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The Athelete's Foot Franchise Cost & Fees

Date of Incorporation: 1972

Franchising Since: 1972

Headquarters: Norcross, Georgia

Country: U.S.

Description: Franchisees operate stores which specialize in selling quality athletic footwear and footwear accessory products including merchandise related to athletics and physical and mental well-being.   Stores operate under the marks TAF and The Athlete's Foot.

Franchise Offer: There are two types of franchise programs offered:
i.)    Single Store Program: Under the Single Store Program, the franchise offered is the right to open one specialty athletic footwear store in a designated area of responsibility.   There are two types of Stores: (a) Traditional Stores; and (b) Non-Traditional Stores.  The franchisor has the final authority to classify the franchisee’s Store as Traditional or Non-Traditional.  Traditional Stores will typically range in size from 1,000 to 3,000 square feet and may be located in storefronts, strip shopping centers, or regional malls. Non-Traditional Stores will typical range in size from 400 to 800 square feet and may be located in airports, travel plazas, office parks, interior floor of department stores, etc.   A Non-Traditional Store may offer limited inventory.
ii.)    Area Development Program: Under Athlete’s Foot Brand's Area Development Program, the franchise offered is the right to develop a geographic area by accepting a license to open specialty athletic footwear stores in the Territory up to a fixed maximum number of stores. The number of stores to be opened in the Territory will be dependent upon a number of factors such as population density, demographic data, the number of potential locations for stores, and the presence of competition.

Financial Assistance: The franchisor is in the process (as of March 2011) of developing and implementing an equipment financing program for certain qualified franchisees.  If this program is implemented, and the franchisee qualifies, the franchisor will purchase the equipment designated for the franchisee.  The franchisee then must sign a promissory note. Under this note, the franchisee will repay the franchisor for the cost of the equipment acquired by the franchisee by way of a surcharge on the proprietary products that acquired under the Franchise Agreement.  Except as described, the franchisor does not offer direct or indirect financing arrangements for any purpose in establishing or operating the Franchise.  The franchisor does not guarantee the franchisee’s promissory note, lease, or any other obligation.

Training and Assistance: The franchisor will provide initial training at their offices, currently in Norcross, Georgia and at an existing TAF store that they designate. TAF may require that additional training be conducted at another location that they designate, including other stores or the franchisee’s Store. Currently, initial franchisee training is provided six times per year.  The franchisee must attend up to five days of on-the-job training at a designated training location for practical application of skills taught during classroom training.  The franchisee is responsible for any travel and living expenses, wages, and other expenses his or her trainees incur.

Territory: The franchisee will not receive an exclusive territory.  The franchisee must locate an acceptable site within the non-exclusive Site Selection Area that TAF specifies. The franchisee may face competition from other franchisees, from outlets owned by the franchisor, or from other channels of distribution or competitive brands that TAF controls.

Term of Agreement and Renewal: The initial franchise term is 10 years, with an option to add successive additional terms of five years if the franchisee is in good standing.

Obligations and Restrictions: The franchisee must devote his or her full-time, best efforts to the proper and effective operation of the Store. In addition, the Store must have at least one Manager; the franchisee may serve as the Manager or the franchisee may designate a Manager. The franchisee or Operating Principal and Manager(s) must successfully complete the training program and any other training programs that TAF requires.

Total Number of Units: 500 units

Investment Tables (Based on a Single Store Program):

Initial Investment:

For a Single Store Program (Area Development Figures Available in FDD) 

Name of Fee Low High
Initial Franchise Fee $10,000 $25,000
Travel and Living Expenses While Training $1,000 $5,000
Architect's Fees $1,250 $6,750
Furniture, Fixtures, Equipment & Decor $48,000 $105,000
Signs $6,500 $10,500
Prepaid rent and security deposit $2,500 $5,000
Leasehold improvements $30,000 $85,000
Utility deposits $2,200 $3,000
Professional Fees $1,500 $6,000
Grand Opening Marketing $5,000 $5,000
Opening Inventory $75,000 $150,000
Computer System $3,000 $8,000
Business Licenses, permits, etc. (for first 6 months) $1,500 $2,500
Insurance - 3 Months $2,500 $3,500
Additional Funds - 3 Months $20,000 $75,000
Total $209,950 $495,250

Ongoing Fees:

Name of Fee Amount
Royalty Fee 5% of Net Sales
Marketing Fee 1% of your Net Sales for the preceding calendar month
Interest 18% per year (or maximum legal rate, if less)
Late Fee $25 per week
Additional Training Currently, $300 per employee or agent for each full or partial day
Additional Consulting Services Currently, $300 per employee or agent for each full or partial day, plus their travel and living expenses
Assigned Trainers Franchisor’s actual expenses, including travel and living expenses for our trainers
Product, Service, Supplier, and Service Provider Review Franchisor’s reasonable cost of inspecting the supplier, testing the proposed product, or evaluating the service provider or proposed service, including personnel and travel costs
Relocation Charge Franchisor’s reasonable costs incurred in evaluating a proposed new site
Transfer Fee $10,000 for a transfer of the Store or Franchise Agreement. For a transfer of a partial ownership interest, the franchisee must pay an administrative fee equal to the administrative costs in processing the transfer (currently, $1,000)
Transfer Referral Fee $15,000
Successor Fee 30% of the then-current Franchise Fee
Insurance Cost of the premium (usually $3,000 to $5,000) plus a reasonable fee ($50 per hour) for franchisor’s services in procuring the insurance
Audit Cost of audit, including travel and living expenses, plus interest on the amount of the under¬payment at an annual rate of the lesser of 18% or the maximum interest rate permitted by law
Inspection Franchisor’s reasonable expenses incurred in inspecting the franchisee’s business, including travel and living expenses, wages, and other expenses
Convention or Meeting Attendance As determined based on costs of holding the convention or meetingq
Remedial Expenses Franchisor’s reasonable expenses incurred in correcting the franchisee’s operational deficiencies
Enforcement Expenses Franchisor’s reasonable cost of de-identifying the franchisee’s Store
Indemnification Franchisor’s liabilities, fines, losses, damages, costs, and expenses (including reasonable attorneys' fees)
Liquidated Damages Liquidated damages is calculated as
(i) the average of the franchisee’s monthly Royalty Fees and Marketing Fees due for the last 12 months (or for any shorter time that the Store has been open) before the delivery of the notice of default,
(ii) multiplied by the lesser of 36 or the number of months remaining in the then-current term,
(iii) discounted to present value using the then-current prime rate of interest quoted by the franchisor’s principal commercial bank.

Date of FDD: 2011

The above information has been compiled from the FDD of TAF along with online sources.

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