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Financial Disclosure Notes

Item 7 Notes

A. This chart lists the estimated amounts of all the fees or payments you must pay to us or a third party before opening one Licensed EyeCare Center. Except as otherwise noted, the fees and payments are applicable per store, and are the same for a New Licensed Owner or an Existing Licensed Owner, however, if you enter into a Development Agreement your fees and payments to a third party may decrease due to economies of scale. Except as noted, any fees paid to us are non-refundable and deemed fully earned upon receipt.

B. The figures included in the chart are estimates based upon our experience building Pearle Vision EyeCare Centers with the following characteristics: (a) EyeCare Center 1.0 design, (b) 1,600 to 2,400 square feet with 1 or 2 exam lanes, 3 consult desks and 1 exterior sign, and (c) leased from a third-party landlord. Costs will vary depending upon the square footage, condition, location, and laboratory type (if any), of the Licensed EyeCare Center and the price differences among market conditions, contractors, and local wage rates, unions, and material costs.

(1) Your Initial License Fee includes the Project Services as outlined in Item 8.

(2) We estimate that you will need to lease (or purchase) space in a free-standing location, strip center, or mall location for your Licensed EyeCare Center in accordance with the square footages we require. Lease Deposits (if any) are not included in our estimates. If you elect to purchase real estate, we estimate the cost for the purchase of unimproved land will range from $250,000 to $2,000,000. If you purchase a Corporate Conversion EyeCare Center from us, certain real estate costs may be paid to us.

(3) This category includes the following costs:

Leasehold Improvements. The amount of your leasehold improvements will vary depending upon the size of your Licensed EyeCare Center and the condition of your space, including whether you receive the space in “as-is” or “vanilla shell” condition. Vanilla shell locations are sites such as new construction sites where the landlord may have prepared the space, such as by providing electrical service, light fixtures, restroom(s), acoustical ceiling tiles, plumbing, drywall, and HVAC. Minimum ceiling height provided should be a minimum of 9′-1″ above finished floor, but 10′- 6″ above finished floor is preferred. Minimum storefront linear footage is 25′-0″ but 35′-0″ is preferred in order to maximize our “Doctor Forward” principal. If you license an Independent Conversion EyeCare Center your leasehold improvement cost will vary according to the square footage of your Licensed EyeCare Center.

Retail Sales Tax. The amount of sales tax you will be required to pay will depend upon the items you purchase and the tax treatment of your locality, state, or federal tax guidelines.

Freight. Freight costs will vary depending upon the items purchased and the proximity of the place where those items are shipped from their destination. If you license a Corporate Conversion EyeCare Center, these Construction costs will be included in the purchase price you negotiate.  If you license an Independent Conversion EyeCare Center you may not incur these costs, depending upon the current state of your EyeCare Center.

(4) A&E Fees.  A&E Fees are fees you pay us or an approved architect to produce, at a minimum, a field survey, construction documents, engineering fees and costs, reimbursable fixed fees, permit set, and energy calculation.  These fees vary depending upon the scope of the project.  If you build a new EyeCare Center, purchase a Corporate Conversion or renew your license agreement and must remodel or relocate the EyeCare Center you will incur the A&E Fee in addition to the Project Services Fees you pay us. Excluding revisions due to Landlord and/or city/municipality comments, we will provide no more than one (1) revision to the construction drawings.  Further revisions cost an additional Five Hundred Dollars ($500) per hour if you obtain A&E services from us.

(5) This category includes the following costs:

Optometric Equipment. If your Licensed EyeCare Center includes an exam lane, you may wish to purchase optometric equipment. The costs presented in this table are for three months of lease payments for optometric equipment for a Licensed EyeCare Center with one exam room and a dispensary, as well as a finishing lab, and is based upon our arrangement with Topcon, an approved supplier, as further indicated below:

EquipmentStandard Lease Payment
Standard Equipment$467
Standard Lane Equipment Options$14 to $402
Description of Standard Pre-Test$413
Optional Pre-Test Equipment$437 to $1,687

We estimate that it will cost $48,573 if you purchase optometric equipment for one pre-test lane and one exam lane. If you build more than one exam room, your costs will increase. These prices are based upon estimates given to us by Topcon, our approved vendor. These prices are not under our control, and Topcon may change these prices at any time without notice to you.

Finishing Equipment. The finishing equipment presented is for finishing equipment leased through Stereo Optical—Essilor Instruments, National Ops—Statisloh and Briot, or Santinellie, our Approved Suppliers.

Coburn Technologies, an approved supplier, offers a “$1 purchase option” leasing program. Generally, if you purchase these items, Coburn estimates your total cost will be $20,000 to $50,000. These prices are not under our control, and Coburn may change these prices at any time without notice to you.

