WHAT IT TAKES
Franchise Investment Overview:
The following page offers an overview of the financial commitments involved in purchasing and operating a ZipCubes franchise. Keep in mind that this list does not reflect the time and energy commitment that will also be required by a successful franchisee and that the charts below are only estimates of costs of starting a ZipCubes franchise; your costs may be higher or lower.
Initial Franchise Fee:
$40,000
Ongoing Fees:
CUBE Rental Rate -
$1.00 per CUBE per day (subject to annual increase).
Each franchisee will rent the CUBES they use and must rent a minimum number of CUBES. There are no royalty fees.
This chart shows the minimum number of CUBES you must rent based on the size of your territory:
POPULATION |
DEADLINE |
MINIMUM # OF CUBES |
| Up to 150,000 |
First 30 days |
30 |
| 24th month and after |
60 |
| 150,001-300,000 |
12th month |
60 |
| 24th month and after |
90 |
| 300,000-600,000 |
12th month |
90 |
| 24th month and after |
120 |
| 600,001-900,000 |
12th month |
90 |
| 24th month and after |
150 |
| 900,001-1,200,000 |
12th month |
120 |
| 24th month and after |
240 |
| 1,200,001 and Up |
12th month |
1 CUBE for every 10,000
persons in the population |
| 24th month and after |
1 CUBE for every 5,000
persons in the population |
Advertising Fund Contribution -
$0.07 each CUBE each day the CUBE is rented to a customer (subject to annual increase).
This fund will be used to create and develop local, regional, and national advertising and public relations and promotional campaigns using print, radio, television, electronic or other media to promote and enhance that value of the ZipCubes brand and portable storage system.
Estimated Initial Investment (1):
90 Day Investment Period
EXPENSE
|
RANGE
HIGH MEDIUM LOW
|
WHEN DUE
|
METHOD OF PAYMENT
|
REFUNDABILITY
|
TO WHOM PAYMENT IS MADE |
| Initial franchise fee |
$40,000 |
$40,000 |
$40,000 |
Signing of Franchise Agreement |
Lump sum |
Refunded if ZCP cancels Franchise Agreement because you did not pass initial training or obtain location within four months & sign ZCP's termination agreement & release |
ZCP |
| Two months security deposit and three months rent for real property(2) |
$3,700 |
$2,500 |
$2,500 |
Signing of Lease |
Lump sum |
Variable |
Landlord |
| Leasehold improvement; structure (3) |
$36,000 |
$27,000 |
$18,000 |
As contracted |
As contracted |
As contracted |
Vendor |
Leasehold improvements;
fencing, gates, paint |
$4,000 |
$3,000 |
$2,000 |
As contracted |
As contracted |
As contracted |
Vendors and installers |
| Initial CUBErent (4) |
$2,737.50 |
$1825 |
$912.50 |
Within 30 days after delivery |
Lump sum |
Refunded if ZCP cancels Franchise Agreement because you did not pass initial training or obtain location within four months & sign ZCP's termination agreement & release |
Store Move Equipment, Inc. |
| Uniform shirts |
$200 |
$100 |
$50 |
Before starting operatins |
Lump sum |
None |
Designated supplier |
| Governmental permit fees, licenses, and conditional use permit |
$1,000 |
$1,000 |
$0 |
Before starting operations |
Lump sum |
None |
Government entities |
| Web-based business management system (5) |
$1575.50 |
$1,400 |
$1,400 |
Before starting operations and $200 each month |
Variable |
Variable |
Designated supplier |
| Office computer and software (6) |
$3,000 |
$1,500 |
$0 |
Before starting operations |
Variable |
Variable |
Vendor |
| Truck, forklift, and miscellaneous office furniture (7) |
$80,000 |
$55,000 |
$30,000 |
Before starting operations |
Variable |
None |
Vendors |
