Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs 2013: Detailed Estimates of Red Mango Franchise Costs (2013 FDD)

by Franchise Chatter on June 19, 2013

in Franchise Costs, Frozen Yogurt Franchises

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Detailed Estimates of Red Mango Franchise Costs Based on Item 7 (Estimated Initial Investment) of Red Mango’s 2013 Franchise Disclosure Document

1.  Initial Franchise Fee:  $35,000

  • The figure above reflects Red Mango’s standard Initial Franchise Fee for a Traditional Self-Serve Store. The Initial Franchise Fee for a Non-Traditional Store is $17,500.

2.  Project Management Fee:  $9,600

  • Unless the parties agree otherwise, you must use the services of Red Mango’s internal development management team or its designated tenant representative consultant/broker to assist you with site selection, lease negotiations, and space planning for the Store.

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

  • Red Mango Photo and Graphics by Jan-nuhYou must lease a location accepted by Red Mango and construct, model, alter, and improve it to their 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 on 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 are generally 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:  $120,000 – $175,000

  • The figures in the chart 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 Red Mango’s standards.

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

8.  Millwork; Smallwares; Interior Graphics; Fixtures; Equipment:  $60,000 – $90,000

  • Furniture, fixtures, and equipment includes tables, chairs, freezers, display cases, and serving equipment, artifacts, and all interior design elements. It does not include the costs of air conditioning equipment.
  • Financing may be available for all or a portion of your equipment purchases.

9.  POS System:  $7,000 – $13,000

10.  Soft Serve Machines; Chiller Unit:  $62,000 – $88,000

  • The estimates above contemplate four soft-serve machines plus a chiller unit, to six soft-serve machines plus a chiller unit for Traditional Self-Serve Stores.  The chiller unit is approximately $10,000. The cost of the chiller unit is included in both the $62,000 (four yogurt machines) and the $88,000 (six yogurt machines) estimated cost for a Traditional Self-Serve Store.

11.  Inventory; Uniforms:  $2,000 – $5,000

12.  Pre-opening Training Expenses:  $3,000 – $6,500

  • The figures above represent the estimated cost for two individuals to attend Red Mango’s initial training program, including the program held in Dallas, which focuses on managing and operating your business.

13.  Grand Opening Advertising Promotion Fee:  $10,000

14.  Additional Grand Opening Expenses:  $500 – $1,000

  • The estimate includes costs of labor, free yogurt samplings, and product presentation.

15.  Insurance – Liability & Workers Compensation (initial deposit):  $1,000 – $2,000

16.  Legal Fees:  $1,500 – $3,000

17.  Additional Funds (3 months):  $10,000 – $20,000

  • These estimates do not include pre-opening training expenses, pre-opening food waste, managerial salaries, or any payment to you. These estimates also do not take into account finance payments or charges, interest, and related costs you may incur if any portion of the initial investment is financed, or the costs of a security system, estimated to cost between $100 and $150 per month to lease.
  • These amounts are the minimum recommended levels to cover operating expenses, including your employees’ salaries for 3 months. However, there is no guarantee that these amounts will be sufficient.
  • Red Mango relied on its experience in working with its franchisees in compiling these working capital estimates.

18.  Total:  $346,100 – $495,600

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