To whom are payments for leasehold improvements made when opening an Extreme Art Studio?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
INVESTMENT
| Type of Expenditure (1) | Amount | Method of Payment | When Due | To Whom Payment is to be Paid(1) | |
|---|---|---|---|---|---|
| Low | High | ||||
| Initial Franchise | $45,000 | $45,000 | Lump sum | Upon signing Franchise | Us |
| Fee(1) | Agreement | ||||
| Furniture, Fix |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 18–23)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, leasehold improvement payments are made to landlords, contractors, and other suppliers. These improvements, which involve the design and build-out of the studio, including plumbing, electrical, and remodeling work, are estimated to cost between $25,000 and $125,000. These costs can fluctuate based on the size, condition, and location of the leased premises, the supply and demand for materials and labor in the local area, local building and fire code requirements, and the lease terms regarding construction and signage.
Extreme Art Studio estimates that a typical location needs between 2,000 and 2,500 square feet, with lease rates ranging from $2.25 to $5.00 per square foot per month. Franchisees may be able to negotiate a tenant improvement allowance with the landlord to help cover these costs. In a build-to-suit lease, the landlord may include some or all of the improvements and fixtures in the lease payments.
Prospective franchisees should carefully consider these costs and negotiate favorable lease terms to manage their initial investment. It is important to investigate lease rates and potential landlord contributions in the specific area where the Extreme Art Studio will be located to get a more accurate estimate of these expenses. Franchisees should also be aware of potential additional costs if the landlord does not provide the standard work letter or an adequate allowance for improvements.