Item 7 Notes

Notes to Chart

  1. We intend to sell franchises with mailing territories of 50,000 households (five zones), but will approve territories of different sizes depending on various factors, such as geography or business counts.  For franchisees purchasing four or five new territory zones, the initial franchise fee is $59,900.  For transitional territories, the purchase price is usually the same as the initial franchise fee, but we reserve the right to modify the purchase price depending on the goodwill and financial performance and other metrics in the territory.  See Item 5. For franchisees purchasing six or more new territory zones, we will negotiate the initial franchise fee or purchase price.  Through the Veterans Transition Franchise Initiative (“VetFran”) program, we will provide a 25% discount on the initial franchise fee for new franchises who have served in the United States armed forces in the five years prior to their application for a franchise. With the discount, your initial franchise fee will be $44,925.  The entire initial franchise fee or purchase price is payable upon the signing of the franchise agreement and is not refundable.  Whether other fees or amounts may be refunded by the various vendors will depend on the chosen vendors’ separate refund policies.  Check with your vendors about possible refunds.
  2. You are not required to open a separate physical office outside your home. The low figure represents your cost working from a home office, while the high figure estimates your first and last months’ rent of $550 plus deposits should you elect to lease an office. You should verify local costs and deposit requirements as costs differ from area to area. Deposits may differ because of your past history with vendors. Should you elect to open an outside office, you are solely responsible for locating and obtaining suitable office space. You must install a reliable business telephone line and the necessary internet connectivity to use our proprietary software and business systems. If your franchise is terminated or sold, you must assign the telephone line and telephone number to us.

  3. The initial franchise fee includes the cost of our initial training program. However, you must pay for all other incidental costs (transportation, lodging, meals, etc.) while completing Money Mailer University (“MMU”) and field training. Because MMU and field training are usually held in your market, the low figure assumes that you will have no transportation costs and will lodge at home. The high figure includes incidental costs if we need to hold MMU at a different location.
  4. You must have a reliable automobile and purchase suitable automobile insurance coverage for use of your car in your business (a minimum “100/300” property/casualty coverage) and name us as an additional insured on all policies. You may purchase additional insurance, including general business liability insurance. You should contact your insurance agent to determine the proper types and amounts of insurance required for your business. The chart in Item 7 assumes you already have an automobile. The listed cost is for any additional auto insurance you may need to obtain.
  5. All franchisees must have all of the equipment and materials listed in Item 11. You must purchase this equipment and materials at your own expense before starting the business. You need this equipment to order our products and services and to perform other general day-to-day business functions. Unless we otherwise approve your use of your existing tablet or laptop, you must purchase the tablet and Office 365 license we designate through us. You will pay for this equipment and software concurrently with your initial franchise fee. The total low and figures represent the typical variance in price for the listed equipment. The low figure includes the annual 0365 license fee for one to five users ($240) and the high figure includes the annual fee for six to ten users ($480). We have the right to solicit vendors to provide this equipment.
  6. You must purchase a mobile telephone from a supplier of your choice.
  7. You must purchase a CRM software subscription from us. See Item 6 and Item 8.
  8. If you are qualified to receive our launch package, you must purchase credit card processing services to be able to use our AdCampaigns point of sale software, which you are required to use. The low and high figures represent one-time set up fees only and do not include ongoing monthly fees and actual interchange fees that will become due when you begin operating the business and accepting credit card payments from advertisers. We have a preferred supplier for these services, but you may elect to use a supplier of our own choosing as long as such supplier can be integrated into our MMO and AdCampaigns software.
  9. The disclosure laws require us to include an estimate of all costs and expenses to operate your franchise during the “initial phase” of your business. The figures in the chart represent our estimate of the costs and expenses you will incur during the period before your first scheduled mailing, which will typically be one to four months after you sign your franchise agreement. These figures assume that you will receive no operating income during this period and cover only utilities, and business-related automobile expenses beyond those you would otherwise incur. The estimates do not include royalty fees and related charges, and they do not include any interest or other financing costs you may incur, which will vary depending on how much money you borrow. They also do not include your living expenses, which vary greatly by person and by geography.
  10. The total amounts do not take into consideration the purchase price that may be negotiated if you purchase a transitional territory with financial and operational factors that warrant a purchase price different than the standard initial franchise fee for a new territory. See Item 5.

GENERAL

We have prepared these estimates on the basis of our experience and that of our existing franchisees. These estimates cover your initial cash investment up to the opening of your business. The “Additional Funds” line covers our estimate of certain costs you will incur during the first four months of operation. They do not provide for your cash needs to cover any financing incurred by you or your personal living expenses or any working capital necessary to cover your future mailing costs or build up your accounts receivable. We cannot predict, and you should not plan to draw, any net income during the start-up and development stage of your business, the actual duration of which will vary materially from business to business and which is likely to extend for longer than the one to four month “initial phase” described in Note 9. You must have additional sums available, whether in cash or through a bank line of credit, or have other assets that you may liquidate or against which you may borrow, to cover personal living expenses, mailing costs and any operating losses you may sustain during your start up and development period, the length of which will depend on how long it takes you to develop the necessary client relationships and become proficient in our sales methodologies and techniques among other factors. The amount of necessary reserves varies greatly from franchisee to franchisee and depends upon many factors, including your requirements for living expenses and the rate of growth of your business. You should have at least six months in reserve for living expenses. Because the exact amount of reserves varies from operation to operation and we cannot meaningfully estimate these reserves, we urge you to retain the services of an experienced accountant or financial advisor to develop a business plan and financial projections for your particular operation. You should contact existing Money Mailer franchisees to discuss their experiences and start up and development expenses and costs.