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

This post was updated on June 6, 2017 to reflect information from Arby’s 2017 FDD (Item 7).

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

Arby’s Freestanding Inspire 2000 (2,000 square foot prototype) – Leased

1.  Development Fee:  $6,250 to $12,500

2.  License Fee:  $0 to $37,500

3.  Travel and Living Expenses While Training:  $5,000 to $23,000

• There is no additional charge for training for three employees of your first Restaurant and one employee of your second Restaurant. However, you are responsible for all other costs associated with training for yourself and your employees, such as additional training fees (for other than the above referenced four employees) and the costs of transportation, room, and board.

4.  Real Property/Occupancy Charge:  variable

• You are responsible for locating and securing a site for your Restaurant location. If your Restaurant is a freestanding unit, you will need a prime location of 30,000 to 40,000 sq. ft. and with 100 to 180 ft. of street frontage.

• Lot size is often affected by the ratio of parking to seating required by local permitting authorities. This ratio is generally determined by allocating 1 parking space to every 2 seats within the Restaurant.

• Building sizes generally range from 2,000 to 3,000 sq. ft.

• Buildings may be new freestanding buildings constructed in accordance with plans Arby’s furnishes or approves, or remodeled freestanding or storefront sites Arby’s approves.

• Costs of commercial leasing vary considerably by location, building, lot size, and market conditions.

• Commercial leases are typically “triple net leases,” requiring you to pay rent, taxes, insurance, maintenance, repairs, common area expenses, and all other costs associated with the property.

• Usually the lessor requires payment of first and last months’ rent in advance and a security deposit equal to one to three months’ rent.

• The minimum lease term is usually 10 years with renewal options.

5.  Site Costs:  $1,000 to $4,500

• Site Costs include the cost of development outside the building footprint defining the building construction area. This is in the area of construction defined by an imaginary line located outside the building exterior perimeter walls and following the contours of those walls.

• The site must be made suitable for commercial construction.

• Necessary work may include architectural renderings, site engineering, soil testing, environmental studies, filling, grading, compaction, curb, cut utility installation or relocation, and drainage control.

• These costs could be applicable to either a leased site or purchased site.

6.  Landscaping:  $20,000 to $38,000

• Landscaping costs will vary by site and facility type and may not apply to certain locations.

7.  Civil and Architectural Drawings/Professional Fees:  $5,000 to $25,000

8.  Zoning/Permitting Costs:  N/A

• You may need to request a zoning variance or otherwise alter current zoning conditions. Costs will vary depending on the requirements of your municipality, county, or state.

9.  Building Costs:  $1,000 to $174,000

• The estimate in the table covers average building costs and basic construction. The term “building costs” refers to the construction cost of the building itself. The “building costs” do not include costs for site development, signs, menu boards, seating and furnishings, food service equipment, or cash registers.

• Building costs vary widely, depending on geographic location, size of building, environmental or other local construction requirements, and if it is a conversion of a former restaurant space.

10.  Equipment:  $163,000 to $223,000

• Depending on your financial position and economic conditions, you may be able to finance some portion of the equipment package cost through a bank or leasing company.

• The estimate in the table above does not include taxes but does include freight and installation charges.

• The exact costs will be subject to negotiations between you and each supplier.

11.  Computer Hardware and Software/POS:  $20,000 to $50,000

• The minimum technology requirements, including a point of sale system (“POS”), are described in the Arby’s Operating Standards Manual (the “Manual”).

• Additionally, there must be a Windows-based personal computer, with broadband internet connection, sound and graphics capabilities, and printer, located in each Restaurant.

12.  Decor Package:  $32,000 to $60,000

• You must purchase your décor package from Arby’s approved suppliers. Costs will vary depending upon the number of seats and the mix of tables, chairs, and booths.

• Décor must be in compliance with Arby’s current image.

13.  Signage and Drive-Thru:  $38,000 to $64,000

• Signage and drive-thru costs include Arby’s signage, menu boards, and drive-thru package components where applicable. You must install indoor and outdoor signage when applicable.

• You must purchase signs and menu boards from Arby’s approved suppliers.

• Costs will vary by site and facility type. Certain enhancements to signage and to the drive-thru package are optional.

14.  Pre-Opening Wages:  $17,700 to $34,000

• You will incur pre-opening labor expenses for salaried and hourly workers. These expenses will vary by geography, market conditions, and facility type, as well as your business decisions.

• The estimated range provided assumes that restaurant managers will be paid for 1.5 to 3 months before opening, assistant managers will be paid for 2 to 9 weeks at 40 hours per week, and other employees will be paid for 3 to 4 weeks.

• Your own expenses may differ depending on actual staffing levels, state employer taxes, wage and benefit levels.

15.  Opening Inventory:  $14,000 to $28,000

• Arby’s estimates that the amounts shown will cover opening inventory; however, the amounts may vary according to facility type.

16.  Insurance:  $7,000 to $12,000

• Insurance costs vary by insurability of each franchisee, restaurant location, and facility type.

• You will probably be required to pay your entire premium for workers’ compensation, property and casualty insurance in advance.

• Your commercial general liability insurance policy must provide coverage on an occurrence basis for personal injury, bodily injury, property damage, product and contractual liability in an amount of at least $1,000,000.

17.  Working Capital/Additional Funds:  $1,000 to $50,000

• In addition to an initial investment, you will require additional funds or working capital to finance the operations of the franchise business until a positive cash flow is produced.

• Unless otherwise stated, Arby’s estimates the start-up phase of your business to be 3 months. It estimates that the amounts shown will cover ongoing expenses, but the estimate of additional funds is not an assurance that further funds will not be needed.

18.  Lease Deposits and Payments:  variable

19.  Business Licenses, Health Permits, Utilities Deposits:  $1,000 to $25,000

• Includes the estimated cost of business permits and licenses, utility deposits, and other taxes.

20.  Total Estimated Initial Investment:  $331,950 to $860,500

Arby’s Freestanding Inspire 2000 (2,000 square foot prototype) – Build Out

• The total estimated initial investment necessary to begin operation of an Arby’s freestanding Inspire 2000 restaurant (build out) ranges from $1,010,950 to 1,738,000.

Arby’s Freestanding Inspire 3000 (3,000 square foot prototype) – Leased

• The total estimated initial investment necessary to begin operation of an Arby’s freestanding Inspire 3000 restaurant (leased) ranges from $344,950 to $874,500.

Arby’s Freestanding Inspire 3000 (3,000 square foot prototype) – Build Out

• The total estimated initial investment necessary to begin operation of an Arby’s freestanding Inspire 3000 restaurant (build out) ranges from $1,066,950 to $1,773,000.

Arby’s Non-Freestanding Building Type – Leased

• The total estimated initial investment necessary to begin operation of an Arby’s non-freestanding restaurant (leased) ranges from $271,950 to $1,077,000.