Start Up Investment - Lice Clinics of America

START-UP COSTS

The start-up costs development is outlined in the following illustration. Most of the difference will depend on the cost of your build-out and your time to ramp up.

The total investment to open a Lice Clinic of America is estimated to be $68,000-$104,500. This includes a one-time “Franchise Payment” of $42,000. With regards to multiple territory purchases, we offer discounts based on the territory(s) and volume.

Franchise Fee:	$42K
Total (Including Franchise Fee) Investment:	$68 -104.5K
Business Type:	Franchise
Financing Available:	Yes, 3rd party financing available
Part-Time / Full-Time:	Full-Time commitment
Opportunities Available:	Exclusive territories available throughout the United States
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Type of Fee	Amount (See Note 1)	Due Date	Remarks
Use Fee	$35 per Device treatment, or $17.50 per Device treatment when treating Medicaid recipients	Due on the 5th business day of the month following the month in which the Use Fee was calculated	See Note 2
Use Fee Late Payment Fee	$150 per occurrence	As Incurred
Late Reporting Fee	$20 per day	As Incurred	See Note 3
Restocking Fee	10% of Device Accessories’ purchase price	As Incurred	See Note 4
Device Replacement	$800 for a new deposit on the Device, plus shipping and handling	As Incurred	See Note 5
Interest	(18%) per annum	When Due	Payable if you do not timely pay amounts owed to us
Indemnification	Will vary under the circumstances	As Incurred	You must indemnify us, and our officers, directors, shareholders, employees and agents for any claims or liabilities resulting from your negligent or intentional misuse of a Device; (ii) failure to maintain or repair a Device; (iii) the use of a Device by a person that is not a “Certified Operator”; (iv) the reuse of an Applicator Tip (as defined in Note 6); and your violation of the Franchise Agreement.
Costs and Attorneys’ Fees	Will vary under the circumstances	As Incurred	We may recover costs and attorneys’ fees if you lose in a dispute with us or that we incur in collecting any amounts owed to us
Transfer Fee	$5,000	Before completion of transfer
Renewal Fee	$5,000	At least 30 days before expiration of Franchise Agreement
Additional Training	Will vary under the circumstances	As Incurred	See Note 7
Audit Expenses	Will vary under the circumstances	As Incurred	See Note 8

Notes:

Except where otherwise noted, all fees are payable to us and are non-refundable and uniformly imposed and collected for new franchisees, although some existing franchisees with older agreements may pay lower fees.
We may choose to discount the Use Fee for such things as Medicaid Treatments (as defined in the Franchise Agreement) and other special occasions. These Use Fees are different from the Minimum Use Fees (as defined in Section 2(a) of Exhibit B of the Franchise Agreement) that relate to annual performance minimums.
You are required to report your previous month’s Treatments by the fifth calendar day of the following month. If you do not report those Treatments by that day, then we may charge you a $20 per-day late fee for every day you continue to fail reporting your Treatments.
You may purchase Device hoses, filters and replacement parts from us. If you return any of these items to us, we will pay you the purchase price you paid for them, less our restocking fee.
Should any Device we license to you be lost or stolen, you must notify us within 7 days of such event. You will lose the security deposit you had paid for that Device. You will then be required to pay a new security deposit for any replacement Device.
Applicator Tip is defined in the Franchise Agreement (Section 8(c)) as the single-use plastic tip that attaches to the Device during a Treatment.
We will not charge tuition for you and the manager of your Clinic to attend our initial training program, which is required prior to you opening your Clinic. We may, however, charge tuition for any additional training we provide to you, your owners (if you are an entity) or your managers. As of the issuance date of this disclosure document, we estimate that tuition for additional training will range from $100 to $1,000 per person, subject to change. See Items 7 and 11 for more information on training.
We have the right to audit your forms, books and records as they may relate to the use and operation of the Devices, so long as it doesn’t unreasonably interfere with your business operations. If the audit discloses an understatement of 5% or more, we have the right to be reimbursed for the reasonable costs of the audit, including travel, lodging, and reasonable accounting and legal costs. (See Franchise Agreement, Section 10(f).)

