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Clubstore Outlet Franchise Costs & Fees

Date of Incorporation: 2008
Franchising Since: 2015
Headquarters: Charleston, South Carolina

Business Description: Clubstore Outlet LLC is the franchisor. Clubstore Outlets feature quality surplus merchandise from wholesale clubs and other retailers, including shelf pulls, overstocks, damaged packaged items, and returned items.

Franchise Offer: The franchised business is to operate a retail store under the trade name Clubstore Outlet that features discounted quality merchandise from wholesale clubs and other retailers.

Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee the franchisee’s note, lease or obligations.

Training and Assistance: The franchisor provides approximately 8 hours of classroom training and 40 hours of on-the-job training. The “classroom training” consists primarily teleconferences and remote training. Franchisees must attend training. Franchisees may send one additional person to training. Franchisees must successfully complete training to the franchisor’s satisfaction at least one week before opening the business. The franchisor will have a representative provide on-site support for at least three days in connection with the grand opening. As part of the on-site opening assistance, the franchisor will assist franchisees in training new employees, and in stocking their business. The franchisor does not currently require additional training programs or refresher courses, but it has the right to do so.

Territory: The franchise is for a specific location. If the specific location is not known at the time franchisees sign a franchise agreement, then their location is subject to the franchisor’s approval. Franchisees will receive a territory in a one- to five-mile radius (or greater) around the location the business, encompassing a population of approximately 50,000 to 100,000 people depending on demographics and population density. In the territory, the franchisor will not open a Clubstore Outlet, nor license or franchise another party to open a Clubstore Outlet.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years from the date of the franchise agreement. Franchisees may obtain successor franchise agreements for up to two additional 10 year terms, if requirements are met.

Obligations and Restrictions: Franchisees are not required to participate personally in the direct operation of their business except as described in the FDD. However, the franchisor recommends that they participate. Franchisees must designate one person as their “Principal Executive.” The Principal Executive is the executive primarily responsible for the business and has decision-making authority on behalf of the business. The Principal Executive must own at least 10% of the business. The Principal Executive must complete the initial training program. Franchisees must offer for sale only goods and services that the franchisor has approved. Franchisees must offer for sale all goods and services that the franchisor requires.

Estimated Number of Units: 20

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $40,000 $40,000
Territory Fee $10,000 $10,000
Setup Fee $20,000 $20,000
Real Estate (including security deposit) $6,000 $13,000
Initial Inventory $75,000 $100,000
Leasehold Improvements $20,000 $35,000
FF&E (shelving, pallet jack, shopping carts, etc.) $6,000 $10,000
Point-of-sale Computer and Applications, Peripherals $1,000 $1,500
Insurance $700 $1,000
Signs $5,000 $7,000
Advertising and Grand Opening $1,500 $2,500
Utilities Deposits $750 $2,000
Permits $250 $500
Legal and Accounting $500 $3,000
Alarm and Cameras Systems $1,000 $1,500
Travel, Lodging and Meals for Initial Training $500 $3,000
Miscellaneous $1,500 $3,500
Additional Funds (first 3 months) $7,500 $20,000
ESTIMATED TOTAL $197,200 $273,500
Other Fees
Type of Fee Amount
Royalty 5.5% of your gross sales.
Marketing Fund Contribution 1% of your gross sales.
Market Cooperative Contribution As determined by co-op. Currently, none.
Inventory Cost of inventory.
Non-compliance Fee $100
Reimbursement Amount that the franchisor spends on the franchisee’s behalf, plus 10%
Late Fee $100 plus interest on the unpaid amount at a rate equal to 18% per year (or, if such payment exceeds the maximum allowed by law, then interest at the highest rate allowed by law).
Insufficient Funds Fee $50 (or, if such amount exceeds the maximum allowed by law, then the maximum allowed by law).
Costs of Collection The franchisor’s actual costs.
Special Support Fee The then-current fee, plus the franchisor’s expenses. Currently, $500 per day.
Customer Complaint Resolutione The franchisor’s expenses.
Records Audit The franchisor’s actual cost.
Inspection Fee Currently $300, plus the franchisor’s out-of-pockets costs.
Non-compliance Cure Costs and Fee The franchisor’s out-of-pocket costs and internal cost allocation, plus 10%
Liquidated Damages An amount equal to royalty fees and marketing fund contributions for the lesser of (i) 2 years or (ii) the remaining months of the franchise term.
Transfer Fee 25% of the then-current initial franchise fee if buyer is an existing franchisee; 50% of the then-current initial franchise fee if buyer is a new franchisee.
Renewal Fee $5,000
Indemnity The franchisor’s costs and losses from any legal action related to the operation of the franchise.
Prevailing Party’s Legal Costs The franchisor’s attorney fees, court costs, and other expenses of a legal proceeding, if the franchisor is the prevailing party

The above information has been taken from the FDD of Clubstore Outlet. Year of FDD: 2016

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