How Much Is an Ace Hardware Franchise? (Detailed Franchise Costs)

Ace Hardware Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

• The franchisor’s estimates of the ranges of initial investments in Ace stores are shown in Tables 1-3 below.

• Ace stores vary widely in size. As illustrations, a low-high range of estimates is set forth below for stores having between 3,000 and 15,000 square feet.

Start-Up Business – Leased Premises

1.  Initial Franchise Fee – Affiliation Fee:  $5,000

2.  Initial Franchise Fee – Capital Stock Subscription:  $5,000

3.  Advertising – Initial Brand Assessment:  $6,000 to $12,000

• The initial brand assessment for new stores is billed when a new store is activated. New stores opened in the first three quarters are billed $6,000 payable in a lump sum. New stores opened in the fourth quarter are billed $12,000 payable in installments.

4.  Exterior Signage:  $5,000 to $35,000

5.  Interior Decor:  $15,000 to $32,000

6.  Leasehold Improvements – Decorating, Furniture, and Fixtures:  $9 per square foot; $27,000 to $135,000

7.  Telephone, In-Store Communications, and Other Equipment:  $10,000 to $20,000

8.  Computer System with Point-of-Sale (Hardware/Software):  $45,000 to $85,000

• You are required to transmit orders electronically. The franchisor also requires you to operate a point-of-sale computer system in connection with the operation of your store.

9.  Rent – First 3 Months’ Rent:  $3,000 to $60,000

10.  Prepaid Expenses – Security Deposit, Dues, Permits, Subscriptions, and Other Prepaid Expenses – $3,000 to $15,000

11.  Opening Inventory:  $150,000 to $1,000,000

• The above assumes the Opening Inventory is purchased through Ace.

12.  Initial Supplies:  $500 to $2,500

13.  Insurance:  $2,500 to $30,000

• Insurance purchased through Ace Insurance Agency, Inc. may be refundable on an earned basis if canceled after the effective date.

14.  New Investor Retail Training:  $0 to $37,730

• New Investor Retail Training is required if you are a new member opening your first Ace store. If you are already a member and are opening a branch store, New Investor Retail Training is not required.

15.  Additional Funds – Working Capital for the First 90 Days:  $15,000 to $150,000

• This estimate is for the initial working capital, or cash reserve, necessary for you to have available during the first 90 days of operation. Working capital acts as a cash flow buffer in the event operating expenses exceed initial projections due to deficient sales.

• These expenses include inventory, payroll, and marketing expenses.

• Ace cannot guarantee these estimates. Factors considered in formulating the need for working capital include competition, prevailing economic or climatic conditions which might exist at the time your store opens for business, and the level of sales obtained during the first 90 days of operation.

• The working capital has been calculated by analyzing information obtained during the past 20 years by Ace and comparing them to industry averages.

16.  Total Estimated Initial Investment:  $292,000 to $1,624,230

Start-Up Business – New Construction

1.  Initial Franchise Fee – Affiliation Fee:  $5,000

2.  Initial Franchise Fee – Capital Stock Subscription:  $5,000

3.  Advertising – Initial Brand Assessment:  $6,000 to $12,000

• The initial brand assessment for new stores is billed when a new store is activated. New stores opened in the first three quarters are billed $6,000 payable in a lump sum. New stores opened in the fourth quarter are billed $12,000 payable in installments.

4.  Exterior Signage:  $5,000 to $35,000

5.  Interior Decor:  $15,000 to $32,000

6.  Land Purchase Costs (20% Down Payment):  $15,000 to $200,000

• The estimated low-high range for the purchase price of land is $75,000 to $1,000,000. The amount shown is a 20% down payment for this low-high range. It is assumed that the remaining 80% cost is financed through a mortgage loan.

7.  Building Purchase Costs (20% Down Payment):  $60,000 to $240,000

• The estimated low-high range for the purchase price of a building is $300,000 to $1,200,000. The amount shown is a 20% down payment for this low-high range. It is assumed that the remaining 80% cost is financed through a mortgage loan.

8.  Improvements – Construction Costs, Fixtures, Decorating, and Other Improvements:  $24,000 to $250,000

9.  Prepaid Expenses – Security Deposit, Dues, Permits, Subscriptions, and Other Prepaid Expenses – $3,000 to $15,000

10.  Telephone, In-Store Communications, and Other Equipment:  $10,000 to $20,000

11.  Computer System with Point-of-Sale (Hardware/Software):  $45,000 to $85,000

• You are required to transmit orders electronically. The franchisor also requires you to operate a point-of-sale computer system in connection with the operation of your store.

12.  Opening Inventory:  $150,000 to $1,000,000

• The above assumes the Opening Inventory is purchased through Ace.

13.  Initial Supplies:  $500 to $2,500

14.  Insurance:  $2,500 to $30,000

• Insurance purchased through Ace Insurance Agency, Inc. may be refundable on an earned basis if canceled after the effective date.

15.  New Investor Retail Training:  $0 to $37,730

• New Investor Retail Training is only required if you are a new member opening your first Ace store. If you are already a member and are opening a branch store, New Investor Retail Training is not required.

16.  Additional Funds – Working Capital for the First 90 Days:  $15,000 to $50,000

• This estimate is for the initial working capital, or cash reserve, necessary for you to have available during the first 90 days of operation. Working capital acts as a cash flow buffer in the event operating expenses exceed initial projections due to deficient sales.

• These expenses include inventory, payroll, and marketing expenses.

• Ace cannot guarantee these estimates. Factors considered in formulating the need for working capital include competition, prevailing economic or climatic conditions which might exist at the time your store opens for business, and the level of sales obtained during the first 90 days of operation.

• The working capital has been calculated by analyzing information obtained during the past 20 years by Ace and comparing them to industry averages.

17.  Total Estimated Initial Investment:  $361,000 to $2,119,230

Conversion Store

1.  Initial Franchise Fee – Capital Stock Subscription:  $5,000

2.  Advertising – Initial Brand Assessment:  $6,000 to $12,000

• The initial brand assessment for new stores is billed when a new store is activated. New stores opened in the first three quarters are billed $6,000 payable in a lump sum. New stores opened in the fourth quarter are billed $12,000 payable in installments.

3.  Exterior Signage:  $5,000 to $35,000

4.  Interior Decor:  $15,000 to $32,000

5.  Decorating, Furniture, and Fixtures:  $1 per square foot; $3,000 to $15,000

6.  Telephone, In-Store Communications, and Other Equipment::  $0 to $10,000

7.  Computer System with Point-of-Sale (Hardware/Software):  $8,000 to $85,000

• You are required to transmit orders electronically. The franchisor also requires you to operate a point-of-sale computer system in connection with the operation of your store.

8.  Opening/Replacement Inventory:  $0 to $600,000

• The above assumes the Opening Inventory is purchased through Ace.

9.  Initial Supplies:  $0 to $2,500

10.  Insurance:  $0 to $30,000

• Insurance purchased through Ace Insurance Agency, Inc. is refundable on an earned basis if canceled after the effective date.

11.  New Investor Retail Training:  $37,730

• New Investor Retail Training is only required if you are a new member opening your first Ace store. If you are already a member and are opening a branch store, New Investor Retail Training is not required.

12.  Total Estimated Initial Investment:  $42,000 to $864,230