Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Capriotti’s Franchise Costs (2017 FDD)

by Franchise Chatter on October 21, 2013

in Franchise Costs, Sandwich Franchise

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Capriotti's Sandwich Shop Photo by TheHungryHungryHungryHippo

This post was updated on July 23, 2017 to reflect information from Capriotti’s 2017 FDD (Item 7).

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

  • There are no other direct or indirect payments regarding the purchase of the franchise.
  • All figures in this Item 19 are estimates only. Actual costs will vary for each franchise and each location depending on a number of factors.

1.  Franchise Fee:  $30,000 to $40,000

  • The initial franchise fee under each Franchise Agreement is a lump sum payment of $40,000. The initial franchise fee for each Restaurant slated for development under an Area Development Agreement is $30,000.

2.  Development Services Fee:  $6,000

  • This fee is payable when you sign the Franchise Agreement for the franchisor’s costs incurred in providing site selection assistance, layout and design assistance.
  • However, if you sign an Area Development Agreement, this fee for the first Franchised Restaurant you agree to develop is due when you sign the Area Development Agreement.
  • You will not pay this fee for the 10th and each additional Franchised Restaurant you develop under an Area Development Agreement.

3.  Kitchen Plans and Architectural/Engineering Fees:  $10,000 to $15,000

  • This fee represents the cost of plans and specifications paid to an approved kitchen designer, architect, and engineer. The cost for the development of construction documents can vary depending on the state or municipality where your restaurant will be built.

4.  Professional Services/Permits and Licensing:  $1,000 to $4,000

  • Professional fees are for attorneys, accountants, or other professionals from whom you seek advice.

5.  Rent:  Amount Not Specified

  • A Franchised Restaurant occupies approximately 1,800 to 2,000 square feet of leased space, typically in an in-line shopping center in an urban or suburban commercial center.
  • While there are exceptions depending on landlord negotiations, Capriotti’s franchisees typically do not pay rent before they open for business.

6.  Security Deposits:  $0 to $8,000

  • Landlords typically charge a security deposit equal to 1 month’s rent and also may have site lease deposits that vary according to location. Utility and other companies typically charge security deposits that vary by locale and your credit history.

7.  Leasehold Improvements:  $125,000 to $494,788

  • The high and the low amount reflect estimated leasehold improvement costs without any tenant improvement allowances but do include a 10% contingency (of the total estimated cost) for unexpected cost over-runs or delays.

8.  Furniture, Fixtures, and Smallwares:  $85,000 to $125,000

  • The high and low amounts represent the price to buy new equipment. This range includes the purchase of audio-visual equipment.

9.  Signage and Decor:  $15,000 to $19,000

10.  Menu Boards:  $3,000 to $3,500

11.  POS System:  $12,000 to $17,000

  • This represents the cost for the fully-integrated required point-of-sale (POS) system with Capriotti’s suite of services.

12.  Training:  $10,000

  • You do not pay a training fee, but you will pay all personal expenses for the training, including transportation to Las Vegas, lodging, meals, wages, and benefits for you and any of your employees during the Pre-Opening Mock Operations.

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

14.  Grand Opening Advertising:  $15,000

  • You must spend at least $15,000 on your grand opening advertising activities. Some franchisees have spent significantly more than $15,000 towards grand opening advertising and activities.

15.  Pre-Opening Mock Operations:  $3,000

  • All Restaurants must have at least 2 Pre-Opening Mock Operation and staff training events, commonly called a friends and family night. For the friends and family night, the franchisor estimates food costs of $1,500 and approximately 200 salary hours for 3 days of employee pre-opening training.

16.  Insurance (3 months):  $1,000 to $2,000

  • You must purchase insurance the franchisor specifies.

17.  Additional Funds (3 months):  $30,000 to $40,000

  • This is an estimate of the range of initial start-up expenses for 3 months.

18.  Total (excluding real estate purchase and lease costs):  $350,000 to $815,288

  • These figures are estimates for the complete investment in setting up a Franchised Restaurant and operating it for 3 months. It is possible to significantly exceed costs in any of the areas listed above.
  • If you open a Restaurant in a non-traditional location, like an airport, university, or sports arena, the cost could be higher for additional required equipment, the use of union labor, and facilities’ fees paid to the location owner.
  • A lower cost Restaurant is one that will require fewer leasehold improvements, less seating, and fewer equipment purchases. Moderate and higher cost Restaurants may require extensive interior renovations and additional equipment.
  • To avoid excessive construction costs, the franchisor strongly recommends you choose contractors carefully by obtaining several competitive bids before construction begins.
  • In compiling these figures, the franchisor has relied on its experience and that of its affiliates in operating Capriotti’s Restaurants.

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