Ace Hardware Corporation
Date of Incorporation: 1928
Franchising Since: 1928
Headquarters: Oak Brook, Illinois
Country: U.S.
Description: Ace Hardware Corporation is a wholesaler of hardware and related products. Ace Hardware operates as a retailer-owned cooperative. If Ace Hardware approves the franchisee’s application for membership, they will grant the franchisee membership in the cooperative upon your purchase of shares of their stock. This membership entitles the franchisee to purchase merchandise and services from Ace Hardware.
Franchise Offer: The franchisee buys what is referred to as a “membership” for the operation of a retail hardware store under the name "Ace Hardware".
Financial Assistance: The franchisor offers 11 financing programs:
- Branch Incentive - Core Format A
- Branch Incentive - Urban Format A
- New Investor Incentive - Core Format A
- New Investor Incentive - Urban Format A
- Branch Incentive - Core Format B
- Branch Incentive - Urban Format B
- New Investor Incentive - Core Format B
- New Investor Incentive - Urban Format B
- JP Morgan Chase Loan Program
- Vision 21 Store Improvement Program
- Professional Retail Services Agreement
Ace is also listed on the Small Business Administration (SBA) Franchise Registry.
Training and Assistance: The franchisor is not contractually obligated under either of the Membership Agreements to provide training programs. The major voluntary training program is known as Top Gun Retailing, and enrollment is open to both new and established Members. Top Gun retailing consists of approximately five consecutive days of training sessions in basic hardware store operations. The franchisor conducts these sessions at the Oak Brook, Illinois headquarters. The cost is $1,000 per person. Training is also available in seven different subject areas.
Territory: The franchisee will not receive an exclusive territory. The franchisee may face competition from other member stores, competitive brands, and/or from other channels of distribution.
Term of Agreement and Renewal: There is no fixed term for the franchise agreement and therefore there are no fixed terms for renewal or extension.
Obligations and Restrictions: It is the franchisor’s general policy not to grant a Membership unless the owner or one of the principal owners of the business participates personally and directly in its operation. The franchisor does not currently place any restrictions or limitations on whom the franchisee may hire as managers, supervisors or other personnel to run the business. The franchisor does not restrict the types of goods and services that you may offer.
Total Number of Units: 4,400 units nationwide.
Investment Tables:
Initial Investment:
Start-Up Business - Leased Premises
| Expenditure | Low | High |
|---|---|---|
| Initial Franchise Fee-Processing Charge | $5,000 | $5,000 |
| Capital Stock Subscription | $5,000 | $5,000 |
| Ace Rental Place Program Fee | $0 | $3,000 |
| Ace Commercial & Industrial Supply Member Program Fee | $0 | $750 |
| Signage -Exterior Signage | $2,500 | $25,000 |
| Signage - Interior Decor | $7,000 | $14,000 |
| Leasehold Improvements-Decorating, Furniture and Fixtures | $8 per sq. ft. $40,000 | $120,000 |
| Equipment -Telephone and other equipment | $10,000 | $20,000 |
| Computer | $0 | $80,000 |
| Electronic Ordering System | $0 | $50,000 |
| Rent-First 3 months rent | $3,000 | $45,000 |
| Prepaid Expenses -Security Deposit, Dues, Permits, Subscriptions and other prepaid expenses | $3,000 | $15,000 |
| Opening Inventory | $150,000 | $600,000 |
| Initial Supplies | $500 | $2,500 |
| Insurance | $2,500 | $20,000 |
| Additional Funds -Working capital for the first 90 days | $15,000 | $50,000 |
| Total Estimated Initial Investment | $243,500 | $1,051,250 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Late Payment | .77% of the past due bi-weekly billing statement balance |
| Low Volume | $100.00 per bi-weekly billing period if annual volume purchased is less than $200,000. |
| Minimum Freight Charge | $115 |
| Fuel Surcharge | When the U.S. National Average price for diesel fuel exceeds $2.05 per gallon, a 0.50% fuel charge applies. The surcharge is adjusted (i.e., increased or decreased) weekly, 0.50% for every five-cent change (increase or decrease) in fuel price. |
| Core Retail Services | $168 per month for all parent stores and $38 per month for all branch stores |
