Firehouse Subs Franchise Costs: Estimated Initial Investment (Item 7, 2022 FDD)

Traditional New Restaurant Development

1.  Deposit:  $0 to $2,500

• The deposit is not refundable, but it will be applied to the initial franchise fee.

2.  Balance of Initial Franchise Fee (Less Any Deposit):  $0 to $17,500

• The current initial franchise fee is $20,000, less the deposit.

• Some franchisees had previously entered into an incentive program offered temporarily only to existing franchisees and the initial franchise fee was waived.

3.  Mural:  $3,500 to $4,495

• Firehouse Subs will commission a mural for your Restaurant, which you must pay to the artist when Firehouse Subs orders it.

4.  Travel and Living Expenses During Training:  $0 to $7,200

• Firehouse Subs provides initial training to you and 1 other person (or up to 2 of your owners) without charge. If space is available at such training sessions, Firehouse Subs will provide initial training for up to 3 additional people at no charge for a total of 5 attendees.

• You are responsible for all travel and living expenses for trainees.

• This estimate assumes that the franchisee will get required training in their market at the Area Representative’s training store and the franchisee would be going home at the end of each day during this extensive training period and does not include the 1 week of classroom training in Jacksonville, Florida.

• The high end of the estimate is only for the 1 week of classroom training in Jacksonville and includes travel, hotel, rental car, and reasonable food allowances, as well as additional travel and living costs if you have to travel to complete the rest of your training.

5.  Opening Advertising:  $5,000 to $11,170

• Firehouse Subs requires you to conduct a market introduction advertising and promotional program within the first 12 months after the opening of the Restaurant. This requirement may be waived if your Restaurant exceeds the franchisor’s expectations for sales performance.

• The market introduction program is in addition to your ongoing marketing obligations.

6.  Rental of Site (3 months):  $4,800 to $12,200

• The size of a Restaurant is estimated to be between 1,200 and 2,565 square feet. The estimated rental is from $8 to $40 per square foot.

7.  Real Property Improvements:  $0 to $25,000

• The Restaurant’s location (the “Site”) typically will be located in a strip mall that is close to retail or other commercial areas.

• The range includes estimates for cost of improvements to the property outside of the leasehold improvements (see amounts in number 8 below). These additional improvements may include amounts spent relating to exterior work on the premises including parking lot, landscaping, certain signage, and drive-through structures.

• Some restaurants may also have to pay government imposed impact and permit fees depending on the Site. They vary considerably due to numerous factors and Firehouse Subs is unable to estimate them.

8.  Leasehold Improvements:  $120,000 to $388,997

• Build-out or renovation of your Site to conform to Firehouse Subs’ standards includes paint, tile work, lighting, salt walls, drywall partitions, counters, and the like.

• The cost of these improvements will be significantly more if you select a Site with no pre-existing improvements.

• If you lease your Site, you may be able to negotiate an allowance to cover all or a portion of these build-out and leasehold improvements.

• Costs of leasehold improvements, which include floor covering, wall treatment, counters, ceilings, painting, window coverings, plumbing, electrical, carpentry, and related work and contractor’s fees, will vary significantly depending on the condition, location, and size of the Site; the demand for the Site among prospective lessees; and any construction and other allowances granted by the landlord after negotiations.

• These costs also include architectural drawings.

9.  Deposits and Prepaid Expenses:  $0 to $15,000

• The amount of rent and security deposit will depend on the size, condition, and location of the Site; and the demand for the Site among prospective lessees.

10.  Signs:  $1,800 to $18,000

• The cost of signage varies depending on the size and type of signs, the size and location of the Restaurant, and any local and development requirements.

• If local law permits, you must display a curb or marquee sign that complies with Firehouse Subs’ specifications and standards.

11.  Equipment and Fixtures:  $26,571 to $142,041

• This item may include tables and booths, sinks, refrigerators, ovens, steamers, ventilation systems, display cases, stools, chairs, utensils, computers, POS System, a phone system and facsimile machine that meets Firehouse Subs’ specifications and standards, a desk, filing cabinets, and related office supplies for a Restaurant.

12.  Opening Inventory:  $5,000 to $35,000

• You must purchase a beginning inventory pursuant to Firehouse Subs’ Inventory Stock Plan as described in the Operations Manual.

13.  Business Licenses:  $0 to $5,248

• You must obtain business and health licenses for the operation of your Restaurant. Other considerations are, but not limited to, zoning, electrical, plumbing, fire inspection, fictitious name, occupations, and various other licenses or permits.

• You should consult the appropriate governmental authority concerning such licenses and/or permits and the associated expenses for your Restaurant before you sign a Franchise Agreement.

14.  Insurance:  $0 to $8,800

• Insurance must be obtained to meet the minimum requirements established by the System Standards.

• The insurance policy must be in force and effect when the lease for your store is signed. If there is no lease (for example, you own the property), then the insurance policy must be in force and effect when you begin construction.

15.  Miscellaneous Expenses (3 Months):  $0 to $187,000

• This item estimates your initial start-up expenses. These expenses include payroll costs.

• Firehouse Subs cannot guarantee that you will not have additional expenses starting the business.

16.  Additional Funds (Working Capital – 3 Months):  $0 to $65,000

17.  MIS System Fee:  $0 to $1,200

• The annual MIS System Fee is $1,900 and is prorated for the first year. The low end is for a Franchise Agreement signed in December and the high end is for a Franchise Agreement signed in January. It is calculated as follows:  for a Franchise Agreement in December, you will pay an MIS Fee of $100 with $1,900 due in January for the following year; and for a Franchise Agreement signed in January, you will pay an MIS Fee of $1,900.

18.  Accounting System Fee:  $0 to $4,000

• If you obtain legal and accounting services to help with business formation; review of contracts, financing documents, and leases; setting up of books and records; and other services. This amount varies greatly depending on the services performed and rates prevailing in your market.

19.  Total Estimated Initial Investment Under the Unit Franchise Program (Excluding Real Estate Purchase Costs):  $166,671 to $950,351

• Firehouse Subs relied on its experience and that of its affiliates and franchisees to compile these estimates.

• Firehouse Subs does not offer financing directly or indirectly for any part of the initial investment for your Restaurant.

• The actual lowest total investment for an individual Restaurant of this category during 2021 was $267,503 and the actual highest total investment for an individual Restaurant was $682,994.

• Average total cost for a typical Firehouse Subs Restaurant is $412,731.

End-Cap Strip Mall Restaurants With Drive-Thru

• Estimated Initial Investment:  $475,133 to $626,672

Free Standing Restaurants With Drive-Thru

• Estimated Initial Investment:  $460,813 to $770,070