Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of World of Beer Franchise Costs (2016 FDD)

by Franchise Chatter on August 29, 2013

in Bar Franchise, Franchise Costs, Retail Franchise

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This post was updated on August 3, 2016 to reflect information from World of Beer’s 2016 FDD (Item 7).

Detailed Estimates of World of Beer Franchise Costs Based on Item 7 (Estimated Initial Investment) of World of Beer’s 2016 Franchise Disclosure Document

  • The estimated initial investments shown in this table are based on franchised and company-owned World of Beer Taverns that opened in the U.S. market during 2015.
  • These new Taverns are typically larger than older World of Beer Taverns and include approximately 3,600 to 6,000 square feet (excluding the exterior patio), with an average ideal size of 4,800 interior square feet.
  • Your actual costs will vary depending on the size and location of your Tavern. World of Beer Taverns typically will be located in urban and suburban areas.

1.  Franchise Fee:  $45,000 to $50,000

  • The initial franchise fee for your first Tavern is $50,000. The initial franchise fee for your second and each subsequent Tavern is reduced to $45,000. If you have entered into an Area Development Agreement, the franchisor will credit the allocable portion of your development fee against your initial franchise fee, as long as you are in compliance with your obligations under the Area Development Agreement.

2.  Leasehold Expense, Utility, and Security Deposits:  $5,000 to $15,000

  • These amounts assume that you will lease the premises for the Tavern and do not include costs of land acquisition and construction of a building. You must provide a suitable site of approximately 3,600 to 6,000 square feet (excluding the exterior patio) from which to operate your Tavern.
  • The franchisor assumes the landlord will require the first month’s rent and a security deposit equal to one month’s rent. You also generally will incur certain deposits with local utilities (for example, electric, telephone, gas, water, and others), if you are a new customer of the local utilities.

3.  Leasehold Improvements:  $550,000 to $800,000

  • If your landlord contributes to the cost of build-out, total leasehold improvement costs could be reduced. This is usually paid to you 45 days after opening and after all lien waivers have been supplied to the landlord. This amount could be up to $300,000 or more, depending on the square footage of the Tavern, which could significantly reduce your total initial investment.

4.  Architect Fees:  $20,000 to $40,000

  • The franchisor currently requires you to use its designated architect to prepare the initial floor plan and concept plan for your Tavern. The franchisor recommends, but does not require, that you use its architect to prepare the engineered plans for the Tavern. If you do not use the franchisor’s architect to prepare the engineering plans, you must use an architect that it approves.

5.  Furniture and Fixtures:  $60,508 to $137,540

  • The cost of furniture (including the bar, tables, booths, glass racks, and cabinets) and millwork will vary depending on the size and seating capacity of the Tavern, the supplier you use, and the shipping distance.
  • The franchisor requires a standard interior decor style, but may allow the Tavern to reflect the location, market, and your tastes within certain parameters it prescribes and approves.

6.  Bar Equipment:  $23,600 to $197,661

  • The estimate given covers the cost of bar equipment, refrigeration equipment, dispensing equipment, storage racks, bar stools, and outdoor furniture.

7.  Restaurant Equipment:  $74,587 to $152,153

  • The estimate given covers the cost of restaurant equipment necessary to provide the required menu items.

8.  Initial Inventory/Supplies (one month):  $35,000 to $55,000

  • You must purchase an initial supply of products and supplies, including beverage inventory. The franchisor estimates that this range will cover the cost of inventory, supplies, and other miscellaneous items for approximately one month of operations.
  • These costs will vary based on your expected volume of business, the size and location of the premises, suppliers, and other factors.
  • The Manuals contain the franchisor’s suggestions for the amount of inventory and supplies.

9.  Office Equipment and Supplies (including computer systems and POS system):  $22,000 to $42,000

  • These amounts include the cost of a POS system, computer hardware and software, and electronic cash register equipment required for your World of Beer Store.

10.  Audio Visual Equipment:  $40,790 to $75,000

  • This estimate includes the audio and visual equipment you must purchase for your World of Beer Tavern. A typical World of Beer Tavern is equipped with 14 to 30 flat screen televisions (32″ to 65″), a sound board, a sound system, and a control center. This estimate includes an annual subscription for audio and visual entertainment for your World of Beer Tavern.
  • You must use the franchisor’s designated audio visual services provider and sign the form of service agreement attached to the Disclosure Document. You may not use the services of any other audio visual services provider without the franchisor’s prior written consent.

11.  Business Licenses and Permits:  $500 to $10,100

  • This amount represents the estimated cost of various operating licenses required at the local, regional, or state level. Your actual costs may vary from the estimates based on the requirements of local government agencies. The franchisor is unable to estimate the cost of your alcohol beverage license because of wide variations in costs.

12.  Insurance Premiums (3 months):  $7,000 to $10,000

  • The estimated cost of insurance for the policies required by the Franchise Agreement will vary significantly based on your location, and the claims experience of commercial businesses in the area, as well as your claims experience in other businesses you operate.

13.  Pre-Opening Marketing Kit:  $6,000 to $10,000

  • This estimate includes items that you will need prior to your World of Beer Tavern’s grand opening, including an initial supply of business cards, logoed T-shirts for your management and other personnel, a pop-up tent and table skirt for public relations events and hiring, stickers and other logoed items, and website development.
  • You must purchase these items from an approved or designated supplier.

14.  Grand Opening Advertising:  $5,000 to $10,000

  • You must spend at least $5,000 on a grand opening program for the Tavern in compliance with the franchisor’s written specifications. You may spend more than this amount, in your discretion.
  • The grand opening must be conducted within 30 days after your World of Beer Tavern opens to the public. The grand opening promotion includes, among other things, catered food and musical performances at your World of Beer Tavern. The franchisor must approve all advertising items, methods, and media.
  • This estimate does not include the cost of the pre-opening marketing package.

15.  Training Expenses:  $8,500 to $25,000

  • You are responsible for all travel and living expenses incurred by your trainees in attending the initial training program.

16.  Interior and Exterior Signage:  $18,000 to $30,000

  • Your exact costs may vary based on the size and configuration of your building, zoning requirements and restrictions, and the requirements of your landlord.

17.  Security/Surveillance:  $3,500 to $6,500

  • This estimate includes the cost of surveillance cameras and safe. You must also install and maintain an alarm system for your World of Beer Store.  There is typically no cost for the alarm system equipment, but you must pay an approved service provider to monitor the alarm. This estimate includes installation and monitoring for your first month of operations.

18.  Professional Fees:  $1,000 to $11,000

  • This estimate is for the cost to employ an attorney, an accountant, and other consultants to assist you in establishing your franchised business and reviewing the franchise documentation.
  • This figure also includes an estimate ranging from $0 to $5,000 for fees the franchisor incurs for its attorney to assist it in negotiating and making changes to the franchise documentation requested by you or your attorney that the franchisor agrees to make.

19.  Additional Funds (3 months):  $20,000 to $40,000

  • These amounts are the minimum recommended levels to cover operating expenses, including employee salaries, for three months. You may require additional working capital if your sales are low or if your fixed costs are high.

20.  Total:  $945,985 to $1,716,954

  • The franchisor relied on its experience and that of its affiliates to compile these estimates.

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