd floor mezzanine level inside the Adventure Park, which costs approximately $240,000.

• Leasehold improvement costs vary depending on whether a landlord provides an improvement allowance (i.e., tenant improvement allowance or “TI”). Your costs may vary depending upon your ability to negotiate a TI with the landlord for your Adventure Park premises.

• These costs include the cost of constructing the café but not the equipment needed for the café.

• In some cases, you may be requested to install noise attenuation devices or make modifications due to seismic zones.

6.  Audio-Visual (Equipment and Installation):  $110,000 to $175,000

• The estimate includes the specialty lighting, audio (such as speakers, amps, volume control, and microphones), security system (such as video recorder, cameras, hard drive, and monitor), data (such as router, switches, WAP, and cabling), and racks for hardware.

7.  Architectural Plans:  $46,500 to $62,000

• This fee represents the estimated base fee of architectural fees to design the interior of an existing facility between 30,000 to 40,000 square feet. The base fee for architectural plans prepared by Urban Air’s preferred architect is $1.55 per square foot and includes the site survey and coordination of the virtual reality and spin zone with the manufacturer.

8.  Café Equipment and Café Furniture:  $70,000 to $95,000

• You are required to have a café at your Adventure Park, which is constructed in accordance with Urban Air’s prototype and includes Urban Air’s designated equipment, unless otherwise approved by Urban Air in writing. These costs do not include the cost of the build-out of the café as such costs are included in the identified Leasehold Improvements.

• Further, this cost does include a standard package for tables and chairs. Depending on the size of your café, you may need additional furniture, booths, tables, and chairs, which may increase the cost of your cafe.

9.  Smallwares and Disposables:  $8,000 to $11,000

10.  Exterior Signage:  $5,300 to $34,000

• This fee may vary depending on the number and size of signs required for your facility.

10.  Interior Signage and Rules:  $13,950 to $38,200

• This fee may vary depending on the number and size of signs required for your facility, including the number of birthday party rooms.

11.  Furniture, Fixtures, and Equipment:  $54,000 to $95,000

• This fee identifies the range of costs for furniture, fixtures, and equipment other than that required for the café.

12.  Point of Sale and Computer Systems:  included in the monthly license fee

• The hardware costs include point of sale kiosks and computers for a standard number of kiosks. The cost of sale will depend on the number of kiosks your location needs.

13.  Base Attraction Equipment 2.0 Package:  $1,252,750 to $1,573,565

• This represents the cost of purchasing the required “Attraction Equipment” for a 2.0 Park, including Free-Roam VR product and Gear Up: Game On, as well as installation costs, unloading costs, and sales tax.

• For 2.0 Parks, the range does not include the cost of acquiring optional Attractions such as spin/flip zone, skydiving, go-carts, bowling, laser tag, go-karts, whirly ball, Esports, and battle guns.

• This range does not include any governmental tariffs, duties, or customs inspection fees.

• In addition, the cost of the Attraction Equipment may vary depending on the number of shipping containers used.

• The cost of Attraction Equipment is typically paid 70% upon placement of the order, 25% before shipping, and 5% before delivery and installation is scheduled.

14.  Required 2.0 Attraction Equipment Upgrade Package:  $130,000 to $500,000

• Urban Air currently offers three standard upgrade Attraction options for 2.0 Parks (Bowling, Flip /Spin Zone Bumper Cars, and Laser Tag). Franchisees opening a 2.0 Park must add at least one of the three upgrade Attraction options. Urban Air encourages you to add more than one upgrade Attraction option.

• Typically, a franchisee will invest in one, two, or three of these upgrade Attraction options to develop a 2.0 Park. The cost of two or three of these Attractions can be up to $500,000.

15.  Professional Fees:  $4,000 to $10,000

• Typically, these professional fees include (a) legal fees incurred to organize your business entity, lease negotiations, review and negotiation of your agreements with Urban Air and (b) CPA fees.

• Urban Air has negotiated an agreement with two law firms, who have no legal or other relationship with Urban Air and who will review and negotiate a commercial lease for you for a flat fee if you elect to retain their services.

16.  Travel and Living Expenses:  $1,500 to $7,500

17.  Initial Inventory (Merchandise):  $5,000 to $20,000

• Assumes sufficient inventory to operate for 30 days. This cost also includes a t-shirt and pair of socks for 100 staff members.

18.  Initial Inventory (Food):  $13,550 to $19,150

19.  Pre-Opening Wages:  $3,350 to $6,930

• This range assumes 4.62 hours of online digital training multiplied by 100 employees multiplied by the federal minimum wage of $7.25 on the low side and $15 per hour on the high side. If you elect to hire a general manager, you will also incur the cost of wages for such general manager (“GM”) from the date of hire.

19.  Insurance:  $5,000 to $45,000

• This sum represents the minimum initial down payment for the general liability insurance, excess insurance, worker’s compensation insurance, property insurance, and employment practices liability insurance. Total annual premiums for all coverages will be determined by each location’s amount of annual payroll, Gross Sales, and your landlord’s requirements, as applicable.

• The estimated annual premium for general liability insurance, based upon estimated Gross Sales (up to $1.8 million), is $50,500, which includes minimum required coverage for hired and non-owned auto. If you estimate your Gross Sales will exceed $1.8 million, you will pay a negotiated rate depending on your mix of attractions.

20.  Third-Party Inspection Fees:  $600 to $3,500

• This range of fees includes the $1,250 fee for the required inspection from a third-party inspector prior to your grand opening plus travel expenses. If you reschedule your inspection, you may incur additional costs from the third-party inspector.

21.  Grand Opening Advertising:  $30,000 to $50,000

22.  Working Capital:  $120,000 to $240,000

• The Additional Funds estimate includes various expenditures in addition to those otherwise listed in this Item for the first three months including, but not limited to the following: (a) state and local licensing fees, if any; (b) taxes, such as sales, use, and similar taxes levied or required by city, local, county, parish, state, or federal laws or regulations by virtue of the operation of a business; (c) deposits and costs of utilities, telephone; (d) background checks on employees; and (e) uniform costs for employees.

• The figures given are estimates and may vary from area to area.

• In compiling these estimates, Urban Air relied on its franchisees’ and its affiliates’ experience in operating Adventure Parks.

23.  Total:  $2,979,800 to $4,689,345

2.5 Version – Indoor Adventure Park

• This estimate is based on a single 2.5 Park that is 45,000 to 60,000 square feet.

• Total:  $3,503,800 to $7,479,345