Estimated Initial Investment

Transcription

1 Copyright 2012 Services, LLC

2 Type of Expenditure (1) Initial Franchise Fee (3) *SmartLock System (2) or Other Approved Equipment Amount $15, $7, to $30, Method of Payment Lump Sum Take Via ACH/EFT Lump Sum or as required by other designated *External Modem $ to $ Lump Sum *Petroleum Related Equipment Sign Installation *Hook-up Fee Production of Magnetic Stripe Cards Logo Set-Up for Cards Controller Maintenance Contract (6) SmartLock Support and Maintenance Contract (6) Captive Site Software Maintenance Fee (20) $0.00 to $500, $1, to $3, Included in Franchisee Fee for First Location Only, 2nd or subsequent sites are: $1, per site after the first Pacific Pride site, AmeriNet site or PrideNet site (5) (16) $1.25 to $1.50 per card $75.00 per hour per franchisee for company card logo creation $ annually $1, to $2, per site $ annual fee Lump Sum $ payable to us with application and $1, when site is operational Lump Sum Lump Sum $40.00 per monthly settlement. Equal Monthly Payments or annually as required by Payable to us via EFT in January or February of each year. When Due At signing of Franchise Agreement Within 30 days of invoice or as required by other designated Within 30 days of receipt Upon Approval of Site Next Billing After Order Next Billing Cycle After Order Payable to us on the 8th and the 23rd of the month. (19) First Billing of Month or as required by January or February of each year. Payment Made To or other designated or designated or third party designated by Copyright 2012 Services, LLC Page 01

3 Travel Expenses of Installer of Controller Computer Billing Package Expenses for Orientation Training *Real Property and Improvements *Inventory *Working Capital *Dedicated Voice Grade Telephone Line Security Instrument Insurance Premium (14) Additional Funds 3 months Total Estimated Costs for a Pacific Pride Franchise (7) Lump Sum $1, to $30, $ to $3, (8) Next Billing After Installation (9) (9) (9) (9) $100, to $360, (10) $120, to $160, plus $1.00 of financing for every $1.00 of monthly sales (11) $ or less (12) $10, or up to two times Estimated Net Monthly Billing whichever is greater (13) $ to $10, $13, to $77, $271, to $1,202, (16), (17), and (18) As Incurred As Incurred As allowed by or Your Employees, s, Repairmen (13) (13) (13) (15) (15) Unknown NOTES: 1. All of the expenses listed on the above chart, except for the additional site fee, are applicable to your first site, AmeriNet site or PrideNet site. The expenses which have an * next to them also apply to each additional site whether a site, an AmeriNet site, a PrideNet site, or an approved retail site. The expenses are anticipated to be incurred within the first three months of operation of a site, an AmeriNet site or a PrideNet site. 2. The SmarkLock System is described in Item 11. The SmartLock System accepts magnetic stripe cards and other cards approved by us. The SmartLock System or other approved equipment must be purchased from us or other vendors designated by us. We reserve the right to change equipment specifications and vendors as we deem necessary. Copyright 2012 Services, LLC Page 02

