Uptown Cheapskate Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

1.  Initial Franchise Fee:  $25,000

• This fee is reduced to $20,000 for the second and each subsequent franchise purchased. This fee is only refundable under certain circumstances as described in Item 5.

2.  Travel and Living Expenses While Training:  $2,000 to $5,000

• You will receive approximately 11 days of classroom and in-store training over a 2-week period at Uptown Cheapskate’s corporate office, a Salt Lake City area Uptown Cheapskate store, or at another location near Salt Lake City.

• You must also complete a 5-day internship at a Salt Lake City area Uptown Cheapskate store or at another Uptown Cheapskate location agreed upon by you and Uptown Cheapskate.

• Your franchise fee includes training for up to three individuals prior to opening your store.

• You must pay for travel, lodging, meals, compensation, and incidental costs for you and your employees for all training and the internship. The travel and living expenses estimate does not include fees for more than three individuals – which are estimated at $1,000/trainee.

3.  Real Estate Deposit, Improvements:  $15,000 to $115,000

• These fees assume that you will lease a 3,500 to 4,500 square foot space in a community shopping center and that the landlord will pay for some, but not all of the improvements. Rents range from $60,000 to $120,000+ per year depending on size, condition, location, and market conditions.

• Freestanding buildings in highly visible locations may also be considered although rents are usually higher than in community shopping centers.

• Landlords typically want the first and last months’ rent paid up front. Some require security and/or cleaning deposits.

• They may give rent concessions during the first few months of the lease, but it may take 12 weeks or more to acquire enough inventory to open your store.

• If you choose to purchase a building, you will probably pay more money up front for the down payment and improvements, but the monthly real estate loan payments may be less than monthly rental fees.

4.  Exterior Signs and Graphics:  $7,000 to $14,000

• The lower amount reflects the cost to purchase and install one 20″ tall sign in a typical community shopping center. Your costs will be higher at those locations that permit you to display a larger sign, or add a second or pylon sign.

5.  Interior Signs:  $4,000 to $6,000

• Signs which describe product categories and sizes, hours of business signs, window stickers, wall stickers, Uptown Cheapskate sign, point-of-sale signs, markdown signs, image graphics, restroom and fitting room signs, and policy signs.

6.  Trade Fixtures, Hangers:  $79,200 to $99,000

• These are estimated fixture costs for a typical 4,000 square foot store. They include the purchase of a sales and processing counter, storage cabinet, hangers, floor fixtures and displays, mannequins, slat wall, shelves, shelf standards, shelf brackets, hardware, and display hooks. Fixture prices typically vary from $19 to $25 per square foot.

7.  Computers, Scanners, Cash Drawers, Printers, Credit Card Machines, Routers, Cables, iPads, TV, etc.:  $13,079

• This cost includes all computer hardware and equipment necessary to purchase, price, tag, and sell inventory; track and report on sales, customers, vendors, inventory, accounts, and expenses.

• The purchase price for all computer equipment (including an estimated tax and a modest contingency) as of February 28, 2021 was $13,079. The price is subject to change after that date.

8.  BaseCamp Software Suite (which includes IMAP, Baseline point-of-sale, and “Q” software):  $10,000

• These costs include computer software necessary to purchase, price, tag, and sell inventory; track and report on sales, customers, vendors, inventory, accounts, and expenses.

• The purchase price as of April 1, 2021 was $10,000 for the BaseCamp software suite, which includes the IMAP, Baseline point-of-sale, and “Q” software from Uptown Cheapskate’s affiliate BaseCamp.

9.  Security Camera System:  $1,500 to $5,000

10.  Grand Opening Promotion:  $20,000 to $25,000

• Your grand opening (or re-opening) promotion will have two phases – phase one during which you advertise that you are purchasing product, and phase two during which you promote your opening.

• The minimum advertising expenditure you must make for these two phases is $20,000. (You must spend $10,000 over two months if you are purchasing a store in operation or that has been relocated.)

• In addition, you are required to spend the greater of $2,000 or 5% of Gross Sales per month on advertising during each half-year period you operate. The monthly base of $2,000 may increase annually.

11.  Opening Inventory:  $48,000 to $65,000

• The minimum opening inventory for a 3,500 sales area square foot store is $10,000 of new product ($3/sq. ft.) (whichever is greater) and 17,500 items (5 items per sq. ft.) of gently-used in-season inventory.

12.  Incorporation Documents:  $500 to $1,000

13.  Loan Fees:  $3,500 to $8,500

14.  Licenses, Permits, Utility Deposits:  $1,000 to $2,000

15.  Supplies, Miscellaneous Expenses:  $5,000 to $8,000

16.  Pre-Opening Working Capital:  $40,000 to $55,000

• This estimates the working capital required during the Open to Buy period. It includes payroll expenses for one full-time employee ($4,500), the first installment for store insurance ($1,000, see below), monthly utility payments ($1,500), high speed internet charges for three months ($300), rent for two months ($15,000), and miscellaneous expenses ($3,000).

• This estimate does not include any financing costs associated with the purchase of the franchise. Uptown Cheapskate cannot guarantee that your expenses will not be greater. Your costs will depend on factors such as: how well you follow Uptown Cheapskate’s operating system, your management skill, market conditions, lease rates, wage rates, media rates, the economy, and your competition.

17.  Additional Working Capital for 3 Months:  $35,000 to $45,000

• This estimates the working capital required during the first 3 months of operation. It includes payroll expenses for two full-time employees ($11,000), ongoing advertising expenses ($9,600), the first installment for store insurance ($1,500), monthly utility payments ($1,800), high-speed internet charges for three months ($300), rent for three months ($21,000), and miscellaneous expenses.

• This estimate does not include any financing costs associated with the purchase of the franchise. Uptown Cheapskate cannot guarantee that your expenses will not be greater. Your costs will depend on factors such as: how well you follow Uptown Cheapskate’s operating system, your management skill, market conditions, lease rates, wage rates, media rates, the economy, your competition, and initial sales levels.

18.  Total Estimated Initial Investment:  $309,779 to $501,579

• This total is an estimate of your pre-opening initial investment and the expenses you may incur during the first 3 months of Store operations.

• In compiling these estimates, Uptown Cheapskate relied on the years of combined retail, shopping center, and computer experience of its associates and its experience in opening more than 80 Uptown Cheapskate stores and over 100 Kid to Kid stores, and operating several Uptown Cheapskate and Kid to Kid stores.