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Franchise Costs: Detailed Estimates of sweetFrog (Frozen Yogurt) Franchise Costs (2017 FDD)

by Franchise Chatter on May 17, 2013

in Franchise Costs, Frozen Yogurt Franchises

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sweetFrog Frozen Yogurt Interior Photo by woofwoofwoof

This post was updated on August 17, 2017 to reflect information from sweetFrog’s 2017 FDD (Item 7).

Detailed Estimates of sweetFrog (Frozen Yogurt) Franchise Costs Based on Item 7 (Estimated Initial Investment) of sweetFrog’s 2017 Franchise Disclosure Document

1.  Initial Franchise Fee:  $30,000

  • If you open multiple sweetFrog Shops, the initial franchise fee may be reduced as stated in Item 5.
  • If you sign a Development Agreement, you must agree to develop at least one sweetFrog shop in the geographic area.
  • When you sign a Franchise Agreement for a sweetFrog shop to be developed under a Development Agreement, the portion of the development fee allocable to that sweetFrog Shop will be credited against the initial franchisee fee.
  • If you do not sign Franchise Agreements for the sweetFrog Shops you agree to develop under the Development Agreement, the development fee is not refundable and is not credited against any other fees due to sweetFrog.

2.  Leasehold Improvements/Construction Costs:  $85,000 to $140,000

  • sweetFrog Shops are typically located in commercially zoned shopping or entertainment areas. sweetFrog used a range of 1,200 to 1,800 square feet of space to calculate the estimate.
  • Due to the cost of land acquisition and new construction, sweetFrog anticipates that the premises for sweetFrog Shops will be leased. sweetFrog does not provide an estimate for purchase of a site because real estate purchase costs vary greatly.
  • This is the estimated labor and materials cost for the construction of tenant improvements. Your actual cost will depend on the size and condition of the premises selected and on other factors, including whether or not your landlord grants a tenant finish allowance, and any existing equipment that can be re-used for the purposes of constructing your Shop (for example, existing HVAC and grease-trap).

3.  Furniture, Fixtures, and Equipment, Including Soft-Serve Machines:  $35,000 to $120,000

  • Equipment required to open a traditional Shop includes soft-serve machines, refrigerator, freezer, display refrigerator, tables, chairs, and other related fixtures, furniture, and equipment.
  • The cost of this equipment and fixtures will depend on available financing terms, size of the facility, and other factors.
  • The low range amount reflects that you may be able to purchase used equipment that meets the franchisor’s standards and specifications. During 2016, based upon information that it received from the supplier of certain equipment, sweetFrog believes that approximately 95% of franchisees that opened new shops that year purchased used equipment.
  • All equipment must be purchased from an approved supplier, which may be SweetFrog Enterprises, LLC.

4.  Lease, Security Deposits:  $3,000 to $12,000

  • Lease and Security Deposits are security deposits and first month’s rent that may be required by your landlord.

5.  Utility Deposits:  $500 to $2,000

  • Utility Deposits are the deposits required by local utility companies for the establishment of electrical or other utility service. These deposits may or may not be refundable based on the practices of the local utility company and the terms of your lease agreement.

6.  Design and Architectural/Engineering Fees:  $0 to $7,000

  • Design and Architectural/Engineering Fees represent the fees and costs normally associated with the production of approved construction drawings and plans for your Shop.
  • These fees will vary based on the size and condition of the premises to be occupied. These fees will be paid to the approved architect or engineer producing the drawings for your site.

7.  Interior and Exterior Signage; Decor Package:  $5,000 to $7,500

  • This estimate is for the cost of signage at your location. The lower estimate assumes normal use of signage (one exterior sign at the location), and the higher estimate assumes multiple exterior signs at your location.
  • These estimates include the costs for interior as well as exterior signage.

8.  Other Equipment:  $1,500 to $3,500

  • Other Equipment includes things like office equipment, an on-site computer for general use, a safe, and other related business equipment, including a surveillance system that sweetFrog suggests, but does not require, that you install.

9.  Grand Opening Marketing:  $5,000

  • You must conduct a grand opening campaign to promote the opening of your Shop. sweetFrog will work with you to develop a grand opening strategy for your local market. sweetFrog recommends that you spend more than the minimum amount listed above.

10.  Expenses During Initial Training:  $1,000 to $2,000

  • sweetFrog provides initial training for two of your management personnel at no additional charge.
  • The amounts in the chart include only your out-of-pocket costs for the expenses you or your employees incur during the initial training program, like travel, lodging, meals, and wages.
  • These costs will vary depending upon your selection of salary levels, lodging and dining facilities, mode of transportation, and travel distance.

11.  Insurance:  $2,000 to $5,000

  • This amount represents an estimate of the down payment on your annual insurance premiums.
  • sweetFrog must be named as an additional insured on the polices it requires you to obtain under the Franchise Agreement.
  • Your cost of insurance may vary depending on the insurer, the location of your Shop, your claims history, and other factors.

12.  Business Licenses and Permits:  $1,500 to $3,500

  • This is an estimated cost of the business licenses and permits required to operate your business. There may be additional costs depending on the type of the entity you select to operate your Shop.

13.  Point of Sale Systems:  $2,500 to $5,000

  • sweetFrog requires you to purchase an approved Point of Sale (POS) System. Currently, sweetFrog has only one approved POS System.
  • The system must satisfy sweetFrog’s internet-based reporting and data collection requirements and must include the number of terminals sweetFrog requires, a scale, two printers, and a secure router.  You must also purchase the necessary equipment and software to run the POS System.
  • You must secure and maintain internet connectivity and pay any additional costs required for the Shop to function as a Wi-Fi hotspot.
  • sweetFrog also requires that you purchase and install any hardware or software necessary to be in compliance with Payment Card Industry Data Security Standards.

14.  Office Equipment and Supplies (3 months):  $500 to $1,000

15.  Opening Inventory (1 week):  $3,500 to $8,000

  • The initial opening inventory of products (including merchandise, food and other consumable inventory like napkins, spoons, and cups) is estimated to cover the first week of operations.
  • It may be possible to arrange terms from your local approved suppliers to assist with this cost.

16.  Professional Fees:  $0 to $10,000

  • You will incur legal and accounting fees to organize your business and review all legal documents on your behalf. The cost of professional services varies widely and you should check rates for local service providers.

17.  Construction Management:  $0 to $18,000

  • Although it is not required, you may choose to engage an approved third-party construction management company to facilitate the construction and build-out of your Shop.
  • The construction management fee will be paid directly to the third-party supplier.

18.  Additional Funds – For Initial 3 Month Period:  $45,000 to $60,000

  • You will need additional funds during the initial 3 months of business to pay for restaurant supplies, yogurt and toppings, credit card fees, payroll, advertising, bank charges, professional fees, rent, and repairs and maintenance.
  • These amounts do not include any estimates for debt service. You must also pay the royalty and other related fees described in Item 6 of the disclosure document, which are not included in this estimate.

19.  Total:  $221,000 to $439,500

  • These figures are estimates and sweetFrog cannot assure you that you will not have additional expenses.
  • sweetFrog relied on the experience of the affiliated businesses to compile these estimates.
  • sweetFrog does not offer any financing directly or indirectly for any part of the initial investment.

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