Restoration 1 Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

For a Standard Franchise

1.  Franchise Fee:  $54,900 to $59,275

• If you acquire a Standard Franchise, the initial franchise fee is $54,900 for a Territory that includes between 250,000 and 250,999 people, plus an additional $175 per 1,000 people over 250,000 in population.

• Most Territories for a Standard Franchise include between 250,000 and 275,000 people, which translates to initial franchise fees ranging from $54,900 to $59,275.

• The franchisor offers a $7,000 discount if you were honorably discharged from any branch of the United States military in the 10-year period before you apply to become a franchisee.

2.  Real Estate/Rent:  $0 to $450

• You can operate the Franchised Business from an office you set up in your or your Designated Manager’s home. You will also need up to 150 square feet of space to store service tools and equipment.

• The low estimate assumes that you have adequate storage space in an attached garage or other home-based storage area. The high estimate assumes that you will lease storage space and will pay a security deposit equal to 2 months’ rent to lease the unit.

• Estimated rental costs for 3 months are included with the category “Additional Funds.”

3.  Renovations and Improvements:  $250 to $500

• To adapt the office and storage area for the Franchised Business, you may need to make some minor renovations or improvements.

• The cost of renovations and improvements will vary depending on factors including the size, condition, and location of the facilities, local wage rates, and the cost of materials.

• The low estimate assumes that fewer improvements are needed.

4.  Encircle Startup Package:  $2,500

• You must purchase Restoration 1’s designated Encircle claims management software startup package prior to opening.

• Of the $2,500 fee: (i) $1,500 is paid to Restoration 1 as a one-time fee to set up your environment; and (ii) $1,000 is paid directly to the third-party licensor and covers the first 100 claims as well as the training program provided by the licensor of the software.

• After you first 100 claims, you must pay the licensor an additional fee of $10 per claim (you must purchase a minimum of 100 claims at a time).

5.  Office Equipment and Supplies:  $300 to $1,000

• You must purchase general office supplies including stationery, business cards, and typical office equipment.

• Factors that may affect your cost of office equipment and supplies include local market conditions, competition among suppliers, and other factors.

6.  Service Tools and Equipment:  $500 to $35,000

• You must purchase brooms, mops, buckets, vacuum cleaners, digital cameras, standard tools and hardware, and may purchase or lease dryers, blowers, and other service equipment for use in the operations of the Franchised Business.

• The low price range is based on leasing through a third party.

• Factors that may affect your cost of service tools and equipment include local market conditions, competition among suppliers, and other factors.

7.  Uniforms:  $250 to $650

• The range of costs provided represents an initial supply of uniform shirts that meet the franchisor’s standards and specifications.

• The costs will vary depending on the number of employees that you hire and the quantity of uniform shirts that you order.

8.  Computer and Software (excluding Encircle Startup Package):  $1,650 to $4,750

• You must purchase a computer and software necessary for operating the Franchised Business.

• The high estimate includes the optional claim management software. This fee does not account for the $10 fee per claim that is due directly to the third-party software provider for each claim that is filed.

• This estimate accounts for a three-month subscription of accounting software.

9.  Training (2 people while training):  $1,200 to $3,500

• The franchisor’s charge for providing its initial training is included in the franchise fee, but you are responsible for travel, local transportation, meals, and lodging incurred to attend initial training.

• The total cost will vary depending on the number of people attending, how far you travel, and the type of accommodations you choose.

10.  Vehicle:  $0 to $40,000

• You will need a tradesman van to accommodate the required equipment.

• The low estimate is based on the assumption that you own an acceptable late model tradesman van. The high estimate represents the estimated purchase price of a tradesman van.

11.  Marketing Materials:  $500 to $2,500

• During your first three months of operation, the franchisor recommends you spend at least $500 on local advertising and promotion, including online and internet marketing and advertising, dues for business organizations, event dues, or other solicitation and promotional efforts.

12.  Insurance:  $2,500 to $5,000

• You must purchase insurance as required by state law and of the type and with minimum limits as the franchisor specifies.

• Factors that may affect your cost of insurance include the size and location of the Franchised Business, value of the renovations and improvements, equipment, inventory, number of employees, and other factors.

13.  Licenses and Permits:  $250 to $5,000

• State and local government agencies typically charge fees for occupancy permits, operating licenses and permits to make improvements to your office and storage area.

• The low estimate represents the costs of standard occupancy permits and operating licenses. The high estimate represents the costs of standard occupancy permits and operating licenses, costs for building permits, and costs to obtain a contractor’s or an engineer’s license.

• Your actual costs may vary from the estimates based on the requirements of state and local government agencies.

14.  Certifications:  $700 to $3,500

• To be the primary owner of a Restoration 1 franchise, you must be certified by the Institute of Inspection Cleaning and Restoration Certification as a Water Damage Restoration Technician, and also preferably, but not mandatory, as an Applied Structural Dryer, Fire and Smoke Restoration Technician, and Applied Microbial Remediation Technician.

• The low estimate in this category assumes that you do not need to travel outside of your area to obtain the certifications. The high estimate in this category includes estimates of travel, local transportation, lodging, and meals in addition to tuition, course materials, and exam fees for all three certifications.

15.  Legal and Accounting:  $1,500 to $2,000

• You will need to employ an attorney, an accountant, and other consultants to assist you in setting up your business.

16.  Additional Funds (3 months):  $20,000 to $30,000

• The figures in the chart reflect estimated working capital needs for a three-month period. Based on the franchisor’s experience, however, some franchisees need working capital for a longer period, which may be seven months or longer. The figures in the chart, therefore, should be considered minimum amounts and you may wish to plan for additional cash reserves.

• They do no include a salary for the owner, or costs of financing.

17.  Total:  $87,000 to $195,625

• In compiling this chart, the franchisor relied on its and its affiliates’ industry knowledge and experience.

For a Micro Market Franchise

• Total:  $67,100 to $142,725