Lens Preparation Equipment. If you license an EyeCare Center and wish to include a finishing lab, you will lease or purchase lens preparation equipment from approved third-party suppliers. We have an approved supplier, Coburn Technologies, who furnishes the required equipment for the lab. Coburn offers a “$1 purchase option” leasing program.

Tracer or Edger. You must purchase or lease a tracer from Essilor, Satisloh, Briot, or Santinellie, our Approved Suppliers. In our experience, our Licensed Owners purchase the Tracer, rather than lease. You should review the options presented by the various Approved Suppliers to lease or purchase the Tracer.

If you choose to purchase an Edger instead of a Tracer, it will increase your ability to assemble eyewear on site in less time. You can purchase the Edger from Satisloh, Santinellie, and Briot, our Approved Suppliers. You should review the options presented by the various Approved Suppliers to lease or purchase the Tracer.

Dispensing Equipment. To operate your Licensed EyeCare Center you will need to purchase dispensing equipment. The dispensing equipment included in this estimate is: a lensometer (manual), lensometer (auto w/printer), and a pupilometer. You may need to purchase additional dispensing equipment if required by law. For example, if your Licensed EyeCare Center is located in New Jersey, we believe that N.J.A.C. § 13.33-2.2 requires you to purchase additional dispensing equipment that may increase your initial investment for dispensing equipment. We encourage you to ask your attorney or other qualified business advisor to advise what specific equipment your Licensed EyeCare Center must have to comply with the regulation.

Traffic Counters. To provide key performance indicators regarding customer count, you must purchase, from our Approved third-party supplier, shoppertrak optical orbits (“Traffic Counter”). The Traffic Counter consists of at least two orbits, labor, installation, freight, tax, and monthly service fees. You may need to purchase more than two orbits depending on the size of the EyeCare Center and number of entrances. We will access the data from the Traffic Counter to analyze and use the data to help market your EyeCare Center and provide insights into your Licensed Business. We estimate the cost to purchase the Traffic Counters is $2,433 to $4,198, and the yearly service cost is $600.

Tag Printer and Barcode Scanner. Additionally you will need equipment to print Frame tags and scan SKU numbers for each Frame. We estimate the cost of these items to be $465.

(6) This category includes the following costs:

Signage. Estimated costs of interior and exterior signage include the cost of one sign; however, your Landlord may require you to purchase additional signage. In addition, you must purchase visual and graphics displays that include frame presentation displays, mirrors, accessory displays, free standing fixture inserts, graphics, and other marketing and merchandising tools, signage, and logos. All signage must be approved by us prior to display in your EyeCare Center.

Fixtures, Furniture and Décor. We require you to purchase fixtures, furniture, and décor from our Approved Suppliers as required by the Pearle Signature Items, Iconic Elements, and as otherwise determined in our sole discretion. The fixtures, furniture, and décor include, but are not limited to, waiting chairs, chairs, stools, and frame panels. The amount of these items you will need varies according to the square footage of your EyeCare Center. All Independent Conversion EyeCare Centers will need to purchase proprietary fixtures from our approved suppliers, although in lesser quantity, to comply with our Iconic Elements. If you purchase a Corporate Conversion EyeCare Center the costs included in this category will be included in the purchase price you negotiate. If you license an Independent Conversion EyeCare Center you may not incur these costs, depending upon the current state of your EyeCare Center.

 (7) The amount of Inventory you purchase will vary according to the following factors:

(a) square footage of your Licensed EyeCare Center,

(b) if your Licensed EyeCare Center has a surfacing or finishing lab,

(c) if you license a Full Service EyeCare Center and,

(d) if you license and open more than one Licensed EyeCare Center in within a short period of time.

To open for business, you will need to purchase an “Initial Frame Assortment” of Frames to fill up to 100% (at our discretion and direction) of your Frame Capacity, including any Managed Vision Care Assortment (if applicable) from us, and it will consist of Frames from Luxottica USA and Oakley, our Service Affiliates, as well as Approved Suppliers. We will bill you for the Initial Frame Assortment in equal, interest-free, monthly installments as further described in Item 10.

The range provided here is for 900 to 1,100 frame units for one Full Service EyeCare Center. If you license a Corporate Conversion EyeCare Center your EyeCare Center may include 700 to 1,600 frame units. You will also need to purchase Inventory (aside from Frames), that you will need to operate your Licensed EyeCare Center as more further described in Item 6.

(8) This category includes the following costs:

Computer System Hardware and Software. You must purchase AcuityLogic™, the approved point-of-sale system hardware and software, from Eyefinity, our Approved Supplier. We estimate the hardware required to run AcuityLogic to cost $4,800 to $11,500, for three workstations or as many as five workstations. If you would like additional workstations, your costs will increase.

