Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs 2013: Detailed Estimates of Little Caesars Franchise Costs (2013 FDD)

by Franchise Chatter on October 24, 2013

in Franchise Costs, Pizza Franchises

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

1.  Initial Franchise Fee:  $20,000 except as provided below:

  • $15,000 for additional franchise by existing franchisee under the same franchise number
  • $15,000 for Full-term Franchisees (as defined in Item 5); $10,000 for Full-term Franchisee if the royalty rate is higher than the original agreement and the ownership of the franchise has not changed from outset of the original agreement
  • Full-term Franchisee (as defined in Item 5):  an existing Franchisee signing a new franchise agreement when the full term (initial 10-year term plus 10-year renewal term) of the original agreement comes to an end
  • $15,000 for Veterans program ($0 for service-disabled veterans)

Little Caesar's Photo by salarmystl2.  Rent:  $1,500 to $7,000

  • The franchisor estimates that the required square footage for your Restaurant will be 1,200 to 1,600 square feet.
  • The estimate reflected in the table is for a monthly lease payment, which may include base rent and additional rent such as prorated expenses for common area maintenance, property taxes, and insurance. You may also have to pay a lease deposit to the lessor.
  • If you purchase real property, the cost would be significantly more, and varies depending upon the location and other factors.

3.  Leasehold Improvements:  $50,000 to $300,000

  • Leasehold improvements must conform to the company’s standard specifications and the prototype plans which it will furnish to you.
  • You will be responsible for ensuring that your final plans conform to local laws and building codes, which may include paying architect and/or engineering fees, as well as the cost of building permits.
  • Leasehold improvement costs vary considerably according to fair market values in your area, your real estate interest (leasehold or ownership), location, and whether you or your landlord develops the location.
  • These estimates do not include out of the ordinary costs such as costs related to extensive redesign, permitting variances, legal obstacles, impact fees, etc.
  • Additional factors that typically affect your initial investment include your cost to negotiate the lease (or buy the property), including legal fees; local real estate market values; terms under which other locations have been leased; how the costs to renovate or develop the land, building, and other site improvements are allocated between you and the landlord; interest costs; and the negotiations of the parties, among others.

4.  Fixtures, Equipment, and Signage:  $107,040 to $197,040

  • Fixtures, equipment, and signage must conform to the company’s standard specifications.
  • The estimated range is for new items; you may be able to acquire certain equipment or other items used if they are in good condition and meet the company’s specifications.
  • The estimated range includes the base purchase price of the Caesar Vision system, which covers the software, hardware, initial license fee, installation, and training for a 3-register system.

5.  Grand Opening Advertising:  $11,000 to $20,000

  • The lower end of the range is the minimum that you must spend for a grand opening local advertising and promotional program. This is for a program the company considers basic.
  • The upper end of the range is the company’s estimate of the cost for what it considers to be a “strong” grand opening plan.

6.  Training Expenses:  $8,000 to $11,000

  • The estimate includes a $50 fee for the National Restaurant Association’s ServSafe program.

7.  Start-up Inventory and Supplies:  $25,000 to $35,000

  • The estimated range given is for supplies and the initial amount of products needed to open the Restaurant.

8.  Insurance:  $500 to $1,500

  • Required insurance:  property; comprehensive general liability; automobile liability; workers’ compensation (as required by law); stop gap liability (employer’s liability) in certain states where a franchisee is approved to self-insure for workers’ compensation; and liquor liability insurance (if your Restaurant, with the company’s prior written approval, sells alcohol)
  • The estimated cost range does not include workers’ compensation insurance. If you are required to purchase workers’ compensation insurance, you should consult with your insurance agent regarding the cost of that insurance.

9.  Utility Expenses:  $1,000 to $5,000

  • In addition to monthly charges, you may need to provide deposits for utilities. The amount of such deposits and utility costs will vary with the location of the Restaurant and the practices of the utility companies.

10.  Licenses and Permits:  $250 to $10,000

  • This estimate includes business licenses and health department certificates. Some municipalities have higher fees or charges than others.
  • The franchisor generally does not permit the sale of alcohol, but if your Restaurant is one of the exceptions allowed to serve alcoholic beverages, your licensing expenses will be greater.

11.  Additional Funds – 3 Months:  $17,000 to $47,000

  • You will need capital to support on-going expenses, such as payroll, to the extent that these costs are not covered by sales revenue. This amount includes accounting and legal expenses. New businesses often generate negative cash flow.
  • The franchisor estimates that the amount given will be sufficient to cover on-going expenses in excess of cash receipts for the first 3 months of Restaurant operations, excluding royalty and advertising contributions. This is only an estimate, however, and there is no assurance that additional working capital will not be necessary during or after the initial phase.

12.  Total:  $221,290 to $653,540

  • The lower end of the range reflects the fact that the initial franchise fee could be as low as zero for a qualifying service-disabled veteran.

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