HART Health Franchise Disclosure Document Item 7
YOUR ESTIMATED INITIAL INVESTMENT*
Note 1: Initial Franchise Fee. If you sign a Development Agreement to open multiple Businesses, you must pay an initial franchise fee of $20,000 for the first HART HEALTH Business plus a development fee equal to $5,000 multiplied by the number of additional Businesses to be developed, for a geographic territory reserved for your development of Businesses. The initial franchise fee for the second and subsequent Businesses to be developed under a Development Agreement is discounted to $15,000. If you qualify, we offer discounted initial franchise fees to veterans. We apply the nonrefundable development fee paid toward the initial franchise fee for the second and each additional Business to be developed, the balance of which is paid at a later date. See Item 5. The initial franchise fee includes the cost of up to two people to attend the HART $mart Initial Training Program (Training Program‚). Session 1 consists of up to five days of training before you open your business. Session 2 consists of up to three days of training within 90 days of the commencement of operations of your Business. Sessions 1 and 2 are conducted in Seattle, Washington or another location that we designate. You also receive from us an initial supply of business cards, letterhead, envelopes and marketing materials as part of the initial franchise fee. See Items 5, 8 and 11.
Note 2: Initial Training (Travel and Living Expenses). You are required to complete and pass Sessions 1 and 2 of the Training Program (see description of Training Program in Note 1 above) to our satisfaction. You must pay for any travel and living expenses incurred during this Training Program by you and any other attendee.
If you are opening your first HART HEALTH business, you must also complete and pass a field training session, which consists of up to three days of hands-on training in your Territory (Field Training‚). The three days of Field Training may or may not be grouped together. You must be an active participant in the Field Training and your responsibilities include scheduling training time and organizing ride-with appointments. See Item 11.
Note 3: Start-Up Package. You must purchase one Start-Up Package for each van that you use in your HART HEALTH Business. Each Start-Up Package includes two Hand-Held Units loaded with our proprietary software that you lease from us or one of our affiliates. You will sign the Equipment Lease Agreement for the Hand-Held units prior to attending our Training Program. You must also pay to activate your Hand-Held Units for cellular operation. You also purchase the following from us as part of each Start-Up Package: van printers, power supplies, infrared printer link units, uniforms, and a vinyl graphics kit for your van. Typically only one Start-Up Package is initially purchased. See Items 5, 8 and 11.
Note 4: Inventory. You must open with and maintain an adequate inventory of first aid kits and stations, non-prescription medications, medical supplies and other items we may designate to serve your customers. These items must be purchased from us or our affiliates. You must pay in full for your initial inventory no later than 14 calendar days prior to beginning Session 1 of the Training Program so you can receive and organize your stock prior to your training. See Items 8 and 11.
Note 5: Office Equipment and Supplies. This estimate includes the purchase of a laptop computer and software, as well as a combination printer/fax/scanner machine. You must have a cellular telephone, a high-speed broad-band Internet connection, a telephone land line at your office that is answered during regular business hours using the trade name of the Business and a facsimile machine and scanner. We reserve the right to require that you obtain and utilize in the Business a Voice Over Internet Protocol telephone system and other office technology systems and equipment that meet our then current standards and specifications. You will also need miscellaneous office supplies. See Item 11.
Note 6: Office Space. A HART HEALTH Business is operated from a home office. If you determine to operate from leased office space, you will incur additional expenses for build-out, rent and other items not estimated in the above chart. Except with our prior written approval, your office must be located in your Territory. See Item 11.
Note 7: Van, Van Equipment and Signage. You must lease or purchase a van that meets our standards and specifications to call upon your customers and to deliver products and related services. We must approve in writing any existing van that you own or any van you lease or purchase prior to your use of the van in the Business. Do not lease or purchase a van until you have received our written authorization. The low estimate in the chart assumes that you will lease a single van prior to opening your Business and includes the estimated monthly lease payment. The high estimate in the chart assumes you will purchase a van. If you purchase a van, your costs may increase by as much as $25,000. We have minimum standards and specifications for vehicle type, color, condition and capacity. You must purchase and install in the van racks to store your inventory. The signage for your van is included as part of the Start-Up Package you purchase from us. The van must have signage that meets our standards and specifications. You should not buy or lease a van or equipment, borrow money, make a change in your employment status or make any other commitments until after you and HHFI have signed the Franchise Agreement.
Note 8: Van Registration, Business and Other Licenses, Deposits, and Legal and Other Professional Fees. This item includes your van registration fees and any business licenses and deposits necessary to commence operation, as well as legal and accounting fees that may be incurred in starting your Business.
Note 9: Insurance. As a franchisee, you will be required to procure, maintain and provide evidence of liability and other insurance policies for all vehicles used in your Business and for your Business as described in the Franchise Agreement. The range in the chart is your estimated monthly insurance cost. See also Item 8.
Note 10: Additional Funds. This is an estimate of additional funds that are necessary for the first three months of your Business operations. These figures are estimates only and we cannot guarantee that you will not have additional expenses starting and initially operating your Business. Your costs depend on factors such as: how closely you follow our methods and procedures; your sales skill, experience and business acumen; local economic conditions; credit terms available to you based on your credit rating; the local market for our products and services; competition; product sales margins; and the sales level reached during this initial period. This item includes a variety of estimated expenses and working capital items during your start-up phase such as initial marketing costs, incidental business start- up expenses, the cost of additional supplies and inventory, the cost of fuel and maintenance of your van, insurance costs for an additional three months, telephone and cell phone charges and other miscellaneous costs. However, this item excludes your salary.
There will be a period of time after you sign the Franchise Agreement when your Business will generate no or low revenue. You should have sufficient funds to permit you to cover living expenses during this period. Because the cost of personal living expenses will vary greatly, we do not include them in the estimates of a typical Franchise initial investment. In your financial planning, you should take into account these periods of no or low revenue or cash flow.
Note 11: Basis for Estimates, Financing. We relied on the combined experience of our affiliates, HHSI and NorMed, in the operation of vans to deliver and service first aid kits and stations to businesses to compile these estimates. Because the ranges in the chart are only estimates, it is possible both to fall short of and exceed the estimated range of costs listed in each item of the chart. In certain major metropolitan areas, actual costs may substantially exceed the high range estimates in the chart. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. Except for a portion of the initial franchise fee, we do not offer financing directly or indirectly for any part of the initial investment. See Item 10. The availability and terms of financing from third parties will depend on such factors as the availability of financing generally, your creditworthiness, collateral you may have and lending policies of financial institutions. With the possible exception of deposits paid to third parties, none of the fees or costs estimated in the chart above are refundable.
Note 12: Additional Vans. You will incur the costs described in the above chart for each additional van, including the lease or purchase of the van, van registration, purchase of equipment, initial inventory, the Start-Up Package and additional insurance. We reserve the right to increase the cost of the initial inventory and the Start-up Package, paid to us or to our affiliates, for additional vans. You must notify us and obtain our written approval prior to purchasing any additional van.
Note 13: Multiple HART HEALTH Businesses. Except as mentioned above, if you sign a Development Agreement, you will incur the costs described in the chart for every HART HEALTH Business developed.
*This information is excerpted from the HART Health Franchise Disclosure Document dated March 21, 2011. This information is subject to change. You should read this excerpt in the context of the entire Franchise Disclosure Document.