Franchise Costs: Detailed Estimates of Andy’s Frozen Custard Franchise Costs (2017 FDD)

This post was updated on July 23, 2017 to reflect information from Andy’s Frozen Custard’s 2017 FDD (Item 7).

Detailed Estimates of Andy’s Frozen Custard Franchise Costs Based on Item 7 (Estimated Initial Investment) of Andy’s 2017 Franchise Disclosure Document

• All amounts listed in the table below are non-refundable, except that a portion of the initial franchise fee is refundable if the franchisor determines that you (or your managing owner) cannot complete initial training to its satisfaction and it decides to terminate the franchise agreement.

1.  Initial Franchise Fee:  $32,000

• The standard initial franchise fee is $32,000, but if you are a franchisee in good standing and buy a second or additional franchise, the initial franchise fee currently is $28,000 for each additional unit.

• Also, if you sign a Development Rights Agreement with Andy’s Frozen Custard, the initial franchise fee for each Andy’s Frozen Custard Store you develop under that Development Rights Agreement is $28,000.

2.  Real Estate/Rent:  Not Included

• An Andy’s Frozen Custard Store occupies approximately 1,500 to 2,100 square feet of space. The franchisor anticipates that you will rent the Store’s premises.

• 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.

• Andy’s Frozen Custard Stores are typically free-standing units.

• It is possible, however, that you might choose to buy, rather than rent, real estate on which a building suitable for the Store already is constructed or could be constructed. Because of the numerous variables that affect the value of a particular piece of real estate, this initial investment table does not reflect the potential cost to purchase real estate.

3.  Leasehold Improvements:  $250,000 to $750,000

• Leasehold improvement costs, including floor covering, wall treatment, 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 or other allowances the landlord grants.

• The lower figure assumes that you remodel an existing building, the higher figure assumes construction of a new building.

4.  Utility and Security Deposits:  $2,500 to $8,500

5.  Computer System:  $30,000 to $40,000

6.  Furniture, Fixtures, and Equipment:  $200,000 to $280,000

• These amounts include the frozen custard making machines (the “Machine”) that you must purchase from the franchisor’s designated supplier. The franchisor determines the number of Machines that you will need to purchase.

• The lower figure assumes that you are purchasing 1 Machine. The higher figure assumes that you are purchasing 2 Machines.

• The franchisor requires that you pay its designated supplier a deposit in the amount of 1/2 of the total cost of each Machine that you purchase at the time you sign the lease for your Store, with the balance of the total amount that you owe the designated supplier payable at the time the Machine(s) are delivered to your Store.

• These amounts also include refrigerators, freezers, and stereo and phone systems.

7.  Signage:  $75,000 to $150,000

8.  Professional Fees:  $5,000 to $50,000

• The architect will provide architectural services relating to the Store building. The civil engineer will provide engineering services in conjunction with the architect and contractor.

9.  Office Equipment and Supplies:  $2,500 to $5,000

• This includes a small desk and chair, safe, fax machine, and telephones.

10.  Business License and Permits:  $1,000 to $25,000

11.  Opening Inventory and Supplies:  $12,000 to $20,000

• This includes food and beverage products, paper products, cleaning supplies, and printing and other supplies purchased from approved suppliers.

12.  Grand Opening Marketing:  $5,000 to $25,000

• This is a range that you may spend on grand opening marketing for your Store. The franchisor can require up to an amount not to exceed $25,000.

13.  Training Expenses (out-of-pocket costs for 2 people):  $4,000 to $20,000

14.  Insurance – 3 Months:  $2,000 to $5,000

• You must obtain and maintain certain types and amounts of insurance. The estimate contemplates insurance costs for 3 months.

15.  Additional Funds – 3 Months:  $1,000 to $80,000

• This item estimates your initial start-up expenses (other than the items separately identified in the table). These expenses include payroll costs but not any draw or salary for you.

16.  Total Estimated Initial Investment (excluding real estate costs):  $622,000 to $1,490,500

• The franchisor relied on AFCI’s approximately 30 years of operating, as well as its franchisees experience in operating, Andy’s Frozen Custard Stores to compile these estimates.