The AcuityLogic software license will cost $5,950 to $12,950:

 Initial CostMonthly CostMonthly Hosting FeeIncluded Services
Base$5,950$140$75Note a
Base and EHR$9,100$290$75Note b
Demographic Data Conversion$0 - $1,050N/AN/ANote c

* All packages include a hosting charge to house your data. In the future the approved point-of-sale system may include social networking, bar code management, credit card processing, and mobile solutions.

Note a: The Base package includes a software license fee, training, implementation, and data conversion (if needed). The monthly cost includes a subscription fee and an insurance clearinghouse.

Note b: The Base plus EHR package includes all of the items in the Base package plus electronic health records for one doctor. For each additional doctor you will need to pay $150 per month.

Note c: This item is the estimated cost to convert your demographic data from your existing point-of-sale system to AcuityLogic. If you would like additional data converted, you may incur additional data conversion costs.

ProfitKeeper. Because the point-of-sale system is computer-based, you can utilize the computer system for other needs, such as word processing and “ProfitKeeper™,” our cloud-based financial management system that you must use to report your weekly and monthly sales and provide financial statements. This financial management system provides the Licensed Owner with real-time comparatives and benchmarks that can be utilized to evaluate their performance relative to the network and their peers. We cover the cost of the contractually required reporting requirements and online analytic functionality.

The Appointment Book. Because the point-of-sale system is computer-based, you can utilize the computer system for a web-based appointment scheduling program called “The Appointment Book,” or “TAB,” which is a daily patient appointment scheduler that facilitates patient scheduling online and includes a patient recall. TAB can be accessed through any high speed internet connection or device with internet access within or outside the office. Currently, the cost of TAB is covered through the advertising fund discussed below, although in the future we reserve the right to charge you a membership fee and/or the cost of administrating TAB. However, if your franchised store is located in Texas, your subleasing optometrist will pay us directly for these TAB services.

(9) The Grand Opening Advertising campaign must be conducted within the first 60 days after your Licensed EyeCare Center opens. The amount of the Grand Opening Advertising campaign must be at least$15,000, and we reserve the right to direct you to increase this amount. We will place the Grand Opening Advertising then bill you the cost in three equal monthly installments. We reserve the right to instruct you to pay directly to our 3rd party vendors for all costs associated with your grand opening inclusive of but not limited to creative and media costs.

(10) The cost presented in this item is for an additional member of your staff to attend training; the cost of your initial training as well as one other member of your staff is included with your Initial License Fee. The estimated cost presented does not include transportation, travel, lodging, and food. Initial Training is more fully described in Item 11 below.

(11) We estimate security deposits on utility services are $1,300 and a security deposit for rental space varies from $0 to one month’s rent generally. If you converted your Independent Optical EyeCare Center, we assume that all security deposits have already been paid. If you are acquiring a Corporate Conversion EyeCare Center, you may not need to pay a security deposit if the landlord did not require one from us.

(12) You must have insurance before your Licensed EyeCare Center opens for business, and your annual insurance premiums will vary according to the amount of insurance you purchase and other factors such as geographic location and loss experience. The estimates presented in this Item are based upon the minimum levels of insurance required by your License Agreement.

(13) Federal and state franchise disclosure laws require us to include an estimate of all costs and expenses to operate your Licensed EyeCare Center during the “initial phase” of the business, which the disclosure law defines as “at least three (3) months or a reasonable period for the industry.” We are not aware of any established longer “reasonable period” for the retail optical shop industry, so our disclosures cover a three month period. The additional funds that we estimate you may need will vary considerably based on a variety of factors, such as the following: the size of your Licensed EyeCare Center; how much you follow our methods and procedures; your management skills, experience, business acumen, and credit rating; the number of employees you chose to hire and the wages/salary and other benefits you choose to pay; the extent you will be actively involved in store-level operations; local competition; the local market for eyewear; local economic conditions, including rent and the cost of supplies; and the actual sales levels that you achieve during the initial three-month period. These figures exclude the following: (a) payments of royalty and Advertising Fees, since these amounts depend upon your actual Gross Revenues; (b) allowance for other payments made to a bank or financing company on any loan that you may obtain to finance the cost of purchasing the License or other development related costs; (c) your draw or salary (or to your owners, if you are not an individual). The figures for Additional Funds are estimates only.

(14) The total investment for the construction of a new EyeCare Center may be segmented between the costs the costs to construct and open the store from the required disclosure of our estimated three months of operating expenditures.

Acquisition & Start-up Costs
New Licensed Owner$338,295$509,519
Existing Licensed Owner$328,295$499,519
Working Capital/Operation Expenses
New Licensed Owner$63,500$111,019
Existing Licensed Owner$63,500$111,019