Kitchen Tune-Up
Date Incorporation: 1988
Franchising Since: 1988
Headquarters: South Dakota
Description: Kitchen Tune-Up (KTU) provide on-site wood restoration and repair services along with offering replacement cabinet doors, cabinet refacing materials, replacement cabinet and furniture hardware, new cabinets, closet and shelf organizers, and other services and products relating to home improvement and remodeling.
Franchise Offer: Kitchen Tune-Up franchise offer is to own and operate a Kitchen Tune-Up business which will sell on-site wood restoration and repair services, replacement cabinet doors, cabinet refacing materials, replacement cabinet and furniture hardware, new cabinets, and closet and shelf organizers.
Financial Assistance:
Summary of financed offered:
| The Item Financed | Startup Package |
|---|---|
| Source of Financing | KTU |
| Down Payment | None |
| Amount Financed | $20,000 |
| Term | 2 years (24 months) |
| Interest Rate | The current New York prime rate plus 2 percentage points |
| Monthly Payment | Varies depending on interest rate |
| Prepayment Penalty | None |
| Security Required | Security interest in equipment |
| Guarantee | Personal guarantee from YOUR owners |
| Liability upon Default | Termination of franchise |
For new franchisees who cannot, or who do not wish to, pay the lump sum payment for the Startup Package, KTU will allow installment payments to be made. This installment payment plan is available to any franchisee who has a positive net worth and who has not declared personal or business bankruptcy within the past 5 years. There is no limit on the number of new franchisees who can participate in this installment payment plan.
Training and Assistance: The franchisor will train the franchisee, their manager, or any additional people designated by the franchisee. The franchisor requires up to 10 days of classroom and practical training at their headquarters in Aberdeen, South Dakota. In addition, a minimum of 3 days of field training is required. Field training will consist of working with a current franchisee that the franchisor designates.
Territory: The franchisee receives a specific franchised area. The boundaries of the franchised area are principally based on the number of owner occupied households in the proposed area. The franchisee may be given the exclusive right to provide Kitchen Tune-Up services and products in the franchised area, or the franchisee may be given the non-exclusive right to provide Kitchen Tune-Up services and products together with a specified number of other franchises. Those other franchises may already exist, or may be established later. Generally, the franchisor establishes non¬exclusive franchised areas when advertising cannot be limited to a specific franchised area
Term of Agreement and Renewal: The term of the franchisee agreement is 10 years with an option to renew for an additional 10 year term subject to the requirements in the franchise agreement. If renewal is offered to the franchisee, there us no fee to renew the franchise business if the franchisee signs and delivers the Letter of Intent at least 180 days prior to the end of the franchise term. If the franchisee does not sign a Letter of Intent, as requires, they must pay a renewal fee of $5,000.
Obligations and Restrictions: While the franchisee is not obligated to participate personally in the direct operation of the franchise business, they must retain and exercise management control over their franchise business. The manager must be approved by the franchisor and have successfully completed the training program. The franchisee must offer and sell only those services and products that the franchisor has approved. The franchisee must offer all services and products that the franchisor designates as required for all franchisees.
Total Number of franchises Units: The total number of franchised units for year ended 2007: 317
Investment Tables:
Initial Investment:
| Name of fee | Low | High |
|---|---|---|
| Deposit | $5,000 | $5,000 |
| Balance of Initial Franchise Fee | $20,000 | $20,000 |
| Franchised Area Fee | $20,000 | $20,000 |
| Startup Package | $20,000 | $20,000 |
| Travel and Living Expenses While Training | $3,000 | $4,000 |
| Vehicle and Vehicle Signage | $500 | $1,600 |
| Misc. Tools and Office Supplies | $350 | $1,500 |
| Misc. Opening Costs | $200 | $1,500 |
| Insurance | $1,000 | $3,000 |
| Advertising - 3 months | $10,500 minimum | $10,500 minimum |
| Additional Funds - 3 months | $2,500 | $4,000 |
| Estimated Initial Investment Totals | $83,050 | $91,100 |
Ongoing fees:
| Name of fee | Amount |
|---|---|
| Royalty | 6% of the franchisee’s gross volume or a minimum monthly fee of $850, whichever is larger |
| Classroom Training for additional Personnel | $500 per additional person, plus actual employment related, travel, and non-included meal expenses of trainees |
| Field training | Actual employment related, travel, and meal expenses of trainees |
| Transfer | The greater of $5,000 or 10% of the total sale price |
| Audit | Cost of audit, plus sums underpaid, plus interest on underpayment |
| Renewal fee | If renewal is offered to the franchisee, there us no fee to renew the franchise business if the franchisee signs and delivers the Letter of Intent at least 180 days prior to the end of the franchise term. If the franchisee does not sign a Letter of Intent, as requires, they must pay a renewal fee of $5,000 |
| Indemnification | Unspecified |
| Manuals | $5,000 |
| Personal guaranty | Unspecified |
| Liquidated Damages | 75% of all monthly minimum royalty fees for the remaining term of the franchised business |
| Local marketing | Unspecified, but a minimum of $3,500 per calendar month is recommended during the first 12 months of the operation; after that, 1% of the franchisees gross volume is recommended |
| Interest | 18% per annum or the highest rate allowed by applicable law, whichever is less |
| Additional training | Actual employment related, travel, lodging and meal expenses of the trainees and/or KTU staff |
| Meeting attendance | Unspecified |
| Books and Records | Unspecified |
| Late fees and dishonored check fees | $30 per occurrence |
| Voluntary Termination fee | 50% of the total minimum monthly royalty fees accruing between the termination date and the end of the contractual term |
| Insurance | Varies depending on the location of the franchised business and certain factors under the franchisees control |
| Facsimile | Unspecified |
| Cooperative advertising | Currently there are no advertising cooperatives |
| National Advertising fund | 1% of the franchisees gross volume; the franchisor can increase the amount the franchisee pays to the National Advertising Fund, but this payment will not exceed 2% of the franchisees annual gross volume |
| Ongoing supply purchases | $2,000 to $3,000 annually |
| Credit card | Varies depending upon requirements of card provider |
| Mall Kiosk | $5,000 |
| Product late fee | $5 per day |
| E-mail address | Unspecified |
| Franchised Area infringement fee | 10% of the franchisees gross volume generated in another franchisee’s franchised area plus the total receipts less the actual cost of products sold |
| Best buy brochure program | Approximately $10 per month per Best Buy store in the franchisees franchised area |
| Joint advertising/marketing in franchised area | $100 |
| Franchisee website | $500 annually |
The above information has been taken from the UFOC/FDD of Kitchen Tune-Up
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