This post was updated on August 13, 2017 to reflect information from Menchie’s 2017 FDD (Item 7).
Detailed Estimates of Menchie’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Menchie’s 2017 Franchise Disclosure Document
1. Initial Franchise Fee: $40,000
- If you sign an Area Development Agreement, the Initial Franchise Fee you will pay will depend on the number of Stores you agree to open. If you agree to open three Stores, your Initial Franchise Fee will be $32,000 for each Store. If you agree to open five Stores, your Initial Franchise Fee will be $25,000 for each Store.
2. Training Expenses: $500 to $3,500
- Menchie’s will not charge a fee for you and one additional person to attend the initial training program. You, however, are responsible for all hotel, transportation, and other costs and expenses for the people you designate to attend the initial training program.
- The amount above represents the estimated costs and expenses you will incur for you and one additional person to attend the initial training program.
3. Development Services Fee: $1,920
- At the time you sign the Franchise Agreement, you must pay Menchie’s the Development Services Fee. The Development Services Fee is earned upon receipt and is non-refundable.
4. Rent Deposit: illegible ($4,000 to $10,000 in 2016 FDD)
- A Menchie’s Store occupies 900 to 1,700 square feet of space. Stores can be located in strip shopping centers, shopping malls, free-standing units, and other venues in downtown commercial areas and in residential areas.
- Rent depends on geographic location, size, local rental rates, businesses in the area, site profile, and other factors, and could be considerably higher in large metropolitan areas than in more suburban or small town areas.
- Menchie’s anticipates that you will rent the premises. It is possible, however, that you will choose to buy, rather than rent, real estate on which a building suitable for the Store already is constructed or could be constructed.
- The rental security deposit may be refundable depending on your agreement with your landlord.
5. Leasehold Improvements: $89,120 to $170,000
- Leasehold improvement costs, including floor coverings, wall treatments, counters, ceilings, painting, window coverings, electrical, carpentry, and similar work, and architect’s and contractor’s fees depend on the site’s condition, location, and size; the demand for the site among prospective lessees; the site’s previous use; the build-out required to conform the site for your Store; and any construction and other allowances the landlord grants.
- The lower figure assumes that you have a unique real estate model; the higher figure assumes a high square footage model.
- These monies are not refundable after they have been expended.
- The estimates included above reflect the average deduction provided by landlords for tenant improvements and other allowances.
6. Furniture, Fixtures, and Equipment: $67,420 to $117,924
- These amounts include the frozen yogurt-making machines that you must purchase from Menchie’s required supplier. The amount also includes the cost for refrigerators, freezers, and other equipment, such as office equipment and furniture and a telephone system.
- These amount are not refundable, but the machines may be sold.
7. Computer (POS) System: $800 to $936
- You must purchase a Computer (POS) System that meets Menchie’s specifications and requirements.
8. Signage: $6,159 to illegible ($2,100 to $10,000 in 2016)
- This includes inside and outside signage. The monies are usually not refundable after they have been expended.
9. Opening Inventory: $4,587 to illegible ($3,000 to $4,000 in 2016)
- This includes food and beverage products, paper products, cleaning supplies, printing, uniforms, promotional material, and other supplies.
- Monies spent on these items are not refundable, but the unused items may be sold.
10. Uniforms, Merchandise, Equipment, and Supplies: $3,000
- You must purchase your uniforms, merchandise, and certain equipment and supplies from Menchie’s.
11. Initial Marketing: $1,500 to $4,000
- This represents the monies to be included in initial marketing for the first 3 months of operation. This includes funds to be used for your Grand Opening Marketing campaign. These monies are not refundable.
12. Utility Deposits, Security Deposits, Business Licenses, etc.: $1,000 to $3,500
- You must obtain business licenses as dictated by local regulations. You will need to provide monies for deposits for utilities and insurance.
- Insurance costs depend on policy limits, types of policies, nature and value of physical assets, revenue, number of employees, square footage, location, business contents, and other factors bearing on risk exposure.
- The estimate contemplates insurance costs for 3 months.
- These monies are not refundable.
13. Inspection Fee: $0 to $1,500
- Menchie’s will inspect your Store prior to opening. If your Store does not pass initial inspection, you will be charged for all costs and expenses Menchie’s incurs in conducting any subsequent inspection, which amount will not exceed $1,500.
14. Additional Funds – 3 Months: $6,000 to $36,000
- This item estimates your expenses during the initial period (first 3 months) of operation of your Menchie’s Store (other than the items separately identified in the table and any owner’s draw).
- This estimate includes payroll costs.
- These figures are estimates and Menchie’s cannot guarantee that you will not have additional expenses starting the business.
15. Total: $225,330 to illegible ($224,557 to $392,710 in 2016)
- Menchie’s relied on its Affiliate’s years of experience operating a Menchie’s Store to compile these estimates.