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NOTES

        ¹ Unless the footnotes below indicate otherwise, all expenses described in this ITEM 7 of this Offering Circular are estimated total amounts for a period of 12 weeks.

 

        ² Franchise Fee.  The franchise fee is described in greater detail in ITEM 5 of this Offering Circular.  We do not finance any fee.

 

        ³ Real Estate.  The lower amount of Real Estate/Rent assumes a lease arrangement for a 2,000 square foot facility at $5.00/square foot for a period of 12 weeks.  The higher amount of Real Estate/Rent assumes a lease arrangement for a 3,000 square foot facility at $6.00/square foot for a period of 12 weeks.  You will need to lease or purchase a suitable facility for the operation of the franchised business.  Typically, locations are operated from a light industrial space ranging from 2,000 to 3,000 square feet.  It is extremely difficult to estimate acquisition costs because of the wide variation in costs between various locations. Lease costs will vary based upon variance in square footage, the cost per square foot and required maintenance costs. We assume that you will have to pay the first month’s rent upfront and put down one month’s rent as a security deposit.  The rent you pay is typically not refundable, but your security deposit may be under certain circumstances. 

 

        ⁴ Utility Payments & Deposits.  In most instances, you will have to pay for all utilities for the franchised business, which are typically paid directly to the utility company.  The amount of the utility payments will vary by location based on several factors, including whether certain utilities are paid by the landlord or included in your rent. You will generally have to pay deposits to obtain services such as electric, telephone, gas and water, if you are a new customer of the local utilities.  The amount of the deposit and whether the deposit is refundable will vary depending on the local utilities.  You should contact your local utilities for more information.

 

        ⁵ Leasehold Improvements.  To adapt a newly acquired facility for operation of a franchise business, the premises must be renovated.  The cost of leasehold improvements will vary based on factors including, the size, condition and location of the facility, local wage rates and the cost of materials.  The amounts you pay for leasehold improvements are typically not refundable.

 

        ⁶ Furniture, Fixtures and Equipment.  The higher amount of Furniture, Fixtures and Equipment expenses includes estimated lease payments for a forklift, while the lower amount of Furniture, Fixtures and Equipment expenses does not.  You must purchase and/or lease and install furniture, fixtures and equipment necessary to operate your franchised business.  The cost of these items will vary according to local market conditions, the size of the facility, suppliers and other related factors.  We do not know if the amounts you pay for furniture, fixtures or equipment are refundable. You should inquire about the return and refund policy of the suppliers at or before the time of purchasing or leasing.

 

        ⁷ USA Insulation Equipment.  The lower amount of USA Insulation Equipment expenses are calculated for one truck and the higher amount of USA Insulation Equipment expenses are calculated for two trucks.  Before you start operating the franchised business, you must purchase the following USA Insulation products at the costs set forth below (plus taxes and shipping costs) for each truck you operate in the franchised business:

 

        ⁸ Initial Inventory.  You must purchase an initial supply of approximately 10 to 20 barrels of USA Insulation Premium Foam and a start-up package of USA Insulation products (See ITEMS 5 and 8).  Costs vary based upon raw materials and manufacturing costs, the size and location of the franchised business, the size of your territory and other related factors.  The costs of USA Insulation Premium Foam and USA Premium Foam Catalyst vary by quantity and are as follows:

  

        ⁹ Insurance.  You must purchase the following types and amounts of insurance:

 

·         “all risk” property insurance coverage for assets of the franchised business, 

·         workers’ compensation insurance and employer liability coverage with a minimum limit of $100,000 or higher if your state law requires,

·         comprehensive general liability insurance with a minimum liability coverage of $1,000,000. per occurrence or higher if your state law requires,

·         business interruption insurance,

·         automobile liability insurance of at least $1,000,000 or higher if your state law requires, and

·         insurance coverage for contractual indemnity.

 

                The amounts you pay for insurance are typically not refundable.

 

 

        ¹⁰ Signage.  This range includes the cost of the signage used in the franchised business, including vehicle signage.  Typically these are not reoccurring costs; however, depending on the type of sign, maintenance may be required.  The costs will vary based upon the size and location of the franchised business, local zoning requirements and local wage rates.  The amounts you pay for signage are typically not refundable.

 

        ¹¹ Office Equipment and Supplies.  You must purchase general office supplies including stationery, business cards and typical office equipment and furniture.  Factors that may affect your cost of office equipment and supplies include local market conditions, competition among suppliers and other things.  We do not know if the amounts you pay for office equipment and supplies are refundable.  You should inquire about the return and refund policy of the supplier at or before the time of purchase. 

 

        ¹² Vehicle.  You will be required to lease or purchase at least one 16-foot box truck for use in the operation of the franchised business.  The high and low estimates represent lease costs, which may vary based on such factors as the location of the franchised business, competition among local dealers and the time of year.  These expenses are typically not refundable.

 

        ¹³ Grand Opening.  You will be required to spend a minimum of $3,000 on grand opening advertising during the first 12 weeks of operation.  You may choose to spend more.  Factors that may affect your decision on the actual amount to spend includes local media cost, location of the franchised business, time of year and customer demographics in the surrounding area.  The amounts you spend for grand opening advertising are typically not refundable.

 

        ¹⁴ Trade Show Booth.  This range represents the costs to purchase a display booth for trade shows.  These costs are typically not refundable.

 

        ¹⁵ Dues & Subscriptions.  You are expected to join the local Better Business Bureau and other local business networking organizations.  These expenses are typically not refundable.

 

        ¹⁶ Training.  This range represents estimated total expenses a three week training program. You are not charged an additional fee for initial training, but you are responsible for transportation, expenses for meals and lodging and any employees’ salaries in attending initial training.  Two weeks of your training will take place in our Eastlake, Ohio location and one week of training will occur at the location of the franchised business. The total cost will vary depending on the number of people attending, how far you travel and the type of accommodations you choose.  These expenses are typically not refundable.

 

        ¹⁷ Licenses & Permits.  Local governments and agencies typically charge you fees for such things as construction permits and operating licenses.  Costs may vary from the estimates based on the requirements of local government agencies.  These fees are typically not refundable.

 

        ¹⁸ Legal & Accounting.  You will need to employ an attorney, an accountant and other consultants to assist you in establishing your franchised business.  These fees may vary from location to location depending upon the prevailing local rate of attorneys’, accountants’ and consultants’ fees.  These fees are typically not refundable.

 

        ¹⁹ Additional Funds/Working Capital.  We recommended that you have a minimum amount of money available to cover 2 additional month’s rent for the facility and operating expenses, including employees’ salaries for the first three months that your franchised business is open. However, we cannot guarantee that our recommendation will be sufficient.  Additional working capital may be required if sales are low or operating costs are high.  These expenses are typically not refundable. The required funds will vary by your area; how much you follow our methods and procedures; your management skills, experience and business acumen; the relative effectiveness of your staff; local economic conditions; competition in your market; the prevailing wage rate; and the sales level you reach during the initial period.  The estimates are of your costs only and do not reflect any offsetting sales revenue you may earn from operations to help pay these costs.

 

        ²⁰ Total.  This total is an estimate of your initial investment and the expenses you will incur during the first 12 weeks of operations.  In compiling this chart, we relied on our management’s and our Affiliate’s industry knowledge and experience.  The amounts shown are estimates only and may vary for many reasons, including the size of your franchised business, the capabilities of your management team, where you locate your franchised business and your business experience and acumen.  We cannot guarantee that you will not have additional expenses starting your franchised business.  You should review these estimates carefully with an accountant or other business advisor before making any decision to buy a franchise.