| Business Insurance | Will vary depending upon coverage purchased. Estimated annual cost of required coverage: $2,500 - $20,000. |
| Ace Bank Card Program | $35.00 annual fee per store. Additional point-of-service processing fees apply per credit card transaction; such fees vary by card processor (VISA, MasterCard, etc.) and by number of transactions processed. |
| Customer Check Verification Service (Telecheck) | 1% of face value of your customer's check. |
| Annual Brand Assessment | Store's first year: $5,000 flat fee per store. Subsequent years: 2% of prior year purchases subject to: Annual minimum: $3,000 per store - Annual maximum: $10,000 per store |
| Ace Rewards ™ Program | $850 initial fee; $75 per month, per store thereafter. $0.27 per direct mail piece. Each store is required to participate in five specific direct mail promotions (some are one time; others - such as new Rewards member "Welcome"- recur throughout the year). |
| Ace Gift Card Program | $40 initial sign kit fee plus 500 per blank (unactivated) card stock. Additional point-of-service processing fees apply per credit card transaction; such fees vary by card processor (VISA, MasterCard, etc.) and by number of transactions processed. Cost will also vary depending upon quantity of card stock purchased, as well as types and quantities of displays and accessories purchased. |
| Regional Advertising | Will vary depending on regional advertising programs. |
| Broadcast Media Services | Free downloads from ACENET for copies of Ace radio and non-sale event TV ads that you may download or request from us and then customize for your store. You pay for all air-time fees charged by radio/TV stations you contract with; these fees range from $1,000 to over $10,000 depending upon the media services you choose. |
| Group Preprint Program | $40 (retailer group price) or $65 (individual store price) per 1,000 copies ordered. |
| New Movers Program | $0.20 per piece. |
| Monthly Sign Kit Program | $125 per month for full kit; $25 for mini-kit. |
| Yellow Pages Advertisement Placement Services | Price varies (maximum $65/month/store) for placement of your ad in Yellow Pages directories. |
| Mystery Shopper Program | $41 per shop (in-store shops); $15 per shop (phone shops); $41 per shop (competitor shops). |
| Customer Comment Cards | $36 per pack of 100 stock (blank) cards. |
| Customer Engagement Program | $55 per month per participating store. |
| Visual Merchandising Services | Price varies depending on the size of the store. Cost estimates: $19,250 to $33,000. |
| Store Planning Services | Will vary depending on the nature of the project. $0.45 per square foot (minimum $2,000; maximum $6,750). |
| Ace Rental Place | Will vary depending upon the rental equipment offered and any optional signage you select. |
| Ace Business to Business | Will vary depending upon the number and type of catalogues, training and interior decor selected, and any optional signage you select. |
| All-Pro Rewards | $750 annual fee for parent store and $100 per branch store. Store pays Ace for the cost of redemption of points by the store's participating contractor-customers, in an amount equal to the value of 1% of the points redeemed. |
| Retail Loss Prevention Services | Will vary depending upon equipment or services utilized. Estimated cost range per service: $30 - $3,500, not including expenses. |
| National Catalogues | $29 per month for one set of catalogs per year (18 total). Additional sets are billed at a rate of $16 per month, per set. |
| Ace Catalogue on DVD | $100 per quarter per parent store; $15 for extra disc for branch store. |
| Retail Financial Report | $50 per copy to stores that do not participate in the survey. |
| Matching Funds | Member contributes up to $2,400 annually for group advertising. |
| Costs and Attorney's Fees | Will vary under circumstances. |
| Indemnification | Will vary under circumstances. |
| Additional Training | Will vary under circumstances Cost range is $35 - $950 (plus tax, when applicable) not including travel and lodging expenses, if any |
| Charitable Donations | Will vary depending upon donations you may decide to make, if any, subject to a minimum total contribution of $20 if you choose to make a contribution. |
Date of FDD: 2010
The above information has been compiled from the FDD of Ace Hardware along with online sources.
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