Type of Expenditure (See Note 1)	Amount (See Note 2)	Method of Payment	When Due	To Whom Payment Is To Be Made
Franchise Payment See Note 3	$42,000	Lump Sum	When you sign the Franchise Agreement	Us
Clinic Lease – Security Deposit and 3 Months’ Rent See Note 4	$3,600 to $7,500	As Agreed Upon	As Incurred	Third Party
Equipment and Furniture See Note 5	$5,950 to $10,650	As Agreed Upon	As Incurred	Third Party
Leasehold Improvements See Note 6	$0 to $14,000	As Agreed Upon	As Incurred	Third Party
Signs and Promotional Displays See Note 7	$250 to $6,000	As Agreed Upon	Before Opening	Various Third Parties
Device Deposits (Refundable) See Note 8	$800 to $3,200	Lump Sum	When you sign the Franchise Agreement	Us
Advertising and Promotion See Note 9	$5,400 to $6,600	As Agreed Upon	Before and after Opening	Various Third Parties
Travel Expenses for Training See Note 10	$1,600 to $3,650	As Agreed Upon	As Incurred	Various Third Parties
Other Prepaid Expenses and Deposits See Note 11	$1,400 to $1,700	As Agreed Upon	Before Opening	Various Third Parties
Miscellaneous Pre- opening Expenses See Note 12	$1,000 to $1,200	As Agreed Upon	Before Opening	Various Third Parties
Additional Funds – 3 Months See Note 13	$6,000 to $8,000	As Agreed Upon	As Incurred	Outside Suppliers
TOTAL See Note 14	$68,000 to $104,500

Notes:

This Table reflects your estimated initial investment for a single Clinic to be opened and operated within your Territory under the Franchise Agreement, and does not include any costs associated with the development of any Satellites within the Territory.
Except where otherwise noted, all fees that you pay to us are non-refundable. Third-party lessors, contractors and suppliers will decide if payments to them are refundable. Neither we nor our affiliates finance any part of the initial investment.
The first territory is $42,000. A second and any subsequent territories are $39,000 each. The Franchise Payment paid to us is more fully described in Item 5.
Clinics will generally be located in medical buildings, medical parks, strip malls, or free-standing locations. Rent will vary widely from location to location depending on many factors, including local market conditions, but we estimate it will range from $1,200 to $2,000 per month.
Your costs for equipment will vary depending upon the size and design of your Clinic. Equipment items include the following: phone (at least one mobile), front desk, 2-4 salon chairs, computer/printer/software, 1-2 iPads, display shelves, art, furniture, TV (optional), washer and dryer (optional).
Your costs for leasehold improvements will vary depending upon the size and design of your Clinic, its geographic location, costs assumed by your landlord, and other economic factors. A key factor is any electrical upgrades required for the power usage of the Devices. Leasehold improvements in this item include paint, flooring, lighting, electrical and any construction. It is possible that you may not have any leasehold improvements if you move into a ready-as-is location.
Depending on the building and landlord, you may have a large display sign on the exterior of your clinic/building. Some landlords will not allow you to use the Lice Clinics of America® name on the exterior.
The Device Deposit paid to us is more fully described in Item 5. The low end of the range assumes two Devices. The high end of the range assumes four Devices.
Advertising and promotion could include such items as flyers/brochures, Facebook ads, SEO fees, Google AdWords, and Yelp.
As a Clinic owner, you (and whoever is managing your Clinic, if different than you) must complete Device training and attend owner training prior to opening your Clinic. You must pay all costs associated with attending owner training, including airfare, hotel, meals, and wages and compensation for any individual attending training. Training is two full days in Salt Lake City, Utah.
Prepaid insurance and utility deposits may vary considerably, depending on the size and location of your Clinic.
Miscellaneous expenses include local permit and license fees, legal and accounting fees.
This amount estimates the expenses you will incur during the first three months of Clinic operations, including initial wages, occupancy costs and utilities, Clinic Retail Products, and shipping and handling for Clinic Retail Products and Devices. This estimate does not include your compensation during this three month period. The estimated range takes into account size of the Clinic, whether you will work in the Clinic or hire staff, and how many initial Clinic Retail Products you choose to stock, and assumes that there is no external financing. Your costs also will depend on factors such as local economic conditions, the prevailing wage rate, and how much you follow our systems and procedures.
This total is an estimate of your pre-opening initial investment and the expenses you will incur during the first 3 months of operating your Clinic in the Territory. This total and the other estimates in this table are based on information gathered from our franchisees that have collectively opened more than 186 clinics throughout the United States, as well as our experience opening our own corporate clinic and our over 10 years of experience in the lice treatment industry dating back to our development of the Device.

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START-UP COSTS

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