If you are looking towards opening a Adam and Eve Franchise, it will be nice for you to have a preview of what the company represents before going ahead to enquire about the total cost of opening the franchise in your location.

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Adam and Eve was founded in 1972 and they began franchising in 2004, about 16 years ago. Phil Harvey is the Founder and CEO and they have their corporate head office at 302 Meadowland Dr. Hillsborough, NC 27278, USA. Presently, the brand has spread to over 56 locations throughout the United States.

Franchisees operate a store for the retail sale of lingerie, apparel, shoes, leather accessories, a selection of intimate novelty items, DVDs, and other associated products. The franchisor offers the right to establish and operate a single Adam & Eve Store or multiple Adam & Eve stores using the franchisor’s proprietary mark and system at an approved location.

Adam and Eve franchisees can count on them to get them up and running within 90 days of securing their location. Once the company helps secure the best site, they let their franchisees retain their own general contractor to build out the store. They follow with a complete interior installation package that takes care of the interior design, furniture and fixtures—all carefully planned to optimize the customer’s shopping experience.

Here are areas where you are expected to spend money and the cost associated with it;

  1. Initial Franchise Investment: $171,050 – $350,700

Please note that typical start-up cost to open store: $171,050 to $350,700. Adam and Eve disclosure document details this and breaks down the expenses and the Average store size is 1200 sq. feet

  1. Franchise Fee: Adam and Eve franchise fees: $35,000 including mobile, but a traditional or kiosk location is also required.
  2. Rent – 3 Months and Security Deposit: $8,000 to $20,000
  3. Leasehold Improvements/Site Selection: $15,000 to $70,000
  4. Furniture and Fixtures: $35,000 to $70,000
  5. Initial Inventory: $60,000 to $90,000
  6. Signage: $5,000 to $12,000
  7. Travel & Living Expenses While Training: $500 to $2,000
  8. Computer System: $1,980 to $1,980
  9. Grand Opening Advertising: $6,000 to $12,000
  10. Utility Costs and Deposits: $0 to $1,000
  11. Permits and Licenses: $50 to $200
  12. Prepaid Insurance Premiums: $1,000 to $3,000
  13. Miscellaneous Opening Expenses: $1,000 to $3,000
  14. Professional Fees: $2,000 to $5,000
  15. Additional Funds (3 months): $5,000 to $25,000
  16. Royalty: 5 percent of Gross Sales for the longest operating store; 4 percent of Gross Sales for each additional store in operation

18.Conversion Store: 3 percent of Gross Sales for the first year of operation;4 percent of Gross Sales for the second year of operation; and 5 percent of Gross Sales for the remaining term of the Franchise Agreement. If franchisees operate more than one store, then after the second year of operation, each Conversion Store will be counted among the New Stores for the purposes of assigning the Royalty to be paid.

  1. Brand Fund Fee: Not to exceed 1.5 percent of Gross Sales.
  2. Website Fee: Currently $20 and the fee is due upon transfer of Franchise Agreement or controlling ownership interest in business entity franchisee.
  3. Minimum Advertising Expenditure: 5 percent of Gross Sales.
  4. Site Selection Visit: The franchisor may, at its option, perform one site selection visit, at its cost.

Please note that if additional site selection visits are necessary, franchisees will pay the franchisor’s reasonable expenses, including the costs of travel, lodging, and food. Expenses will not to exceed $1,000. Franchisees will also pay the then current per diem rate. Current per diem rate = $200.

  1. Cooperative Fee: As determined by cooperative, but at least 3 percent of Gross Sales for the preceding month
  2. Training Program (New or Additional Trainees): The then-current fee, plus expenses. Current = $750

Please note that you shall pay the additional training fee for initial training programs furnished to any individual who replaces an employee who has previously attended such training program.

  1. On-Site Training or Assistance: The then-current per diem rate for each representative the franchisor sends to the Store. Current per diem rate = $200
  2. Transfer Fee: $10,000 and the Due Date for this fee is before transfer completed.

