Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Erbert & Gerbert’s Sandwich Shop Franchise Costs (2016 FDD)

by Franchise Chatter on November 9, 2013

in Franchise Costs, Sandwich Franchise, Sub Sandwich Franchise

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Erbert & Gerbert Photo by lammoreaux

This post was updated on August 29, 2016 to reflect information from Erbert & Gerbert’s 2016 FDD (Item 7).

Detailed Estimates of Erbert & Gerbert’s Sandwich Shop Franchise Costs Based on Item 7 (Estimated Initial Investment) of Erbert & Gerbert’s 2016 Franchise Disclosure Document

For a Single Outlet (Traditional Location)

  • For the estimated range of costs, the franchisor relied on its and its affiliates’ experience in the restaurant business since 1988 and the experience of its franchisees since 1992.
  • Payments are not refundable unless otherwise noted.
  • The franchisor does not offer, either directly or indirectly, financing to you for any items, but it reserves the right to do so in the future. The availability of financing will depend upon various factors like the availability of financing generally, your credit worthiness, other security that you may have, and the requirements of lending institutions concerning the type of business to be operated by you.

1.  Initial Franchise Fee:  $30,000

  • The Initial Franchise Fee is $30,000, unless the Franchised Business is an Erbert & Gerbert’s Restaurant developed under an Area Development Agreement, in which case the Initial Franchise Fee will be $20,000 for all subsequent units other than the first unit.
  • Under the development program, when you sign the Area Development Agreement, you must pay the franchisor a Territory Fee equal to the number of Franchised Locations to be opened under the Area Development Agreement multiplied by $10,000 and you will receive a $10,000 credit against the Initial Franchise Fee owed when you sign the Franchise Agreement for each Erbert & Gerbert’s Restaurant.

2.  Leasehold Improvements:  $50,000 to $145,000

  • These figures represent the cost to lease and remodel an existing building in a partially finished condition. These figures do not include demolition costs or major structural building modifications.
  • Erbert & Gerbert’s Restaurants are typically located in a store front, shopping center, or strip mall, and require approximately 800 to 1,500 square feet of floor space.
  • The high end estimate of the Leasehold Improvements includes the cost to add a drive-thru service to your Franchised Business. These estimates will vary depending on location, local business economy, availability, accessibility, competition, and general economic conditions.
  • You may be able to negotiate into your lease an obligation of the landlord to contribute funds to be used for tenant improvements. These figures assume no landlord contribution toward lease improvements.

3.  Lease Payment and Security Deposit:  $5,000 to $12,000

  • Erbert & Gerbert’s Restaurants are generally operated from leased premises. If you choose to purchase the land and building for your Franchised Business, your initial costs will be significantly higher than if you choose to lease and remodel the Franchised Location.
  • The cost to purchase land on which to construct the building may vary widely depending upon the location of the land, the demand for the site, the zoning, the assessed value of the parcel, the attributes of the parcel and related area, such as parking availability, accessibility, traffic flow, and the general economic conditions.
  • The monthly rental for your Franchised Location may include common area maintenance fees and real estate taxes. The amount indicated includes a one month rental payment and the security deposit, which is generally one month’s rent.
  • The terms of a lease may provide a build-out time period during which lease payments are not required, but some leases may require lease payments during construction.

4.  Travel and Living Expenses for You and Your Manager During Training:  $1,500 to $4,200

  • You must pay for travel and other expenses while you and your manager attend the Initial Training Program.

5.  Insurance Premiums – 3 Months:  $2,000 to $3,500

  • These amounts represent 3 months of premiums for the required insurance, including statutory workers’ compensation deposits your state may require. The amount of workers’ compensation deposits will vary depending on the state in which your Franchised Business is located.

6.  Opening Inventory of Supplies, Food, and Beverages:  $3,000 to $5,000

7.  Uniforms, Small Wares, Office Supplies, Menus, and Other Printed Materials:  $6,000 to $8,000

8.  Exterior Signage and Interior Decor:  $10,000 to $18,000

9.  Furniture, Fixtures, and Equipment:  $40,000 to $85,000

  • See third bullet point in No. 2 (Leasehold Improvements).

10.  Computer Systems:  $13,000 to $22,000

  • The cost for the computer systems may be higher if you choose to include optional features above other requirements.

11.  Professional Services:  $2,500 to $5,000

12.  Architectural/Design Services:  $8,500 to $10,500

13.  Miscellaneous Licenses, Deposits, and Permits:  $2,500 to $5,000

14.  Grand Opening Advertising and Promotion:  $8,500

15.  Additional Funds – 3 Months:  $15,000 to $30,000

  • This item estimates your expenses during the initial 3 month period of operating the Franchised Business (other than the items identified separately in the table). These expenses include estimated rent, payroll costs, benefits, the cost to have your utilities, additional inventory requirements, supplies, etc. but do not include Royalty Fees, Advertising Fees, or an owner’s draw or salary.
  • These figures are estimates and you may have additional expenses in order to start the business.

16.  Total Estimated Initial Investment:  $197,500 to $391,700

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