How does the initial Fitstop franchise fee in Item 5 relate to the estimated initial investment in Item 7?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
IAL INVESTMENT**
| YOUR ESTIMATED INITIAL INVESTMENT | |||||
|---|---|---|---|---|---|
| Type of Expenditure | Amount | Method of Payment | When Due | To Whom Payment is to be Made | |
| Initial Franchise Fee1 | $50,000 | Lump sum | Upon execution | Us | |
| Initial Marketing Spend2 | $10,000 | Lump sum | Prior to opening | Approved Supplier for digital/online marketing; Third-Party Provider for other expenditures | |
| Other Initial Marketing and Promotional Activities2 | $1,000 to $10,000 | As arranged | As invoiced or agreed | Approved Supplier and/or other Third-Party Providers (videographer, etc.) | |
| Training-Related Costs and Expenses3 | $1,000 to $7,500 | As arranged | Prior to Opening | Third-Party Providers for Travel, Lodging, Meals and Local Transportation | |
| Site Selection Assistance | $0 to $10,000 | Lump sum | Prior to opening | Approved Supplier or other Third-Party Provider | |
| Security Deposit and other Pre-Opening Amounts under Lease for Approved Premises5 | $8,000 to $75,000 | As arranged between you and the landlord. | As negotiated and agreed in the lease | Third-Party Landlord | |
| Design and Layout | $3,000 to $10,000 | As arranged | Prior to opening | Approved Supplier(s) and/or Other Third-Party Provider(s) | |
| Operational Equipment and | $70,000 to $100,000 | Lump sum | Prior to opening | Approved Supplier(s) | |
| Supplies Package6 | |||||
| Leasehold Improvements7 | $100,000 to $325,000 | As arranged | As invoiced | Third-Party Contractor and Other Third-Party Vendors/Providers | |
| Signage: Exterior/Interior8 | $10,000 to $50,000 | As agreed | As invoiced | Approved Supplier(s) | |
| Computer System and Required Software – Initial Costs9 | $3,000 to $7,000 | Lump sum | As invoiced and prior to opening | Approved Supplier(s) | |
| Other FFE | $0 to $10,000 | As arranged | As incurred | Approved Supplier(s) and/or other Third-Party Vendor(s) | |
| Utility Deposits (water, | $1,000 to $3,000 | As | Prior to opening | Utility Providers | |
| electricity, gas) | incurred | ||||
| Insurance Premiums | $2,000 to $10,000 | As arranged | As incurred and invoiced | Third-Party Insurance Carrier/Provider | |
| Business Licenses & Permits | $500 to $10,000 | Lump sum | Prior to opening | Local, state, and/or federal government agencies |
| Professional Fees | $1,000 to $10,000 | As arranged | As invoiced | Third-Party Professional(s) – Lawyer and Accountant |
|---|---|---|---|---|
| Music Licensing | $500 to $1,000 | As arranged | Ongoing basis | Approved Supplier |
| Subscription10 | ||||
| (for play, not synch) | ||||
| Other Miscellaneous Pre- Opening Expenditures | $0 to $5,000 | As arranged | As incurred | Approved Supplier(s) and Third-Party Suppliers/Providers |
| Rent – 4 Months after | $20,000 to $50,000 | Lump sum | Prior to opening | Third-Party Landlord |
| opening11 | ||||
| Additional Funds – 4 Months Following Opening12 | $25,000 to $70,000 | Various | As incurred | Personnel of the Franchised Business; Approved Supplier(s) and/or Other Third-Party Providers; other vendors; state agencies; etc. |
| Total Estimated Initial | $306,000 to $823,500 | |||
| Investment |
Explanatory Notes to Item 7 Chart Above
General Note.
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the initial franchise fee is part of the total estimated initial investment. Item 5 states that the initial franchise fee is $50,000, which must be paid in a lump sum upon the execution of the Franchise Agreement. This fee is non-refundable and is considered fully earned by Fitstop once the agreement is signed.
Item 7 provides a detailed breakdown of the estimated initial investment, which includes the $50,000 initial franchise fee. The total estimated initial investment for a Fitstop franchise ranges from $306,000 to $823,500. Besides the franchise fee, other significant costs include initial marketing spend ($10,000), other initial marketing activities ($1,000 to $10,000), training-related costs ($1,000 to $7,500), site selection assistance ($0 to $10,000), security deposits and pre-opening lease amounts ($8,000 to $75,000), design and layout ($3,000 to $10,000), operational equipment and supplies ($70,000 to $100,000), leasehold improvements ($100,000 to $325,000), signage ($10,000 to $50,000), computer systems and software ($3,000 to $7,000).
The initial franchise fee is a fixed cost, whereas other components of the initial investment can vary significantly. For example, leasehold improvements can range from $100,000 to $325,000, and rent for the first four months can range from $20,000 to $50,000, depending on location and lease terms. The FDD also notes additional funds needed for the first four months post-opening can range from $25,000 to $70,000. These figures do not account for debt services or compensation for the Franchise Operator.
Prospective franchisees should carefully review all the costs outlined in Item 7 and consider local market conditions and consult with an accountant to ensure they have sufficient capital to launch and sustain their Fitstop franchise. Understanding the breakdown of the initial investment, including the non-refundable franchise fee, is crucial for financial planning.