The fee is due upon transfer of Franchise Agreement or controlling ownership interest in business entity franchisee.

Please note that for an assignment of a Franchise Agreement to a wholly-owned entity or where the existing owners are reallocating ownership interests among themselves (not more than a controlling ownership interest), Adam and Eve will charge you a reduced transfer fee of between $500 to $2,500 to cover its administrative and legal costs to facilitate the transfer.

  1. Insurance: Cost of Insurance and procurement expense. Actual cost of premiums, plus Adam and Eve costs and expenses and the Due Date for this fee is as incurred.

Please note that if you fail to obtain and maintain the insurance Adam and Eve requires, and Adam and Eve elects to do so on your behalf, you must reimburse Adam and Eve.

  1. Renewal: 50 percent of our then-current initial franchise fee.
  2. Hold Harmless and Indemnification: Amount of loss or damages plus costs.
  3. Interest and Audit Expenses: Will vary under the circumstances and the Due Date for this fee is incurred.

Please note that this fee is due only if you do not give Adam ad Eve reports, supporting records, or other required information on time or you understate Gross Sales by more than 2%.

  1. Collection Costs, Attorneys’ Fees and Arbitration Fees: Costs of collection, attorneys’ fees and arbitration fees.
  2. Additional Site Visit Fee: The franchisor’s reasonable expenses, including costs of travel, lodging and food for additional on-site evaluation. Please note that the Due Date is upon execution of the lease for an approved Site, or upon renewal or transfer triggering a required Refresh.

Please note that Massage Envy has the right to adjust the portion of the Site Survey Fee Application it retains.

  1. Supplier and Product Evaluation Fee: Reasonable cost of evaluation and testing, not to exceed $500
  2. Overdue Payment Fee: $200, plus the lesser of (a) the maximum legal rate of interest due on the overdue amount per month, or (b) 1.5 percent on the overdue amount per month, from the date it was due until paid, together with reasonable attorneys’ fees and costs, and costs of investigation.
  3. Remodel or Upgrade Obligation: Cost of Remodel or Upgrade – will vary under the circumstances. Please note that the cost of the remodel or upgrade could be as much as $70,000
  4. Manuals and Replacement Fee: $300 per manual.
  5. Liquidated Damages: This fee will vary under the circumstances.
  6. Gift Card Program: This fee will vary under the circumstances.
  7. Relocation Fee: $7,500 and the due upon transfer of Franchise Agreement or controlling ownership interest in business entity franchisee.
  8. Missed Annual Conference Fee: $3,000 and the due upon transfer of Franchise Agreement or controlling ownership interest in business entity franchisee.
  9. Proprietary Products Purchases: This fee will vary under the circumstances
  10. Promotional Programs: This fee Varies, depending on length and type of promotion.
  11. Computer System: $495 per month, renewable every 5 years.
  12. Indemnification: Will vary with circumstances and the Due Date for this fee is as incurred.

Please note that you must indemnify Adam and Eve and others for any damages incurred if you breach the Franchise Agreement or if Adam and Eve and others are sued for claims relating to the operation of your Business.

  1. Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If requirements are met, franchisees can renew for one additional term of 10 years.
  2. Financial Assistance: Adam and Eve Franchise Inc. offers in-house financing to cover the following: franchise fee. So also, Adam and Eve Franchise Inc. has relationships with third-party sources which offer financing to cover the following: startup costs, equipment, inventory, accounts receivable, and payroll amongst others.

In Summary,

  • Initial Investment: $171,050 – $350,700
  • Net-worth Requirement: $300,000
  • Liquid Cash Requirement: $175,000
  • Ongoing Initial Franchise Fee: $30,000 – $30,000
  • Ongoing Royalty Fee: 5 to 4 percent
  • Ad Royalty Fee: 2 percent
Ajaero Tony Martins