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Stephen G., Sr Financial Expert

Category: Finance

Satisfied Customers: 7152

Experience: Extensive Experience with Tax, Financial & Estate Issues

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I have a Franchise Disclosure Document that I need to

Customer Question

I have a Franchise Disclosure Document that I need to calculate Estimated Initial Investment for the category of Lease Deposit plus First Month of Rent and then a second category of Leasehold Improvements. For Lease Deposit plus First Month of Rent I need it to be calculated on $18.60 and $26 per square foot, but I don't know how to do that. Am I calculating it over the life of the lease, just the first year??? HELP? On the Leasehold Improvements - Do I add those dollar amounts to the Demolition, OH&P, Supervision and Travel the construction company charged us, divided by 12 - or divide that by the amount of square feet??? OMG - I have not clue as to what I should do. Please help.

Are you saying to multiply 4000 sf x 18.60 and then divide that by 12 to get the monthly rent for the first year? The lease is for 7 years, what about the remaining 6 years.For Leasehold Improvements I believe I need to calculate what the improvements would be per square foot (this is what I'm asking you since you're the expert :)Our entire construction costs are $320,315 (below.) My boss asked me to separate out the Leasehold improvements from the the rest of the construction costs. So, in the FDD I have to list how much per square foot the build out of 4000 sq feet would be based on what we spent on the leasehold improvements (at least i'm assuming that is what I need to do - is this correct?) And I'm also assuming that I need to include the demolition, OH&P, supervision, and travel...correct? How do I do this? Is it the the total of 320315/4000 x 12 again?Startup Expenses Buildings/Real Estate Demolition $10,800 OH&P $38,900 Supervision $10,800 Travel $5,600 Total Buildings/Real Estate $66,100 Leasehold Improvements Carpentry Dryall $90,946 Accoustical Ceilings $22,125 Paint / Wall Coverings $14,291 Flooring $33,715 Plumbing $8,830 Electrical $29,125 HVAC $24,185 Fire Alarm $5,345 Fire Suppresion $7,375 Permits $1,500 Engineering $6,000 Total Leasehold Improvements $243,437

Customer:replied 1 year ago.

The first part of your answer doesn't make sense to me because if I do the math like you are saying to do it I get $2,580.65 4000sq /18.60*12 = $2,580.65 per month for 12 months. How is that possible when with triple nets we're paying $6200 per month. Please see below.Clinic - 1st 3 Months Sq Ft $ per Sq Ft Mo Extended Annually Extended Monthy Lease (w/Triple Nets) 4000 $18.60 $6,200.00 $74,400.00 Lease Deposit $6,200.00 Total $12,400.00

You didn't multiply the correct numbers. (You didn't give me the sg ft initially)

So, using what I told you seems to come out property:

18.60 x 4,000. Sg Ft = 74,400/12 = $6,200. month.

So, I think you reversed the numbers to divide & those to multiply - in fact I know you did. (You wouldn't divide the sq feet by the $18.60 cost per foot then multiply it by 12 - that number doesn't represent anything).

Start-up expenses by definition don't include Leasehold Improvements; So if you have the Leasehold Improvements figure, then you would divide those cost by the Sq ft to give you a cost per sq feet which would be the proper measurement. So you simply take the Leasehold Improvements $243,437. /4,000. = $60.86 per sq ft

That would be the kind of measure that would be normal.

You wouldn't arbitrarily add in other costs; just what the system categorized as Leasehold Improvements.

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