| Outdoor signs and window signs (8) |
$500 |
$500 |
$500 |
Before starting operations |
Variable |
None |
Sign Company |
| Training program travel and living expenses (9) |
$2,500 |
$2,500 |
$2,500 |
Before starting operations |
Variable |
Variable |
Airlines, hotels, restaurants |
| Initial fuel for truck and forklift |
$1,000 |
$700 |
$500 |
Before starting operations |
Lump sum |
None |
Vendor |
| Telephone, facsimile, and DSL lines |
$1,500 |
$1,500 |
$1,500 |
Variable |
At installation and monthly after that |
Variable |
Telephone and DSL service providers |
| Initial insurance premium and deposits |
$3,000 |
$3,000 |
$3,000 |
Before starting operations |
Lump sum |
Variable |
Insurance companies |
| Local advertising (11) |
$9,000 |
$6,000 |
$6,000 |
Variable |
Variable |
Variable |
Suppliers and vendors |
| Advertising and promotion fund contributions (10) |
$800 |
$600 |
$400 |
Monthly |
Monthly installments |
None |
ZCP |
| Payroll |
$12,000 |
$12,000 |
$12,000 |
Monthly during first three months of operation |
Variable |
None |
Employees |
| Additional funds - first 3 months: (11) |
|
|
|
|
|
|
|
| Working capital |
$5,000 |
$3,000 |
$2,500 |
Variable |
Variable |
None |
Utilities, miscellaneous suppliers and vendors |
ESTIMATED INITIAL INVESTMENT - FIRST 90 DAYS |
$207,513
|
$162,225
|
$123,762.50
|
|
|
|
|
21 Month Investment Period (begins after the 90 Day Investment Period)
EXPENSE
|
RANGE
HIGH MEDIUM LOW
|
WHEN DUE
|
METHOD OF PAYMENT
|
REFUNDABILITY
|
TO WHOM PAYMENT IS MADE |
| Real property lease payments |
$30,000 |
$13,200 |
$0 |
Monthly |
Monthly |
As contracted |
Landlord |
| CUBE rent (4) |
$110,500 |
$60,000 |
$30,000 |
As CUBES are needed |
As CUBES are needed |
None |
SME |
| Web-based business management system monthly fee (5) |
$5,775 |
$4,200 |
$4,200 |
|
|
|
Designated provider |
| Advertising and promotion fund contributions (10) |
$7,500 |
$4,700 |
$3,800 |
Monthly |
Monthly |
None |
ZCP |
| Local advertising (11) |
$63,000 |
$42,000 |
$42,000 |
As contracted |
As contracted |
As contracted |
Suppliers |
| Government fees |
$1,000 |
$1,000 |
$1,000 |
Variable |
Variable |
Variable |
Governmental agencies |
| Insurance |
$42,000 |
$21,000 |
$11,000 |
Variable |
Variable |
Variable |
Insurance companies |
| Refresher training and company meeting travel expenses |
$5,000 |
$5,000 |
$5,000 |
Variable |
Lump sum |
Variable |
Travel and loding providers |
| Fuel |
$10,000 |
$7,500 |
$5,000 |
As needed |
Variable |
None |
Supplier |
| Taxes |
$11,500 |
$4,000 |
$0 |
|
|
|
Governmental agencies |
| Telephone, facsimile, and DSL |
$10,500 |
$10,500 |
$8,000 |
Monthly |
Monthly |
None |
Service providers |
| Payroll |
$84,000 |
$63,000 |
$63,000 |
Monthly |
Monthly |
None |
Employees |
| Additional funds - months 4 through 2: (11) |
|
|
|
|
|
|
|
| Working Capital |
$15,000 |
$10,000 |
$23,500 |
Variable |
Variable |
Variable |
Utilities, miscellaneous expenses and vendors |
ESTIMATED INITIAL INVESTMENT - MONTHS 4 THROUGH 24 |
$395,775
|
$246,100
|
$196,500
|
|
|
|
|
TOTAL ESTIMATED INITIAL INVESTMENT - 24 MONTH PERIOD |
$603,288
|
$408,325
|
$320,262.50
|
|
|
|
|
1) The first chart is an estimate for the period that begins with your purchase of a ZipCubes franchise and ends 90 days after you have opened for business; it includes your estimated start up expenses and estimated initial operating expenses. The second chart is an estimate for the next 21 months of operation. ZCP expects that it could take 21 months for your ZipCubes business to produce net revenue, but you may take a longer or shorter period of time.
