Yes, I believe the $1.6 mil includes the cost of the hardware/software which is hugely profitable for UWKI if it ever happens. The technology fee of 2% is probaby for ongoing updates, new games, etc. etc. going forward after they are all set up.
That's why the original mix was to be 2 franchises for 1 company-owned store. The profits from selling 2 franchise stores successfully would allow them to open one company-owned store.