Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Pretzelmaker Franchise Costs (2017 FDD)

by Franchise Chatter on September 14, 2013

in Franchise Costs, Pretzel Franchise

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Pretzelmaker Photo by Julie Chan

This post was updated on September 14, 2017 to reflect information from Pretzelmaker’s 2017 FDD (Item 7).

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

  • Pretzelmaker Stores specialize in selling hand-rolled soft pretzels of various flavors, frozen pretzels, pretzel dogs, pretzel bites, and other pretzel-related products and toppings, and related food and beverage items.
  • The franchisor offers 2 type of Stores:  (a) Traditional Stores; and (b) Non-Traditional Stores. In addition, if you own and operate a Store, in certain circumstances, the franchisor will offer you the right to offer and sell products at a separate location that the franchisor approves (“Satellites”). Satellites may either be operated in conjunction with a Traditional Store or a Non-Traditional Store that is located in the same venue or shopping center.
  • The franchisor will have final authority to classify your Store as Traditional or Non-Traditional.

For a Single Store (Not a Satellite)

1.  Franchise Fee:  $15,000 to $25,000

2.  Grand Opening Marketing:  $3,000 to $5,000

  • You must spend the required grand opening marketing and promotion amounts 2 weeks before opening your Store and the 6 weeks after opening the Store. Your cost may be higher based on the length of time you wish to run opening promotions.
  • If the franchisor collects this fee (rather than having you spend this amount directly with third party suppliers), it will either (i) reimburse you for your documented grand opening marketing expenditures that it has pre-approved, up to the $3,000; or (ii) directly pay your vendors for your grand opening marketing expenditures that it has pre-approved, up to the $3,000.

3.  Travel and Living Expenses While Training:  $2,000 to $4,000

  • This estimate is for the cost of attending initial training in Atlanta, Georgia or any other venue the franchisor designates. The franchisor provides instructors, facilities, and materials for the initial training at no charge. You must pay the travel and living expenses, wages, and other expenses your trainees incur during initial training.
  • The actual cost will depend on your point of origin, method of travel, class of accommodations, and dining choices.

4.  Dough Ingredients:  $1,000 to $5,000

5.  Other Opening Inventory:  $500 to $1,000

  • You must have a supply of flavorings, garnishments, food and beverage products, small kitchen wares, cleaning supplies, paper and packaging supplies, beverage cups and lids, report forms, gift cards, and marketing and point-of-sale materials during your operation of the Franchise.
  • You must buy these items from the franchisor, its affiliates, or various other vendors or suppliers.
  • The initial cost for the gift card program ranges from $100 to $300.

6.  Architectural Fees:  $4,000 to $7,500

  • You also must employ and pay an architect or engineer to prepare a site plan and other construction documents. Although the franchisor will provide you with prototypical plans and specifications at no additional cost to you, you must pay an architect or engineer to adapt these plans and specifications to city, state, and local building codes and to the specific site chosen for your Store.

7.  Furniture, Fixtures, Equipment, and Decor:  $60,000 to $85,000

  • These estimates include the estimated costs for necessary trade fixtures, such as display cases, counters and work tables, equipment such as ovens, refrigerators, beverage dispensers, coffee preparation and dispensing equipment, and small wares.

8.  Signs:  $4,500 to $7,500

9.  Prepaid Rent and Security Deposit:  $2,500 to $5,000

  • Typical locations are in enclosed shopping malls, but also may be located in other shopping centers, transportation centers, or entertainment venues.
  • A typical Traditional Store requires between 200 and 850 square feet of space. A typical modular, prefabricated Non-Traditional Store will use between 400 and 800 square feet of space. A typical Satellite will use between 50 and 150 square feet in a shopping center or venue, but also will require a Traditional Store or Non-Traditional Store.
  • You may be required to pay a security deposit under your real estate lease. Your lease also may require you to pay the last month’s rent in advance.
  • The estimate includes one month of rent, and is based on a combination of square footage and location.

10.  Leasehold Improvements:  $95,000 to $150,000

  • These estimates include construction costs (labor and material) for typical tenant improvements and remodeling necessary to prepare a site for operation of a Store. The estimates also include construction management costs, general conditions, builders’ risk/liability insurance, and financing costs.

11.  Utility Deposits:  $2,200 to $3,000

  • Deposits for utility services are typically required at the time the service is applied for, and may or may not be refundable.

12.  Professional Fees:  $1,000 to $6,000

  • The franchisor may require that you engage an attorney to review your lease or purchase agreement for the accepted site and supply the franchisor with reasonable documentation of this review.
  • The franchisor strongly recommends that you seek the assistance of professional advisors when evaluating this opportunity.
  • The estimates in this chart are based on professional fees in the state of Georgia. You may experience different rates for professional fees in your market.
  • The franchisor may also require you to engage a professional accountant during the first 12 months of your Store’s operation.

13.  Computer System:  $2,500 to $5,000

  • This estimate includes the cost of purchasing the required computer hardware, software, inventory control system, and point of purchase system from approved suppliers.

14.  Business Licenses, Permits, Etc. (for first 6 months):  $1,500 to $2,500

  • You must maintain all required licenses and permits necessary to build and operate your Store. You should check with local authorities, an attorney, or a business consultant to determine what licenses and permits are necessary at your location.

15.  Insurance (3 months):  $2,500 to $3,500

  • The franchisor requires you to obtain and keep in force certain insurance coverages on a primary, non-contributory basis, with the franchisor and its affiliates named as an additional insured on each policy. Your real estate lease also may impose requirements for insurance coverage in addition to the requirements that the franchisor imposes.
  • The table contains the estimated cost of required insurance premiums for a 3 month start-up period; however, the cost of insurance varies, depending on the insurance company you select, lease requirements, variances in the cost of insurance from city to city and state to state, and other factors.

16.  Additional Funds (3 months):  $8,000 to $12,000

  • This amount represents the range of your initial start-up expenses over the first 3 months of operation. These figures include estimated payroll costs. However, they do not include the salary for a Store manager, on the assumption that you will manage the Store.
  • These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses starting your business.

17.  Total:  $205,200 to $327,000

  • This total amount is based on the franchisor’s and its predecessors’ market research and experience opening and operating similar stores.

For a Satellite Location

  • The total estimated initial investment necessary to begin operation of a Pretzelmaker satellite location ranges from $79,900 to $169,394.

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