4 3. The initial franchise fee includes the cost of the Controller Equipment. The controller is a dedicated computer system for managing the exchange of information between you and us. The cost includes hardware, software and installation. Any travel costs incurred to install the controller at your office must be reimbursed by you to the Installer. 4. Specifications for certain of the petroleum equipment are located in the Operations Manual. Costs of equipment will vary depending on the supplier, size of the site location and market factors. The range of costs given in the chart above is a range for the typical costs and cannot be relied upon as an absolute because we have no control over the costs charged by your suppliers. 5. We must approve any additional proposed site locations as described in Item The contracts provide 24 hour service and on site maintenance for the controller and telephone assistance for the SmartLock Equipment. Additional contracts may be added with equipment changes. 7. You must also pay the travel and room and board expenses of the installer of the controller. Such expenses will vary depending on the location of your sites and the distance the installer is required to travel. 8. You are responsible for paying all costs for room, board and transportation and related expenses to attend the mandatory Orientation Training. Transportation costs will vary significantly depending on where you reside and whether you travel by air, train, automobile or bus. If you reside near our headquarters, you may have no transportation costs. If you are traveling from the east coast, airfare may cost as much as $2, Costs of room and board will range between $80.00 and $ per night. 9. If you do not own adequate real property and improvements which meet our specifications, you will be required to purchase or lease the land and improvements. It is not possible to estimate the amount or describe the range of amounts you will spend to purchase or lease real property and improvements for your franchise site. The amount will depend on the size, location, and condition of the purchased or leased property. The actual site where you conduct your business can be of your own choosing provided the site(s) are approved by us. AmeriNet sites and PrideNet sites may be located in any area except in an exclusive territory of another franchisee, provided the site is approved by us. sites are typically located in commercial and/or industrial areas. The individual site must not be less than 10,000 square feet and may be as large as desirable. AmeriNet sites are located at full service truckstops. There is no building requirement for the or PrideNet sites, however, the shelter which houses the automated fueling components must conform to equipment specifications as set forth in the Pacific Pride Operations Manual. PrideNet sites have no minimum square footage. If you do not own your own site, leasing costs (subject to the location and size of property) would be expected to include a monthly charge and a two (2) month security deposit. The foregoing costs will vary up or down depending upon the particular location. Lease and security deposits may be held by a landlord after expiration of the lease, or expiration or sale of the franchise, Copyright 2012 Services, LLC Page 03

5 to provide for any unascertainable events. In addition to the above charges and deposits, you may have long term lease obligations. Because of these wide variations, meaningful costs cannot be estimated. 10. The initial basic fuel inventory for a franchise will depend upon the number of sites and PrideNet sites, the size of the site and the volume of products anticipated to be sold. Inventory for a typical four product installation at today s prices will range from $100, to $360, The range of costs given is a range for the typical costs and cannot be relied upon as an absolute because the needs of each site varies and supplier s costs vary due to market factors. Since AmeriNet sites and approved retail sites are located at existing fueling sites, no additional fuel inventory is required. 11. Starting working capital and accounts receivable working capital requirements for and PrideNet sites will depend on the number of sites, and the volume of anticipated sales, and the price of fuel. A typical four product installation at today s prices will require between $120, and $160, starting working capital, and an on going one dollar of account receivable financing for every dollar of monthly sales, assuming the accounts are billed twice monthly with payment required within ten days of billing. 12. You must have a voice grade telephone line dedicated to the controller. The cost of installation of a telephone line will vary, but normally is under $ Because we guarantee payment of certain monies owed to other System Participants, it is necessary that prior to issuing access cards to your customers, you deposit with us a security instrument by which we can secure payment from you if you are delinquent in payments. The term Estimated Net Monthly Billing means the estimated net amount, which we estimate you will owe to other System Participants for purchases and service fees during two billing periods. You choose one of three options. You may: a. Deposit an Irrevocable Letter of Credit, payable to us in an amount equal to up to two times the Estimated Net Monthly Billing or $10,000.00, whichever is greater; or, b. Post a surety bond in favor of us in an amount equal to up to two times the Estimated Net Monthly Billing or $10,000.00, whichever is greater; or, c. We, at our discretion, may accept other forms of security in an amount equal to up to two times the Estimated Net Monthly Billing or $10,000.00, whichever is greater. The cost of these instruments will vary depending on the lending institution, your relationship with the bank, insurance company or other company involved, and the amount of the security required. The security shall be used by us for payment of any delinquent amounts owed by you to other System Participants. If you are delinquent, we, without prior notice to you, shall draw upon the security for payment of the delinquent amounts. We shall immediately give you notice of the withdrawal and you shall have ten (10) days from the date of our notice within which you must repay or reinstate the security in the required amount. If you initially established a cash deposit and Copyright 2012 Services, LLC Page 04

