Franchise Costs 2013: Detailed Estimates of CherryBerry Franchise Costs (2013 FDD)

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

• In general, none of the expenses listed in the chart below are refundable, except any security deposits you must make may be refundable and the initial franchise fee is partially refundable under certain circumstances.

• CherryBerry does not finance any portion of your initial investment.

1.  Initial Franchise Fee:  $25,000

• This fee may be different if development rights are purchased.

• Once the Initial Franchise Fee has been paid in full, it is non-refundable, except that if you fail to complete the training program to the franchisor’s reasonable satisfaction, CherryBerry has the right to terminate your Franchise Agreement and refund all but $15,000 of the Initial Franchise Fee.

• If you are a Development Agent, you will pay CherryBerry a lump sum, non-refundable Development Agent Rights Fee of between $100,000 and $500,000, depending on the size of your Development Area when you sign the DAA.

2.  Leasehold Improvements, Construction Cost, General Contractor Fee:  $125,000 to $165,000

• You shall select a site within your geographic territory using the services of a commercial real estate broker. The commercial real estate brokers are familiar with commercial real estate contracts and terms and will identify a suitable location and, at the company’s discretion, assist in negotiating lease terms with the landlord.

• The terms of the lease and the amount of the monthly lease payment and security deposit will depend on the geographic location, size, condition of the premises, and the demand for the premises by other prospective tenants. These recurring overhead costs cannot be estimated.

• You will lease space from the owner of the approved location on terms negotiated by you and the owner.

• Leasehold improvement and construction costs vary significantly depending on the condition, location, size and configuration of the Unit premises, the layout of the retail center, and other factors relating to the geographic location of the business, suppliers, government regulations, labor costs, and other considerations.

• You will contract directly with the architect, construction contractor, and possibly other construction suppliers on terms negotiated by you. CherryBerry will consult with you regarding the construction of the Unit.

• Also included are the estimated charges for you to hire a general contractor for the construction in the mall or retail center.

• These figures do not include any tenant improvement allowance.

3.  Fixtures, Equipment, Signs, POS System:  $20,000 to $60,000

• This estimate includes the cost of all equipment, including the point of sale system.

4.  Architect:  $4,500 to $10,000

• You shall contract with a local architect and pay the architect directly. This fee is an estimate of the architect cost.

• You have the option to use the services of CherryBerry’s approved architectural firms.

5.  Electrical, Plumbing, Drywall, Tiles, Installation:  $15,000 to $40,000

6.  Security/Utility Deposits, Licenses, and Prepaid Fees:  $1,500 to $3,000

• This category includes an estimate of security deposits, utility deposits, food service licenses, and other prepaid fees that you must pay. CherryBerry strongly recommends that you determine the availability and cost of required licenses before you purchase a CherryBerry franchise.

7.  Opening Inventory and Supplies:  $7,500 to $10,000

• The costs of initial inventory and supplies, including food and ingredient supplies, vary with the local market. The above figures are based on estimates of reasonable quantities of inventory and supplies for the start-up phase of the business.

8.  Miscellaneous Opening Costs:  $2,500 to $5,000

• This category includes miscellaneous opening costs and expenses such as installation of telephones and high speed internet connection, initial insurance premiums, cost of uniforms and employee recruitment, grand opening marketing, and other miscellaneous costs.

9.  Training:  $1,000 to $3,000

• This category includes out-of-pocket expenses for travel to training and training costs.

10.  Ancillary Real Estate Fees:  $2,000 to $3,000

• These fees are for miscellaneous real estate costs, such as broker incentives and market analysis studies.

11.  Additional Funds:  $15,000 to $25,000

•  Additional funds may be necessary before the Unit is opened and to maintain the business during the first few months of operation. This category is intended to cover unforeseen costs that may arise during the initial six month phase of the business.

• It is anticipated that the Unit will not open for at least three months after the Franchise Agreement is signed, and cash flow may be minimal during the first few months the business is open.

12.  Total:  $219,000 to $349,000

• Your actual costs may vary and will depend on many factors such as the size and condition of the space and the cost to convert it to a CherryBerry Unit, your management skill, experience and business acumen, local economic conditions, the local market for the products, the prevailing wage rate, advertising expenditures, rental charges, level of competition, and the sales level achieved during the initial period.

• In compiling these figures, CherryBerry relied on its affiliate’s experience in operating CherryBerry Units since 2010.

• The above estimates of your initial investment do not include optional business organizational expenses or overhead expenses such as legal fees for review of the Franchise Agreement, review of the lease and the contracts with construction suppliers, organization of a new business entity, etc. Whether or not any of these expenses are incurred is entirely at your discretion and cannot be predicted or estimated by the company.