FDD Talk 2.0: Estimated Initial Investment for a Traditional (Self-Serve) and Non-Traditional Red Mango Frozen Yogurt Store (2012 FDD)

(Ambrosio’s note:  Welcome to FDD Talk 2.0, a more comprehensive version of our flagship content, featuring not only the Item 19 financial performance representations of select franchises, but their estimated initial investment, unit growth, and other key items of their 2012 FDD as well.)

Highlights of Red Mango’s 2012 Franchise Disclosure Document – Part 1

Estimated Initial Investment for a Traditional Red Mango Self-Serve Frozen Yogurt Store

1.  Initial Franchise Fee:  $35,000

• The standard initial franchise fee for your first store is $35,000. If you develop multiple stores of this type under a Store Development Agreement, the initial franchise fee is $35,000 for the first store and $30,000 for each additional store that you commit to develop.

2.  Project Management Fee:  $9,600

• Unless the parties agree otherwise, you must use the services of the company’s internal development management team or their designated tenant representative consultant/broker to assist you with site selection, lease negotiations, and space planning for the store. You are not required to use these services if you are developing a non-traditional store.

3.  Lease Deposits & Rent:  $8,000 – $12,500

• You must lease a location accepted by the franchisor and construct, remodel, alter, and improve it to the company’s specifications. These estimates assume that your location will be a leased, unimproved, unfinished retail store-type unit. A traditional self-serve store typically occupies 1,400 to 2,000 square feet of commercial space. These businesses are typically located on a major thoroughfare, or in or adjacent to a retail strip mall or shopping center, or in an urban storefront.

• Typical rent costs usually range from $2.00 to $8.00 per square foot per month, depending upon factors such as size, condition, and location. Your rent will generally be a fixed base rent plus triple net charges. Your lease may also provide for percentage rent, which will be a percentage of your sales at the store.

• Security deposits generally are required by utilities, the landlord, and equipment lessors. Amounts will vary depending on the provisions of various leases, utilities’ policies, and your credit rating.

4.  Architect; Engineer; Drawings:  $10,000 – $12,000

5.  Permits:  $1,500 – $3,000

6.  Interior Improvements; General Contractor; Lighting; Tile:  $100,000 – $170,000

• Construction and remodeling costs vary widely, depending upon the location, design, configuration, and condition of the premises, the condition and configuration of existing services and facilities such as air conditioning, electrical, and plumbing, and the terms of your lease.

• The figures in this section include a general contractor’s fee (generally equal to 10% to 15% of total construction costs); contractor’s insurance; materials and supplies; tools; labor and subcontractor fees; and other costs to construct leasehold improvements conforming to the company’s standards.

7.  Exterior Signage:  $5,000 – $10,000

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