Shack Shine Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

1. Initial Franchise Fee: $32,000 to $56,000

The low figure includes $20,000 for the first subterritory, plus $12,000 for one additional subterritory. While the majority of franchises will be two territories, Shack Shine may sell more than two subterritory franchises in certain appropriate markets or circumstances. The high amount above reflects a franchisee purchasing four subterritories. The subterritory Initial Fee is $12,000 per each additional subterritory.

2. Initial Marketing Expense: $10,000 to $20,000

The Initial Marketing Expense will be used by Shack Shine in its discretion to market and promote the Franchised Business prior to and during the first 6 months of operation. Should you purchase more than two subterritories, Shack Shine may recommend that you spend an additional $5,000 to $10,000 for Initial Marketing Expenses.

3. Computer Hardware and Software: $0 to $1,500

You must establish and maintain a high speed Internet connection for use in connection with your Franchised Business, and establish and operate such software, computer, communications, and other system hardware and software that Shack Shine prescribes.

The high end estimate represents the estimated cost to purchase and establish this equipment. If you already own equipment that meets Shack Shine’s requirements, your cost for these items will be $0.

You must purchase a cell phone for use in connection with the Franchised Business, and you will be responsible for all costs associated with the use and maintenance of the cell phone.

Upon termination or expiration of the Franchise Agreement, Shack Shine may, at its option, purchase the cell phone number from you for fair market value, or require that you cancel the cell phone number, the costs or penalties of which will be paid by you.

4. Vehicles and Graphics Lease/Purchase Deposit: $0 to $5,000

The above figures assume you lease one vehicle and represent the initial lease deposit for that vehicle. Some franchisees with good credit and who meet certain other vendor requirements may be able to lease a vehicle with no payments for the first six months of the lease term, as represented by the low end estimate of $0 shown above.

Costs may vary substantially, especially if you elect to purchase a vehicle rather than lease one.

You must purchase or lease vehicles which meet Shack Shine’s standards and specifications, and you are required to use only those vehicles in the operation of any part of the Franchised Business.

You are permitted to use those vehicles only for the Franchised Business and for no other reason.

You are required to abide strictly to Shack Shine’s vehicle requirements and standards, including its requirements for the vehicles to be decorated with its approved graphics package. Your vehicles shall be outfitted, wrapped, and/or decaled to Shack Shine’s specifications, the cost of which is included in the above estimated figures.

5. Vehicle Lease Administration Fee: $0 to $500

6. Real Estate/Rent: $0 to $4,500

You may want to operate your Franchised Business from a home-based office, in which case, there would be no cost to you for rent. Alternatively, you may rent an office space, in which case you must pay all rent and other fees payable under the lease.

Shack Shine estimates rent for designated office space would average $500 per month, but the amount of rent will vary widely depending on a number of factors, including size, condition, and location of the facility.

If you do not have sufficient storage space at your designated office, then Shack Shine recommends that you rent a 20’ by 10’ storage garage, which Shack Shine estimates would cost $250 per month. Prices for storage garages may also vary greatly.

The high estimate is for six months of rent for both an office space and separate storage garage.

7. Training Expenses: $2,450 to $6,200

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Training fees for your Principal Operator and any other director, officer, or shareholder of your entity that Shack Shine requires, are included in your Initial Fee; however, you are responsible for your travel, accommodations, and meals while training at Shack Shine’s training facility.

Costs will vary depending on your proximity to British Columbia and the number of people attending training. These expenses are typically not refundable.

Expected costs are based upon a 10-day estimated stay, with shared accommodations from $150-$300 per night; one meal per day at $20 per person (Shack Shine provides breakfast and lunch during training); air transportation at $500-$1,000 per person; and shared local transportation at $25-$80 per day.

The low figure above represents the cost for one person attending and the high figure represents the cost for two people attending.

8. Insurance: $2,000 to $8,000

You must obtain and maintain at all times during the term of your franchise the types of insurance policies or coverages and the minimum policy limits or maximum deductibles of any policy as specified in the Operations Manual (“Coverages”), which are apt to change from time-to-time.

This estimate includes your initial six months of insurance expenses, but you must continually maintain insurance coverage in such amounts as Shack Shine specifies.

You must also maintain at all times all insurance policies as required by the law in which your Franchised Business is operated.

9. Equipment and Supplies: $3,000 to $15,000

The cost of office equipment and supplies will depend on whether you already have such items (such as a desk, stationery, etc.). This item also includes all equipment that will be in the vehicles, such as pressure washers, water poles, safety equipment, etc.

10. Licenses and Permits: $150 to $500

Government agencies typically charge fees for permits and operating licenses. Your actual costs may vary from the estimates based on the requirements of federal, state, and local government agencies.

11. Professional Fees: $1,900 to $2,400

You will need to retain a lawyer, an accountant, and other consultants to assist you in establishing your Franchised Business. These fees may vary from location to location depending upon the prevailing rates of local lawyers, accountants, and consultants. These fees are typically non-refundable.

12. Additional Funds – 6 Months: $20,000 to $29,500

This estimates your initial operating expenses, including working capital, during the initial start-up months. Additional Funds relate only to costs associated with the Franchised Business and do not cover any owners’ draw or personal, “living,” unrelated business or other expenses you may have, such as royalty payments, debt service on any loans, state sales and/or use taxes on goods and services, and a variety of other amounts not expressly described and included in the notes above.

13. Total: $71,500 to $149,050