Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2.0: Estimated Initial Investment for a Freddy’s Frozen Custard and Steakburgers Restaurant (2012 FDD)

by Franchise Chatter on September 13, 2012

in Franchise Earnings, Frozen Dessert Franchise, Hamburger Franchise

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(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 Freddy’s Frozen Custard and Steakburgers’ 2012 Franchise Disclosure Document – Part 1

  • Freddy’s Frozen Custard and Steakburgers is a restaurant franchise featuring the retail sale of steakburgers, hot dogs, and frozen custard to the general public.

Estimated Initial Investment for a Freddy’s Frozen Custard and Steakburgers Restaurant

1.  Initial Franchise Fee:  $25,000

  • If Freddy’s grants the franchise under a Development Agreement, the franchisee must pay a development fee equal to $5,000, which is credited against the $25,000 initial franchise fee. Freddy’s does not finance any portion of the franchise fee.

2.  Training Expenses (Travel, Meals, Lodging, and Employee Wages):  $20,000 – $30,000

3.  Leasehold Improvements:  $150,000 – $320,000

  • The typical restaurant occupies approximately 3,500 square feet. Freddy’s expects that most franchisees will operate in stand-alone restaurants, although some franchisee-operated restaurants will be located at in-line shopping centers.
  • Rent varies widely from location to location, but Freddy’s estimates the rent (including common area maintenance and other similar charges) to range from $68,000 to $189,000 per year depending upon the size, condition, and location of the leased premises.
  • A one-month security deposit is also generally required, which Freddy’s generally estimates to be between $5,000 to $10,000.
  • The cost of remodeling the leased premises to meet Freddy’s design specifications for leasehold improvements depends upon the condition and configuration of the existing retail space.

4.  Real Property:  see comments below

  • If you elect to purchase the site for your restaurant, your land acquisition costs will vary depending upon a multitude of factors, including the size and location of the property, and the availability of financing on commercially reasonable terms.
  • In addition, site improvement costs may vary based upon soil and environmental conditions, availability of utilities to the site, the topography of the site, the size of the parcel, local zoning, and other building requirements.
  • Building costs will vary depending on commercial construction costs in your assigned area.
  • Freddy’s is unable to estimate the cost of purchasing a site and/or constructing a building on the purchased or leased site.

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