6 we subsequently draw on such deposit for payment of delinquent amounts, then during the period commencing with the date of draw by us and continuing until the cash deposit has been restored to up to two times the Estimated Net Monthly Billing or $10,000.00, whichever is greater, the cash deposit shall not earn interest. At the expiration or termination of the franchise, any security, or balance of the security deposited by you, (plus any accrued and unpaid interest, if any) less amounts owing by you to other System Participants, will be returned to you within ninety (90) days of expiration or termination. We reserve the right at any time to require you to amend the Letter of Credit, deposit additional funds into the interest bearing account, or increase the amount of the bond or other security in order that the amounts should equal up to two times the Estimated Net Billing or $10,000.00, whichever is greater. If the security is not adequate, we may refuse to produce access cards for issue to your customer, until such time as you provide the required security. In addition, we have the right to invalidate cards issued to your customers if you fail to provide the required security. You must not allow the security to expire or lapse. We also reserve the right upon thirty (30) days prior written notice to procure other type of security that would apply to all franchisees, and then bill all franchisees for their prorata share for the cost based on assessment of risk as determined by us, in our sole discretion. We also reserve the right to waive any security amount at our discretion. 14. Insurance Required: You must maintain the following insurance coverage: a. Public liability insurance as to each of your sites in an amount not less than $2,000, per site per occurrence for bodily injury and death to one or more persons and $1,000, for property damage per site per occurrence with an aggregate limit of $4,000, per policy year. b. Product liability insurance as to each of your sites which dispenses fuel which has been mixed or blended by you, in an amount not less than $2,000, per site per occurrence for bodily injury and death to one or more persons and an amount not less than $1,000, for property damage per site per occurrence with an aggregate limit of $4,000, per policy year. Any other insurance coverage which may be required by federal, state, or local statute, law, rule, or regulation. The required insurance policies must name us as an additional insured and you must provide us with Certificates of Insurance which require thirty days notice to us prior to cancellation. The amount of the premiums for insurance coverage may vary depending on location. The required insurance policies must also name all other System Participants as additional insureds, but coverage for other System Participants is only for claims arising at or from your Copyright 2012 Services, LLC Page 05

7 sites. You must provide us with Certificates of Insurance which require ten days notice to us prior to cancellation. The amount of the premiums for insurance coverage may vary depending on location. 15. Additional funds for miscellaneous costs for ongoing operational expenses, some of which will be incurred in the start up phase, will be required. Estimated ranges of such costs are as follows: Opening Promotion and Sales Effort $ 3, to $ 8, Fees and Licenses $ 0.00 to $ 5, Repairs $10, to $20, Accounting Services $ to $ 3, Utility Deposits $ 0.00 to $ 1, Applicable Taxes and Tax Deposits $ 0.00 to $20, Other $ 0.00 to $20, Total $13, to $77, Payment for these amounts must be made to the appropriate vendor, governmental agency, or service provider. Specific costs will vary depending on the your circumstances. The above figures are only estimates. Any refund policy would be set by the appropriate providing party. 16. The total estimated costs exclude the purchasing and encoding of access cards and expenses with no amounts listed in the above chart. In addition, the additional site hook-up fee is excluded since it is not part of the initial investment for one site. Further, costs for an approved retail site are not included since you are not required to open those types of sites. We relied on our experience in the automated fueling network business to compile these estimates. You should review these figures carefully with a business advisor before making a decision to purchase the franchise. The initial investment period is 3 months. Additional on-going fees are listed in Item 6. All listed fees paid to us are nonrefundable. Fees paid to a vendor will be refundable only if your agreement with the vendor provides for refunds. When the 8th or 23rd of the month falls on a weekend or legal banking holiday, then payment is due on the last business day prior to the 8th or 23rd. Payable to us if you choose to use our software at a Captive Site. Copyright 2012 Services, LLC Page 06