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

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

• None of these payments are refundable.

1.  Initial Franchise Development Fee:  $30,000 ($27,000 for veterans)

2.  Equipment and Smallwares:  $107,000 to $115,000

• Breadsmith Franchising, Inc. (BFI) equipment are payable 60% upfront (with option to pay in full), 40% due net 30 from order; all other fees (customs, shipping, storage, etc.) as they occur.

• Some vendors may offer financing for a portion of equipment to qualified purchasers.

• Your investment in equipment, whether by purchase or lease, will depend on how you acquire and finance the equipment.

3.  Leasehold Improvements and Fixtures:  $79,000 to $100,000

• The franchisor does not recommend that you acquire real estate for your Breadsmith Bakery. You should lease space in a well-maintained, high-traffic neighborhood shopping center. The typical Breadsmith site is between 1,200 and 2,000 square feet. Rental rates vary for acceptable locations and may be between $15.00 and $40.00 a square foot, plus common area maintenance (CAM) charges.

• The cost of leasehold improvements will vary depending on location, local construction costs, zoning, deposits, and other factors.

• You must obtain the franchisor’s approval for the site before signing a lease.

4.  Opening Inventory:  $4,000 to $7,000

• You will need an initial supply of ingredients and supplies in your opening inventory. The estimated cost should cover approximately 2-3 weeks of operation. All supplies and inventory must meet the franchisor’s standards.

5.  Signage:  $3,500 to $7,500

• Signage costs may vary by location, construction, size, color, material, and individual contractor’s specifications.

6.  Security Deposits:  $2,000 to $6,000

• The estimate includes deposits that may be refundable to you at a later time. In most cases, your lease will require you to pay electric, gas, water, and other utilities directly; however, some landlords cover some utility charges through CAM fees or operating fees they include in the lease.

7.  Promotion:  $3,500 to $7,500

• The promotion cost estimate will vary with the type of media you choose to use. Costs also vary by location. Public relations event costs will also vary by type of event and location.

8.  Pre-Opening Training:  $4,000 to $6,000

• This estimate includes the cost for you to travel to the franchisor’s office for initial training. It does not include any salary for you while training. The estimate includes a salary for new employees who train on location for one week before you open your store.

9.  Miscellaneous (legal, insurance, permits, office supplies, tools, etc.):  $1,500 to $10,000

• The estimate also includes the premium on insurance for your business during pre-opening.

• You must maintain in effect an insurance with an “all insurance” carrier, naming the franchisor as an additional insured.

• The insurance must include public liability insurance in no less than $2,000,000 combined single limits for bodily injury and property damage; comprehensive and collision auto liability insurance with $2,000,000 combined single limit for both bodily injury and property damage; business interruption insurance for a period of at least 180 days; and all risk replacement coverage.

10.  Additional Funds (6 months):  $4,000 to $30,000

• This amount is an estimate of your initial start-up expenses. The estimate is based on an owner-operated business and does not include any salaries or benefits for the owner. It also does not include payroll costs for other employees.

• You may need additional cash after the first 6 months, as the franchisor cannot estimate or promise when, or whether, you will achieve positive cash flow or profits. Since these figures are estimates, the franchisor also cannot guarantee you will not have additional expense either in starting the business or during the first 6 months.

11.  Total:  $238,500 to $317,000 ($235,500 to $314,000 for veterans)

• In putting together these estimates, the franchisor relied on the experiences of its franchisees who opened stores in the last 36 months and current costs. Your actual investment could be different than the franchisor’s experience, particularly if you add features to your store that are above and beyond those normally contained in the stores.

• The franchisor does not offer financing for any part of the initial investment.