Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of The Coffee Beanery Franchise Costs (2013 FDD)

by Franchise Chatter on March 18, 2014

in Coffee Franchise, Franchise Costs

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Detailed Estimates of The Coffee Beanery Franchise Costs Based on Item 7 (Estimated Initial Investment) of The Coffee Beanery’s 2013 Franchise Disclosure Document

For Retail Store with Food

1.  Initial Franchise Fee:  $27,500

  • Your franchise fee of $27,500 is paid in two installments:  $17,500 when you sign the Franchise Agreement plus $10,000 when the franchisor approves the site for your Store.

2.  Opening Inventory and Supplies:  $12,000 to $30,000

3.  Equipment, Fixtures, Signage, and Leasehold Improvements:  $250,000 to $375,000

  • CoffeeBeaneryThis item includes typical equipment, fixtures, signage, and leasehold improvements and will vary considerably depending upon the physical characteristics of the Store location and the products you decide to offer. The range of cost for these items is attributable to such factors as size, configuration, and location of the Store, as well as price differences between suppliers.
  • In addition, if you choose to offer expanded food services at your Store, you will need to purchase the equipment necessary to offer this food service and the costs associated with this equipment will vary considerably depending upon the type of food service you offer. For example, offering expanded food service will require refrigeration facilities and food preparation equipment that is not required for a store that sells only prepackaged food.
  • In most cases, you will be purchasing this equipment from outside suppliers, although the franchisor may sell certain equipment and signs on a limited basis.

4.  Grand Opening Advertising:  $3,500

  • You are required to make a deposit of $3,500 to the franchisor for disbursement for your grand opening expenses. This item covers expenses necessary for Coffee Beanery to advertise and promote your new business during the 2 months before and up to 12 months after opening.
  • The franchisor expends these funds to conduct grand opening promotion for your Store. All of the deposit is used to purchase items needed for grand opening and refunded back to you if not expended within 12 months. The franchisor does not retain a portion of the funds.

5.  First Month’s Rent and Security Deposit:  $3,000 to $15,000

  • The amount of the first month’s rent and security deposit will depend on the size, condition, and location of the premises, and the demand for the premises among prospective lessees. Locations that offer extended food service typically require approximately 400 additional square feet, but this is not always true.
  • The size of the location may have an effect on the cost of leasehold improvements with a larger location requiring higher expenditures for leasehold improvements. However, this may not always be the case since the cost of leasehold improvements may be incorporated into the rental rate for the location depending upon the lease you negotiate.
  • The lease may impose other charges for percentage rent, real estate taxes, utilities, maintenance, advertising and promotion, or other expenses.

6.  Training Expenses:  $3,000 to $5,000

7.  Brand Building Fee:  2% of Gross Sales

8.  Royalty Fee:  6% of Gross Sales

9.  Miscellaneous Opening Costs:  $3,000 to $5,000

  • This item covers miscellaneous opening costs and expenses such as installation of telephones, deposits for and temporary utilities, business licenses, legal and accounting expenses, insurance premiums, register cash, and initial bank deposits for checking account.

10.  Additional Funds – Working Capital:  $20,000 to $80,000

  • This estimates your initial start-up expenses. These expenses exclude payroll costs. These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses starting the business.
  • Like any new business, it should be expected that your business will not generate positive cash flow for a significant period after your opening. This period may be as long as 3 years. You should be prepared, therefore, to invest additional sums to support operations during this initial phase.

11.  Total Estimated Initial Investment:  $326,000 to $545,000

  • The franchisor relied on its over 30 years of experience in the retail coffee business to compile these estimates, including 15 years in operating locations with extended food service, but they are not exact.
  • The franchisor does not offer direct or indirect financing to franchisees for any items.

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