Freddy’s Frozen Custard and Steakburgers Franchise Costs: Estimated Initial Investment (Item 7, 2022 FDD)

• This initial investment chart represents the estimated initial investment range for construction of a Restaurant that is a freestanding restaurant with a drive-thru (“Standalone Restaurant”), a Restaurant that is an end cap unit of a shopping center with a drive-thru (“End Cap Restaurant”), and a Restaurant that is an in-line unit of a shopping center without a drive-thru (“In-Line Restaurant”).

Standalone With Drive-Thru

• A Standalone Restaurant typically requires approximately 3,000 square feet of internal space and typically occupies a parcel with an approximate total area of 0.8 to 1.0 acres. Standalone Restaurants typically have seating for 50 to 120 guests.

1.  License Fee:  $30,000

• If you are developing the Restaurant pursuant to a Development Agreement, the franchisor will credit the $10,000 Development Fee paid for each Restaurant against the License Fee.

• If the Restaurant is the first Restaurant that you develop pursuant to a Development Agreement, then the franchisor will also apply the $20,000 License Fee Deposit towards the License Fee.

2.  Training Expenses (Travel, Meals, Lodging, and Employee Wages):  $20,000 to $50,000

3.  Construction, Remodeling, and Leasehold Improvements:  $650,660 to $1,478,899

• The cost of constructing or remodeling the premises to meet the franchisor’s design specifications depends upon the condition and configuration of the existing retail space and whether or not your landlord agrees to provide an allowance for tenant improvements.

• Site improvement costs for Standalone Restaurants may vary based upon soil and environmental conditions, availability of utilities to the site, the topography of the site, the size of the parcel, local zoning, and other building requirements.

• Building costs will vary depending on commercial construction costs and union activity in your Assigned Area.

4.  Real Property Rent (one month):  $5,667 to $15,750

• Rent varies widely from location to location depending upon the size, condition, and location of the leased premises, but the franchisor estimates the rent (including common area maintenance and other similar charges) to range from $5,667 to $15,750, per month.

• If you elect to purchase the site for your Restaurant, your land acquisition costs will vary depending upon a multitude of factors including the size and location of the property and the availability of financing on commercially reasonable terms. The franchisor is unable to estimate the cost of purchasing a site.

5.  Security Deposit:  $5,667 to $15,750

• A one-month security deposit is also generally required, which the franchisor generally estimates to be between $5,667 to $15,750.

6.  Computer, Point of Sale Equipment, Outdoor Ordering System and Software, Security Cameras, Drive Thru Headsets:  $53,764 to $70,200

7.  Equipment, Furniture, Fixtures, and Decor:  $312,480 to $452,900

• Cost of equipment, furniture, fixtures, and decor will vary based upon the size of the Restaurant. These costs include all equipment (other than computer and point of sale equipment) necessary to operate the Restaurant including standard fixtures and equipment, indoor and outdoor menu boards, decor, and furniture.

8.  Building Signage, Interior Neon, LED Border:  $22,090 to $100,830

9.  Miscellaneous Opening Costs:  $8,000 to $15,000

• Includes construction insurance, utility deposits, licenses and business permits, pre-paid expenses, company organization costs, and other professional fees and pre-opening costs.

10.  Opening Inventory and Supplies:  $10,000 to $25,000

• This amount represents the cost of food products and condiments and office and store supplies necessary to initially stock the Restaurant for operation.

11.  Insurance:  $2,000 to $8,000

12.  Grand Opening Advertising:  $2,500 to $5,000

• You must conduct a grand opening advertising and promotional program for the Restaurant during the period commencing 14 days before and ending 180 days after its opening and expend at least $2,500, or, if required by the franchisor, at least $5,000.

• This amount includes the estimated cost of newspaper and radio advertising, circulars, coupons, and other media for the grand opening and for the first six months of business.

• It does not include the Marketing Fund contribution of up to 3% of your weekly Gross Receipts which you must pay at the franchisor’s discretion, or contributions to any applicable advertising cooperatives of up to 2% of your 28-day operating period Gross Receipts which, again, you must pay at the franchisor’s discretion.

13.  Additional Funds – 3 Months:  $20,000 to $60,000

• This amount represents an estimate of the funds needed to cover pre-opening expenses, utilities, uniforms, recruitment, in-store training expense, and additional opening capital for other variable costs (e.g. electricity, telephone, heat, etc.), paper, cleaning, and other supplies.

• This amount does not include any amounts payable to you as a draw or salary.

• These estimates of additional funds are based on the franchisor’s past experience in operating company-owned Restaurants.

14.  Total Estimated Initial Investment:  $1,142,828 to $2,327,329

• These estimates are based on the franchisor’s current experience in operating and franchising Restaurants.

End Cap With Drive-Thru

• An End Cap Restaurant typically requires 2,400 to 3,400 square feet of internal space with a drive-thru window and seating for 50 to 120 guests.

• Estimated Initial Investment:  $1,032,968 to $2,132,066

In-Line No Drive-Thru

• An In-Line Restaurant typically requires 2,400 to 3,000 square feet without a drive thru and has seating for 50 to 120 guests.

• Estimated Initial Investment:  $794,254 to $1,288,798