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

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

• Except for the security deposit, which is typically refundable if you comply with the lease during its term, none of these expenditures is refundable. The franchisor does not finance any portion of your initial investment.

1.  Initial Franchise Fee:  $30,000

2.  Training Expenses:  $10,000 to $25,000

• This figure estimates your and your personnel’s costs and expenses for training if neither you nor your affiliates operate a Certified Training Restaurant and the franchisor provides the entire initial training program.

• It includes costs for the Operating Partner under the Area Development Agreement to attend training.

3.  Marketing Deposit for Grand Opening:  $5,000 to $10,000

4.  Real Estate/3 Months’ Rent:  $10,000 to $30,000

• A Standard Freshii Restaurant occupies approximately 500 to 1,500 square feet of space. The typical location for a Freshii Restaurant is in an inline footprint in an urban setting with high vertical density that is focused on attracting office workers and professionals.

• Rent depends on geographic location, size, local rental rates, other businesses in the area, site profile, and other factors and could be higher in large metropolitan areas..

• The franchisor anticipates that you will rent the Restaurant’s location. It is possible, however, that you might choose to buy, rather than rent, real estate on which a building suitable for the Restaurant already is constructed or could be constructed. Because of the numerous variables affecting the value of a particular piece or real estate, this initial investment table does not reflect the potential purchase cost of real estate or the costs of constructing a building suitable for the Restaurant.

5.  Security Deposit:  $5,000 to $15,000

• This estimate contemplates a security deposit equal to one month’s rent. A landlord may require you to pay a security deposit that is more than one month’s rent.

6.  Construction, Remodeling, Leasehold Improvements, and Decorating Costs:  $50,000 to $150,000

• The estimate is to improve a 1,000 square foot property and includes the costs of general contractors and licensed tradesmen to install electrical and plumbing fixtures. Your costs might be more or less than this estimate depending on where you plan to operate your Restaurant.

• Leasehold improvement costs — including floor covering, wall treatment, counters, ceilings, painting, window coverings, electrical, carpentry and similar work, 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 Restaurant; and any construction and other allowances the landlord grants.

7.  Furniture, Fixtures, Other Fixed Assets, and Equipment:  $25,000 to $100,000

• This includes items like the serving line, refrigerators, tables, chairs, the components for the Computer System, smallwares, and office supplies.

8.  Signage (Interior and Exterior):  $3,000 to $10,000

9.  Opening Inventory and Supplies:  $5,000 to $10,000

10.  Insurance:  $1,000 to $7,500

11.  Licenses and Permits:  $1,000 to $3,000

12.  Miscellaneous Opening Costs:  $5,000 to $15,000

• This includes costs for professional fees, utility deposits, and other organizational and pre-paid expenses.

13.  Additional Funds – 3 Months:  $10,000 to $60,000

• This estimates the funds needed to cover your initial expenses for the first 3 months of operation (other than the items identified separately in the table). It includes payroll costs but not any salary or draw for your owners.

• This is only an estimate and you might need additional working capital during the first 3 months you operate your Restaurant and for a longer time period after that.

14.  Total Estimated Initial Investment:  $160,000 to $465,500

• The franchisor relied on its principals’ experience developing and operating Lettuce Eatery Restaurants in Canada since 2004, and in developing Freshii Restaurants in Chicago, Illinois during 2007 to 2008 to compile these estimates (including the estimate of additional funds).