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

October 11, 2011


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.

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