Initial Investment and Financing

Q. How much does it cost to open a Pets Are Inn business?

A. This answer varies depending upon your geographic area. However, we can provide general guidelines for you to use in planning. The following table shows the range of investment one would normally expect to experience in starting your new business.

Range of Investment	High	Low
Initial Fee*	$35,000	$10,000
Initial Advertising	7,500	7,500
Real Estate & Improvements	2,500	0
Supplies & Printing	2,500	1,500
Lodging Supplies	1,000	500
Expenses During Training	500	250
Computer Equipment & Software	3,500	1,500
Facsimile Machine	150	150
Miscellaneous	4,000	2,000

TOTAL	$56,650	$23,400

Initial Fee for the 1st franchise territory is $35,000; $15,000 for the second territory; and $10,000 for the 3rd and subsequent territories.
The initial fee includes the 1st year’s Insurance Premium for PAI’s Master Insurance Program. In addition, you are required to purchase/lease a Damliar/Chrysler mini van either a Dodge Caravan or Plymouth Voyageur. The vehicle must be white and no more than 3 years old.

Q. What will my monthly income and expenses be?

A. This is very difficult to estimate because expenses can vary dramatically depending upon the size and location of the territory and other factors. All prospective franchisees are encouraged to contact existing Pets Are Inn Franchise Owners and inquire about their actual experience. The following is an estimate of the monthly income expenses associated with operating a “median revenue” ($146,000) Pets Are Inn business in 2005. These figures are estimates only. They were prepared by the Franchiser based upon: (1) the Franchiser’s operating expenses for its Pets Are Inn business from 1987 to present, and (2) the information provided by Pets Are Inn franchise owners on their monthly reports.

Gross Monthly Revenue	$12,166	$12,166 x 12 = $146,000
# of Host Families	24

Expenses:
Cost of Goods Sold:
Host Family Expense	$ 2,910
Royalty	$ 983
Advertising
Nat’l – 1%	$ 122	33.0%
FO – ½%	$ 61
Local Cooperative – 5%	$ 608
Computer Fees	$ 50
Total	$4,734	38.9%

Operating Expenses:
Pickup & Delivery:
Variable Expenses:
Driver	0	franchise owner
Vehicle	$ 133	gasoline
Fixed Expenses:
Vehicle	$ 400	monthly lease/purchase
Insurance	$ 100
License/fees	$ 25
Maintenance	$ 20

Office Operation:
Variable Expenses:
Reservations	$ 500	10 New Customers
	$ 860	43 Existing Customers
Banking/Visa Charges	$ 254
Fixed Expenses:
Telephone/Cell	$ 100
Accounting	$ 100
Support	$ -
Supplies	$ 75
Office/Operations Insurance	$ 100
HF Advertising	$ 50
Internet Access	$ 50

Total	$2,767	22.8%

Net Monthly Revenue Before Tax	$4,665	38.3%
Yearly IBT	$55,980	38.3%

The above expenses include only direct operating expenses. There have been no provisions made for amortization of start-up costs, depreciation of the Franchise Owner’s vehicle, finance costs, or taxes. Likewise, the above figures do not include any compensation, wages, or benefits for the Franchise Owner or for any employee.

Continuing Fee/Royalty

In addition to the Franchise Fee, beginning on the Effective Date, the Franchise Owner shall pay a non-refundable royalty amount computed on a monthly basis as follows:

10% of the first $5,000 of gross sales revenue;
7.5% of the next $5,000 of gross sales revenue;
5% of all gross sales revenue in excess of $10,000.

Or $100 per month for the first six (6) months the franchise is in operation, whichever is greater; $200 per month for the next six (6) months the franchise is in operation, whichever is greater; $400 per month starting the 2nd year the franchise is in operation, for the duration of the Franchise Agreement, whichever is greater.