The types and amount of the expenses in this chart are only estimates of the costs you may incur to establish your ZipCubes business. They are based on OCSC's experience. Your expenses may be significantly different. ZCP cannot guarantee that you will not have additional expenses or predict how or which of your expenses may be higher or lower. Your costs will depend on many factors,including whether you are just adding the ZipCubes business to an existing business, whether you already have the truck and forklift you need to operate your ZipCubes business and what you have to pay for them in your territory if you do not already have them, how much of your operating and office equipment you already have or choose to rent rather than purchase,the cost of leased space in your territory, how much help you obtain from outside consultants or experts, local economic conditions and competition for equipment and labor in your area, as well as the other factors mentioned in Note 11. Review these figures carefully witha business advisor before you decide to purchase a ZipCubes Franchise.
2) If you already own or lease real property that fits the requirements for a ZipCubes Business location, you may not incur these expenses. See Item 8 for a discussion of the typical size, cost and features of a ZipCubes Business location.
3) You are not required but may choose to get a modular structure to store CUBES to protect them from weather.
4) The initial CUBE rental rate is $1.00 per CUBE. SME can increase the rental rate once each 12 months to reflect increases in its material cost and/or the general cost of living as reflected by the Consumer Price Index. This estimate does not include any potential increase in CUBE rental rates. You must pay SME all applicable state or local user taxes.
5) You must obtain the right to use the web-based business management system ZCP designates for use in your ZipCubes Business. The estimate includes the set up fee and first monthly support fee for the designated system for a low and medium range of up to 1,000 units and for ahigh range of 1,000 to 2,000 units. See Item 11 for additional information about the web-based business management sytem.
6) You must own or lease an office computer that meets ZCP's specifications and is used only for your ZipCubes Business. The estimate assumes you will purchase rather than lease the required computer. ZCP cannot predict whether you will be able to lease the computer or whether that would be economical. See Item 11 for additional information about the computer.
7) If you have a truck that meets ZCP's specifications your costs will be lower. You may be able to lease or finance the purchase of the truck and forklift. The figures assume you will purchase them. If you lease or finance either or both those items, your initial costs will be lower but your monthly costs will be higher.
8) This estimate assumes you will purchase rather than lease the required signs. ZCP anticipates that you will not be able to lease the signs.
9) ZCP provides initial training for up to two owners and three managers as described in Item 11. ZCP will charge for training of any additional personnel at its daily training rate, which is presently $250. You must pay for travel and living expenses for all your trainees and pay employee salary or wages.
10) In addition to the advertising and promotion fund contributions you will make to ZCP, ZCP may establish a cooperative advertising program for a particular geographical area or region that includes your territory and require you and the other ZCP Franchisees in that area or region to participate in and make contributions to the cooperative advertising fund. These estimates do not include any cooperative advertising program contributions. See Item 11.
11) This is the amount ZCP estimates you will need for working capital and miscellaneous other expenses during the first 90 days and the next 21 months of operation, respectively. The low range estimate assumes you will add this line of business to a compatible existing business and manage it yourself rather than start a new facility and hire a manager. This is not a representation that you will begin to make a profit or break even after 24 months. This amount does not include any return on or of your investment or any salary for you even if you work in the business rather than hiring a manager.
12) These figures are only estimates. Your actual costs will depend on many factors, including whether you are merely adding the ZipCubes services to an existing business and, if so,how much additional space you may need, the availability and cost of suitable space in your area, your creditworthiness, economic conditions in your area, the prevailing wage rate and availability of stable labor force at relatively low wages, the size of your locatin, whether you work in the business, the volume of business you reach during the initial operating period, how well,the concept of portable self-pack storage and moving is received in your territory, and the mobility of populatin in your territory. If you lase rather than purchase items your initial investment may be smaller, but your monthly operating costs and your total long-term investment will be higher, perhaps significantly higher. Your ability to lease rather than purchase some or all of thse items will depend on your creditworthiness and business history. You may not be able to lease allof them even if you would choose to do so. ZCP cannot predict whether you will have additional expenses to start your ZipCubes Business or whether your expenses will be higher than those in these estimates.
ZCP developed these estimates based upon OCSC's experience operating one nonfranchised unit in San Francisco during the past five years. The experience of other operators, particularly those who are required to lease a minimum number of units based on total population in their area and whose businesses are located in other geographical areas, particularly ones outside urban areas and not near colleges and universities, may differ.
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