Estimated Initial Investment Example | Sample Franchise Disclosure Document | Item 7

ITEM 7: YOUR ESTIMATED INITIAL INVESTMENT

(Column 1) Type of expenditure	(Column 2) Amount	(Column 3) Method of payment	(Column 4) When due	(Column 5) To whom payment is to be made
Initial franchise fee	$15,000 (note 1)	Lump sum	At signing of franchise agreement	Belmont Mufflers, Inc.
Travel and living expenses while training	$2,500 to $5,000	As incurred	During training	Airlines, hotels, and restaurants
Real estate and improvements	(Note 2)	(Note 2)	(Note 2)	(Note 2)
Equipment	$40,000 (note 3)	Lump sum	Prior to opening	Belmont or vendors
Signs	$2,200	Lump sum	Prior to opening	Abbey Sign Company
Miscellaneous opening costs	$8,000 (note 4)	As incurred	As incurred	Suppliers, utilities, etc.
Opening inventory	$8,800 (note 5)	Lump sum	Prior to opening	Belmont or vendors
Advertising fee – 3 months	$500	As incurred (% of gross sales)	Monthly	Belmont
Additional funds – 3 months (note 6)	$23,000 to $45,000	As incurred	As incurred	Employees, suppliers, utilities
TOTAL (note 7)	$100,000 to $124,500 (note 8) (Does not include real estate costs)

Notes:

1. See Item 5 for the conditions when this fee is partly refundable. W e do not finance any fee.
2. If you do not own adequate shop space, you must lease the land and building from us. Typical
   locations are light industrial and commercial areas. The typical Belmont Mufflers Shop has 8,000
   square feet. Former three-or-four-bay gasoline service stations have been converted into a
   Belmont Mufflers Shop. Rent is estimated to be between $52,000 – $120,000 per year
   depending on factors such as size, condition, and location of the leased premises.
3. This payment is fully refundable before equipment installation. After installation, we deduct
   $3,000 installation costs from your refund.
4. This includes security deposits, utility costs, and incorporation fees.
5. This payment is fully refundable before we deliver your inventory. After delivery, we will deduct a
   10% restocking fee from your refund.
6. This estimates your start-up expenses. These expenses include payroll costs. These figures
   are estimates and we cannot guarantee that you will not have additional expenses starting the
   business. Your costs will depend on factors such as: how much you follow our methods and
   procedures; your management skill, experience and business acumen; local economic
   conditions; the local market for our product; the prevailing wage rate; competition; and the sales
   level reached during the initial period.
7. Except as indicated, we do not offer direct or indirect financing to franchisees for any items.
8. We have relied on our 24-years of experience in the muffler business to compile these
   estimates. You should review these figures carefully with a business advisor before making any
   decision to purchase the franchise.