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Franchise Costs: Detailed Estimates of Elevation Burger Franchise Costs (2015 FDD)

by Franchise Chatter on November 14, 2013

in Franchise Costs, Hamburger Franchise

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Elevation Burger Exterior Photo by maxfisher

This post was updated on June 29, 2015 to reflect information from Elevation Burger’s 2015 FDD (Item 7).

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

  • In general, none of the expenses listed in the chart below are refundable, except any security deposits you must make may be refundable. The franchisor does not finance any portion of your initial investment.

1.  Initial Franchise Fee:  $17,500

  • You must pay a uniform Initial Franchise Fee of $17,500 and a Territory Fee of $17,500. The Initial Franchise Fee and Territory Fee are paid in a lump sum when you sign the Franchise Agreement and is non-refundable.

2.  Territory Fee:  $17,500

  • You must pay a Territory Fee of $17,500 multiplied by the total number of Restaurants to be developed under the Area Development Agreement, even if it is only one restaurant. The Territory Fee is non-refundable and will vary depending upon the number of Restaurants you commit to develop in your territory.

3.  Leasehold Improvements, Construction Cost:  $175,000 to $400,000

  • Leasehold improvement and construction costs vary significantly based on the condition, location, size, and configuration of the Restaurant premises, the layout of the mall or retail center, and other factors relating to the geographic location of the business, suppliers, government regulations, labor costs, and other considerations.
  • You will contract directly with the construction contractor and possibly other construction suppliers on terms negotiated by you.
  • Leasehold improvements do not include exterior costs.
  • The franchisor will require you to use one of its approved architecture and engineering firms to prepare full construction documentation of your restaurant build-outs.
  • The Restaurants will generally occupy between 1,500 to 2,500 square feet. In some instances, the Restaurant may be larger depending on the size of available sites and/or franchisee preferences. Calculations regarding estimates for leasehold improvements, building construction, and site work are based upon Restaurants of 1,800 to 2,500 square feet.

4.  Furnishing, Equipment, and Signage Installed:  $150,000 to $260,000

  • You must lease or purchase, as arranged by you, the following:  kitchen equipment package and smallwares, display stands, interior decor packages (tables, chairs, accessories, paneling, lighting, ceiling treatments, floor treatments, and artifacts), decorations, phones, point-of-sale register, computer equipment and software, security system, safe, and signs.
  • Signs include exterior and interior signs. Local code restrictions may restrict the signage available for a certain restaurant and affect the costs.

5.  Travel and Living Expenses While Training:  $1,000 to $20,000

  • The travel and living expenses for trainees will depend upon factors such as travel distance, quality of accommodations, wages, and per diem allotment.
  • The estimate stated in this table includes expenses for four trainees.
  • The low range is the estimate for training that may be held locally and includes expenses for meals.

6.  Pre-Opening Expenses:  $7,500 to $16,000

  • Pre-opening expenses do not include costs associated with local codes and licensing such as tap-in fees and related costs which will vary from one jurisdiction to the next. You must obtain all necessary business licenses, permits, and approvals to operate the Restaurant.
  • This includes one year’s estimated insurance premium for property and liability insurance. Also includes on-site staff training expenses.

7.  Grand Opening Advertising:  $7,500

  • You must submit your grand opening marketing plan and budget a minimum of 30 days before your Restaurant’s opening for approval. If this is not received by the franchisor, you must pay the franchisor the minimum marketing funds allocated to the grand opening for them to spend on your grand opening for you.

8.  Opening Inventory and Supplies:  $10,000 to $25,000

  • You may need to purchase certain recipe items which constitute key components of the System. Also included in this number is the opening food inventory, uniforms, linens, smallwares, first aid supplies, office supplies, initial cleaning supplies, gift cards, menus and other printed items, and opening cash drawer.
  • The amount of your initial inventory will vary depending on the sales volume you anticipate for your Restaurant and on current market prices.

9.  Initial Operating Capital:  $18,000

  • The amount of working capital needed will depend on the time necessary to achieve cash flow to cover operating expenses. This amount is the minimum recommended for a three month contingency.
  • This category includes estimated payroll, utilities, vendor, advertising, promotion, Royalties, Creative Fund fees, and similar costs during the initial phase of a new Restaurant.
  • The franchisor cannot guarantee that you will not have additional expenses starting the business.

10.  Additional Funds (3 months):  $5,000 to $50,000

11.  Total:  $409,000 to $831,500

  • In preparing Estimated Costs disclosures, the franchisor drew from the experiences that its affiliates have gained in operating an Elevation Burger Restaurant.

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