Zaxby’s Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

1.  Initial Franchise Fee:  $35,000

2.  Lease Deposit and Payment:  $10,000 to $19,000

• Your landlord may require a lease deposit and will typically require monthly rent in advance.

• Rent will vary depending upon the location of the premises and other related factors.

• The prepaid rent is usually nonrefundable, but that will ultimately be determined by the terms of the lease.

• The Restaurant must be a standalone facility with drive-thru capability.

• The improved space for a Restaurant is between 2,788 to 4,155 square feet. The typical lot size for a Restaurant is between 0.8 and 1.5 acres.

• A landlord typically will pay for the cost of any necessary leasehold improvements and will require a monthly rent based on a 6.5% to 8% annual capitalization rate of its costs and expenses for the real estate and improvements.

• If you elect to purchase the real estate rather than leasing it, the unimproved real estate for a Restaurant will typically cost between $400,000 and $1,400,000 and improvements made to an unimproved lot will typically cost between $1,200,000 to $1,800,000, depending on the type of building and the size/number of customer seats.

• The estimates in the table assume you will be leasing the real estate and that the landlord will pay the costs of any leasehold improvements.

3.  Utility Deposits:  $0 to $9,000

• Most utilities, such as local water, sewer, gas, electric, and telephone companies, require deposits prior to initial services, which are included in this estimate.

4.  Initial Inventory:  $5,000 to $20,000

• The Restaurant’s initial inventory requirements will include chicken, dry goods, sauces, refrigerated goods, batters, paper goods, and other food and nonperishable items.

5.  Furniture, Fixtures, and Equipment:  $214,000 to $313,000

• This estimate includes the cost of purchasing booths, tables, chairs, digital menu boards, digital point of purchase products, decor items, office supplies, refrigeration and cooking equipment, shelving, sinks, smallwares, and drive-thru timer system as described in the Manual.

• The estimated costs include purchase price, delivery, and installation.

6.  Technology System:  $30,500 to $33,500

• This estimate includes the cost of acquiring the hardware, point of sale system, drive-thru equipment, digital menu boards, ordering kiosks, software, other equipment, and network connections that Zaxby’s specifies periodically in the Manual necessary to operate the Restaurant (collectively, the “Technology System”).

• This estimate also includes the initial annual payment for the software maintenance contract, help desk service, and reporting services. It also includes the initial cost of software licensing and support from other technology vendors, including credit card middleware, drive-thru timer, and online ordering.

• You must purchase these components from suppliers that Zaxby’s approves or designates and must execute any related software licenses required by designated vendors.

7.  Signage:  $25,000 to $50,000

• A Restaurant is generally outfitted with a sign with open channel neon letters over the Restaurant and pole signs which must be approved by Zaxby’s. The estimated costs represent manufacture and installation.

• This cost is substantially more if you elect to utilize an interstate type signage.

8.  Initial Marketing Contribution:  $5,200 to $10,000

• You must submit to Zaxby’s no later than 5 days prior to the date of opening of the Restaurant the Initial Marketing Contribution. Zaxby’s will determine the Initial Marketing Contribution, in Zaxby’s sole discretion, provided that it shall not exceed $10,000.

• Zaxby’s will spend your Initial Marketing Contribution on your behalf in accordance with your initial marketing plan prior to or during the first 120 days of operation of the Restaurant based on invoices that you submit to Zaxby’s for payment.

• Currently, franchisees whose Restaurants are located in a geographic area with an established Co-op will be required to spend a minimum of $5,200 on the initial marketing plan, and franchisees whose Restaurants are located in a geographic area without an established Co-op will be required to spend $10,000 on the initial marketing plan.

9.  Insurance:  $1,000 to $17,000

• You must obtain and maintain on a primary and non-contributory basis at least a commercial general liability policy, commercial automobile liability policy, commercial property liability policy, workers’ compensation/employer’s liability policy, umbrella liability policy, and employment practices liability policy.

10.  Permits and Licenses:  $2,000 to $24,000

• This amount represents the estimated fees you will pay to apply for various permits and licenses, such as building permits, sales tax permits, incorporation fees, fire inspection fees, and health department inspection fees. The applications and fees required will depend upon the regulations of the governing agencies in your area.

11.  Accounting and Legal Fees:  $500 to $25,000

• These fees will be paid to professionals that assist you in the review of the franchise opportunity, negotiation of leases and contracts related to the development of the Restaurant, establishment of the franchisee Entity (if needed), and set up of the accounting and related systems for the Restaurant.

12.  Printing/Business Supplies:  $300 to $1,000

• This estimates the cost of certain required pre-printed materials, such as business cards, letterhead, envelopes, checks, gift certificates, and menus. All of these items must use Zaxby’s approved artwork and otherwise meet Zaxby’s specifications in the Manual. They must also be purchased from an approved vendor.

13.  Uniforms:  $1,500 to $4,000

• This estimates the cost of certain required uniforms, including aprons, shirts, nametags, and caps. All of these items must use Zaxby’s approved artwork and otherwise meet Zaxby’s specifications in the Manual. They must also be purchased from an approved vendor.

14.  Training Expenses:  $10,000 to $25,000

• These expenses include the cost of transportation, meals, accommodations, and similar expenses associated with the attendance of 4 people at the required portions of initial training.

15.  Pre-Opening Payroll:  $10,000 to $37,000

• This amount represents payroll expenses associated with pre-opening training, initial employee meetings, cleaning, preparation, stocking, organizing, decorating, and last minute details for the entire staff.

16.  Additional Funds for 3 Months:  $1,000 to $96,000

• This figure is an estimate of anticipated working capital required during the first 3 months of a Restaurant’s operation. Zaxby’s based these estimates on its affiliates’ and franchisees’ experience in opening and operating numerous Restaurants.

• The expenses you incur during the start-up period will depend on factors such as local economic and market conditions, your business experience, and the level of traffic at your location.

• Zaxby’s cannot guarantee that you will not incur additional expenses in starting the business, which may exceed this estimate.

17.  Total:  $351,000 to $718,500

• Zaxby’s is unable to calculate the exact investment required of each franchisee due to the many factors that influence the total project costs. Zaxby’s based these estimates on its affiliates’ and franchisees’ experience in opening and operating numerous Restaurants.

• The actual amount of your investment will vary based on location, real estate costs, local economy, restaurant size and seating capacity, available real estate financing or investor capital, and many other factors.

• The total assumes you will be leasing the real estate and that the landlord will pay the costs of any leasehold improvements. The estimate does not include the cost of purchasing real property for the Restaurant and making improvements to such purchased property.