Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Kolache Factory Franchise Costs (2015 FDD)

by Franchise Chatter on September 21, 2013

in Bakery Franchise, Franchise Costs

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Kolache Factory Photo by TimSchmidt (Digammo)

This post was updated on August 3, 2015 to reflect information from Kolache Factory’s 2015 FDD (Item 7).

Detailed Estimates of Kolache Factory Franchise Costs Based on Item 7 (Estimated Initial Investment) of Kolache Factory’s 2015 Franchise Disclosure Document

  • The franchised business is a retail bakery cafe that sells an assortment of kolaches and complementary menu items under the Kolache Factory trade name.
  • The amounts shown for the initial franchise fee are actual; all other amounts represent estimates, based on experiences that franchisees have reported.
  • The summary does not include real estate acquisition costs (either purchase or lease). These costs vary significantly from locale to locale, and your initial cash outlay will depend on whether you choose to purchase or lease the site for your Store and whether you choose to locate the Store in a strip shopping center, stand-alone location, or a mall.

1.  Option Fee:  $7,000

2.  Franchise Fee:  $18,000 (1st + Option Fee Credit); $28,000 thereafter

3.  Development Fee:  $7,000 x number of franchises you commit to develop

  • Note that the initial franchise fee was reduced from $35,000 to $25,000 for the 2011, 2012, 2013, 2014, and 2015 calendar years.
  • The low estimate assumes this is your first and only franchise. The high estimate assumes that you commit to develop a total of three Stores and have signed a Development Agreement.
  • The amounts do not include any management fees for review of alternative vendors or suppliers.

4.  Real Estate Acquisition and/or Lease Costs:  Amount Not Specified

5.  Rent, Security, and Utility Deposits:  $3,330 to $10,000

  • Assumes a lease deposit equal to one month’s rent. Utility deposits vary from locale to locale.

6.  Architectural, Engineering, and Legal Fees:  $18,000 to $25,000

7.  Leasehold Improvements, Construction:  $150,000 to $220,000

  • If you do not own a bakery cafe site, you must purchase or lease the building for your Store premises. Stores are typically located in strip shopping centers or shopping malls and range in size from 1,600 to 2,000 or more square feet. Any location you lease will have to be built out or remodeled to the company’s specifications.
  • The low estimate presented in the table for leasehold improvements does not include a drive-thru or full-service espresso bar, and the low estimate contemplates a landlord finish-out allowance of $13,000 to $20,000. The allowance, if any, that you negotiate with your landlord may be higher or lower.
  • Mall and free-standing locations are typically more expensive to build-out than strip center locations, so leasehold improvement expenses in these locations may be higher.

8.  Cabinetry and Millwork:  $20,000 to $26,000 (+ fuel surcharges)

9.  Equipment, Furniture, and POS System:  $130,000 to $200,000

  • All equipment must be purchased new and must be chosen from the list of brands the franchisor has approved. The estimate does not include espresso bar or drive-thru equipment.

10.  Grand Opening Expenses (net of up to $3,000 match by franchisor):  $2,000 to $3,000

  • The Grand Opening Package currently consists of business card artwork; 1,000 printed cards; menu art and 500 menus; an opening inventory of gift cards and artwork; window posters; one “Coming Soon,” one “Grand Opening,” and one “Now Open” advertisements in a local newspaper; “Grand Opening,” “Coming Soon,” and “Now Open” banners; “Grand Opening” flyers; 15 and 30 second “Grand Opening” radio scripts; wall posters; one Val-Pak or equivalent mailer for two zones in your Trade Area; counter mats; and gator boards.

11.  Signage:  $5,000 to $9,000

  • Municipal code and lease restrictions on signage may increase the cost of your signs. The estimate is for one exterior sign, and does not include drive-thru menu boards.

12.  Manager Training:  $3,000 to $22,000

  • You must hire your personnel before they attend training. You must also carry worker’s compensation insurance in compliance with the Franchise Agreement. The amounts assume salary, travel, lodging, meal, and incidental expenses for yourself and two managerial-level individuals to attend the required training program.

13.  Initial Inventory (Food, Paper Goods, and Gift Cards):  $8,000 to $10,000

14.  Office Supplies, Uniforms, Freight, Miscellaneous Expenses:  $5,000 to $15,000

15.  Additional Funds/Working Capital – 3 Months:  $20,000 to $40,000

  • These figures assume you will need the indicated amounts for rent, utilities, wages, inventory purchases, employee training, insurance premiums, debt service, legal and accounting fees, and other expenses during the initial phase of your Store’s operation, which the franchisor estimates to be three months. You may incur additional expenses in starting up your Store.

16.  Total:  $396,330 to $619,000

  • The franchisor has relied on its 30 plus years of experience in developing Stores in arriving at these cost estimates.

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