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Ace Hardware Franchise Cost & Fees

Date of Incorporation: 1928
Franchising Since: 1928
Headquarters: Oak Brook, Illinois

Business Description: Ace Hardware Corporation is a wholesaler of hardware and related products. Ace has been engaged in the wholesale hardware business and has offered dealerships to retailers of hardware and related items since the organization in Illinois of the former Ace Hardware Corporation in 1928.

Franchise Offer: The franchise offered is for the operation of a retail hardware store under the name “Ace Hardware.” In the United States Ace operates as a retailer-owned cooperative. If the franchisee’s application for membership is approved, Ace will grant the franchisee membership in the cooperative upon the franchisee’s purchase of shares of stock. This membership entitles the franchisee to purchase merchandise and services from Ace. Franchisees may also own and operate an existing separate business, such as a grocery store, and add an Ace Hardware store to or within the existing business. Ace refers to this as its “grocery format.”

Financial Assistance: The franchisor offers several financial assistance programs, see FDD for details. The franchisor is the lender for all these programs. In limited circumstances, the franchisor has formed joint ventures. Each venture is formed on a case-by-case basis. Ace is also listed on the Small Business Administration (SBA) Franchise Registry. This listing means that if franchisees choose to apply for an SBA loan, they will receive a streamlined review process for your loan application.

Training and Assistance: Ace's New Owner's Institute is a required training program offered at corporate headquarters in Oak Brook, Illinois. Subjects covered during this program typically include ACENET, Store Staffing, Recruiting/ Interviewing, Financial Management, Inventory Management, and Consumer Marketing. One of the major voluntary training programs is known as Essential Management Skills, and enrollment is open to both new and established Members. It consists of approximately three consecutive days of training operations on various leadership topics including time management, delegation skills and more. The franchisor also conducts Retail Training Seminars on various aspects of retail operations on an occasional basis at locations convenient to the various marketing areas in which members are located.

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 franchisees may offer with some exceptions. If franchisees participate in one of Ace’s new store incentive programs, they must purchase certain minimum dollar amounts of the store's opening stock order (OSO) from Ace.

