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Adam & Eve Stores Franchise Costs & Fees

Date of Incorporation: 2003
Franchising Since: 2004
Headquarters: Hillsborough, North Carolina

Business Description: The franchisor is AEFC, Inc. Franchisees operate a store for the marketing and retail sale of lingerie, apparel, shoes, leather accessories, a selection of intimate novelty items, DVDs, and other associated products. The franchisor offers the right to establish and operate a single Adam & Eve Store or multiple Adam & Eve Stores.

Franchise Offer: Under the Adam & Eve franchise agreement, franchisees will have the right to establish and operate a single Adam & Eve Store using the franchisor’s Proprietary Marks and System at an approved location.

Financial Assistance: If franchisees meet the criteria, the franchisor may offer franchisees the option to finance up to $35,000 of initial inventory purchases from the franchisor or its affiliates. This financing does not extend to other approved suppliers and only applies to those products for which the franchisor or its affiliates are an approved supplier. Except as described, the franchisor does not offer direct or indirect financing. The franchisor does not guaranty franchisees’ note, lease or obligation.

Training and Assistance: Before the Store opens, franchisees and all store managers (if any) must attend and successfully complete to the franchisor’s satisfaction the standard initial training program for franchisees. If you are a corporation, partnership or limited liability company, this requirement applies to one principal acceptable to the franchisor and all managers who will operate the Adam & Eve Store on a day-to-day basis. At the franchisor’s option, any persons later employed by franchisees as a manager must, before acting as manager, attend and complete to the franchisor’s satisfaction the initial training program, at franchisees’ expense. The standard initial training program consists of up to five days of classroom and on-site training at the franchisor’s facilities in Hillsborough, North Carolina, at the franchisee’s Adam & Eve Store, and/or at another location designated by the franchisor. The standard basic training program includes a discussion of the System, techniques, procedures, and methods of operation, inventory control, job descriptions, hiring practices, security and loss prevention, opening methods and techniques, bookkeeping, advertising, sales, promotion, marketing plans, customer relations, instruction on quality standards and practical experience in the operation of an Adam & Eve Store. The initial training program will also include up to five days (or up to one day, if franchisees sign a Conversion Addendum) of on-site training at the Approved Location before the Store opens, which is provided to franchisees at no additional charge. Franchisees or their designated Store manager must attend the franchisor’s annual meeting of franchisees. Franchisees are encouraged, but not required, to also take advantage of other optional training opportunities that approved vendors provide.

Territory: Under the Franchise Agreement, franchisees may establish and operate one Adam & Eve Store at an Approved Location. Franchisees will be granted an exclusive territory for their Store. The exclusive territory will be determined once the Approved Location is identified. The Territory will be described in the Franchise Agreement and will be a radius of two miles around the Approved Location or a radius that includes a potential market of 225,000 people, whichever radial distance is less. The franchisor obtains population information primarily from the U.S. Census Bureau, although it may use other sources.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years from the date the Franchise Agreement is signed. If franchisees satisfy the requirements, they can renew for up to two additional terms of five years each.

Obligations and Restrictions: Although the franchisor recommends that franchisees personally participate in the direct operation of the Franchised Business, their personal on-premises supervision is not required if the day-to-day operation of the Franchised Business is supervised by a manager who has satisfactorily completed our training program. Franchisees must sell or offer to sell only products and services that comply with the franchisor’s standards and specifications and that are authorized under the System as described in the Manuals or otherwise in writing by the franchisor.

Estimated Number of Units: 65

Investment Tables:
Initial Investment for a New Store
Name of Fee Low High
Initial Franchise Fee $30,000 $30,000
Rent – 3 Months and Security Deposit $8,000 $20,000
Leasehold Improvements/Site Selection $15,000 $70,000
Furniture/Fixtures $35,000 $70,000
Initial Inventory $60,000 $90,000
Signage $5,000 $12,000
Travel & Living Expenses While Training $500 $2,000
Computer Software/Hardware $2,500 $7,500
Grand Opening Advertising $6,000 $12,000
Utility Costs and Deposits $0 $1,000
Permits & Licenses $50 $200
Prepaid Insurance Premiums $1,000 $3,000
Miscellaneous Opening Expenses $1,000 $3,000
Professional Fees $2,000 $5,000
Additional Funds (3 months) $5,000 $25,000
ESTIMATED TOTAL $170,050 $350,700
Other Fees
Type of Fee Amount
Royalty 5% of Gross Sales for the first (or only) Store; 4% of Gross Sales for each additional Store operated.

Conversion Units: 3% of Gross Sales for the first year of operation;
4% of Gross Sales for the second year of operation; 5% of Gross Sales for the third year of operation and remainder of the Agreement term.
Brand Fund Fee Not to exceed 1.5% of Gross Sales.
Website Fee $50
Minimum Advertising Expenditure 5% of Gross Sales.
Site Selection Visit The franchisor may, at its option, perform one site selection visit, at its cost. If additional site selection visits are necessary, franchisees will pay the franchisor’s reasonable expenses, including the costs of travel, lodging, and food. Expenses will not to exceed $1,000. Franchisees will also pay our then current per diem rate. Current per diem rate = $200
Cooperative Fee As determined by cooperative.
Training Program (New or Additional Trainees) The then-current fee, plus expenses. Current = $750
On-Site Training or Assistance The then-current per diem rate for each representative the franchisor sends to the Store. Current per diem rate = $200
Transfer $10,000
Insurance Cost of Insurance and procurement expense.
Renewal 50% of our then-current initial franchise fee.
Hold Harmless and Indemnification Amount of loss or damages plus costs.
Interest and Audit Expenses Will vary under the circumstances.
Collection Costs, Attorneys’ Fees and Arbitration Fees Costs of collection, attorneys’ fees and arbitration fees.
Additional Site Visit Fee The franchisor’s reasonable expenses, including costs of travel, lodging and food for additional on-site evaluation.
Supplier/Product Evaluation Fee Reasonable cost of evaluation and testing, not to exceed $500
Overdue Payment Fee $200, plus the lesser of (a) the maximum legal rate of interest due on the overdue amount per month, or (b) 1.5% on the overdue amount per month, from the date it was due until paid, together with reasonable attorneys’ fees and costs, and costs of investigation.
Remodel/Upgrade Obligation Cost of Remodel or Upgrade – will vary under the circumstances. The cost of the remodel or upgrade could be as much as $70,000
Manuals/Replacement Fee $300 per manual.
Liquidated Damages Will vary under the circumstances.
Gift Card Program Will vary under the circumstances.
Relocation Fee $7,500
Missed Annual Conference Fee $500
Software/POS Fee $245

The above information has been taken from the FDD of Adam & Eve Stores. Year of FDD: 2016

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