Estimated Number of Units: 4,930

Investment Tables:
Initial Investment for a Start-Up Business - Leased Premises
Name of Fee Low High
Initial Franchise Fee-Processing Charge $5,000 $5,000
Capital Stock Subscription $5,000 $5,000
Signage - Exterior Signage $2,500 $25,000
Signage - Interior Decor $7,000 $14,000
Leasehold Improvements - Decorating, Furniture and Fixtures ($8 per sq. ft.) $24,000 $120,000
Telephone and Other Equipment $10,000 $20,000
Computer System with Point-of-Sale (Hardware/Software) $45,000 $80,000
Rent - First 3 months $3,000 $60,000
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 $30,000
New Investor Retail Training $0 $35,000
Additional Funds - Working capital for the first 90 days $15,000 $50,000
Total Estimated Initial Investment $272,500 $1,061,500
Initial Investment for a Start-Up Business – New Construction
Name of Fee Low High
Initial Franchise Fee-Processing Charge $5,000 $5,000
Capital Stock Subscription $5,000 $5,000
Signage - Exterior Signage $2,500 $25,000
Signage - Interior Decor $7,000 $14,000
Real Property Purchase Costs – Land $15,000 $200,000
Real Property Purchase Costs – Building $60,000 $240,000
Construction Costs, Fixtures, Decorating and other Improvements $24,000 $250,000
Telephone and other Equipment $10,000 $20,000
Computer System with Point-of-Sale (Hardware/Software) $45,000 $80,000
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 $30,000
New Investor Retail Training $0 $35,000
Additional Funds - Working capital for the first 90 days $15,000 $50,000
Total Estimated Initial Investment $344,500 $1,561,500
Initial Investment for Conversion
Name of Fee Low High
Initial Franchise Fee-Processing Charge $5,000 $5,000
Capital Stock Subscription $5,000 $5,000
Signage - Exterior Signage $2,500 $25,000
Signage - Interior Decor $7,000 $14,000
Decorating - Decorating. Furniture and Fixtures ($1 per sq. ft) $3,000 $15,000
Other Equipment $0 $10,000
Computer System with Point-of-Sale (Hardware/Software) $8,000 $80,000
Opening Inventory $0 $600,000
Initial Supplies $500 $2,500
Insurance $2,500 $30,000
New Investor Retail Training $0 $35,000
Total Estimated Initial Investment $30,500 $821,500
Other Fees
Type of Fee Amount
Late Payment 0.77% of the past due bi-weekly billing statement balance.
Low Volume $100 per bi-weekly billing period if annual volume purchased is less than $200,000
Freight Charge The freight rate is billed as a fixed percentage of your warehouse purchases, adjusted annually.
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 $37 per month for each branch store.
Business Insurance Will vary depending upon coverage purchased. Estimated annual cost of required coverage: $2,500 - $30,000
Ace BankCard Program $35 annual fee per store. A monthly non-qualified fee will be assessed to the franchisee’s statement based on card type and volume.
Customer Check Verification Service (Telecheck) 1% of face value of the 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.
Computer Hardware and Software for Point of Sale System $45,000 - $80,000
Ace Rewards Program $850 initial fee; $75 per month, per store thereafter. $0.29 per direct mail piece. Each store is required to participate in three Ace Rewards specific direct mail promotions.
Grocery Format Add-on to Ace Rewards Program If franchisees are a grocery format, there is a one-time set-up fee of $1,000 00 if franchisees do not already use products provided by Ace’s chosen vendor, ProLogic. There is an additional program tee of $300 per Cycle. There are 13 non-overlapping Cycles per calendar year.
Ace Gift Card Program $50 initial sign kit fee plus $0.50 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 card, 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 the franchisee may download or request from Ace and then customize for the store. The franchisee pays for all air-time fees charged by radio/TV stations he/she contracts with; these fees range from $1,000 to over $10,000 depending upon the media services chosen.
Group Preprint Program Price varies by page count and group participation. For example, group pricing for an eight tab is $43 per thousand, while individual store orders are $72 per thousand. See order form for specific pricing.
New Movers Program $0.21 per piece.
Monthly Sign Kit Program $160 per month for full kit; $50 for mini-kit.
Customer Insights Program (Mystery Shop, Customer Engagement, Employee Engagement) For each in-store mystery shop the fee is $46. For each phone mystery shop the fee is $15. For each competitor mystery shop the fee is $46. Franchisees can also purchase customer engagement and employee engagement services, in addition to the mystery shop services, for a monthly bundle fee of $59 per month (which is billed as a $46 mystery shop fee and a $13 customer and employee engagement survey fee).
Customer Comment Cards $38 per pack of 100 stock (blank) cards. $5 per holder.
Visual Merchandising Services Price varies depending on the size of the store.
Ace Rental Place Will vary depending upon the rental equipment offered, fixtures needed, maintenance/repair shop needs and any optional exterior signs selected. Estimated cost of implementation ranges from $0 to $15.000
The Supply Place - Certification (B2B) Will vary depending upon the implementation method, marketing material and signage purchased to promote business to business. Estimated cost for implementation ranges from $0 to $4,500
The Supply Place - eCommerce A one-time initial set up charge of $1,000; a $100 monthly charge for first store; and a $75 monthly charge for unlimited number of additional stores in a chain.
Retail Loss Prevention Will vary depending upon equipment or services utilized. Estimated cost range per service: $30 - $3,500. Costs do not include expenses for meeting rooms, travel, lodging, meals or tax where applicable.
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 One DVD is included with the $125 ACENET monthly service fee. Additional DVDs cost $15 per DVD.
Retail Financial Report $50 per copy to stores that do not participate in the survey.
Liquidated Damages $10,000 per month.
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 The cost will vary depending upon the type of training, duration, and location of sessions. Price does not include expenses for meeting rooms, travel, lodging, meals, or tax where applicable.
Charitable Donations Will vary depending upon donations the franchisee may decide to make, if any, subject to a minimum total contribution of $20 if the franchisee chooses to make a contribution.

The above information has been taken from the FDD of Ace Hardware. Year of FDD: 2016

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