This post was updated on December 24, 2016 to reflect information from Pie Five Pizza Co.’s 2016 FDD (Item 7).
Detailed Estimates of Pie Five Pizza Co. Franchise Costs Based on Item 7 (Estimated Initial Investment) of Pie Five Pizza Co.’s 2016 Franchise Disclosure Document
1. Development Fee: $5,000
- If you enter into a Development Agreement, you must pay $5,000 for each Franchised Restaurant you agree to develop under the Development Agreement.
2. Initial Franchise Fee: $20,000
3. Grand Opening Advertising: $15,000
- You must conduct initial marketing for the Franchised Restaurant in accordance with a grand opening plan that you have prepared and to which the franchisor has consented (“Grand Opening Plan”).
- Under the Grand Opening Plan, you will be required to spend a minimum of $15,000 on grand opening advertising over the period beginning one month prior to opening and continuing through the second month after opening. Guidelines for grand opening activities will be included in the Manual.
- Within 10 days after the end of the period in which you conduct this initial marketing, you must submit appropriate documentation to verify compliance with the grand opening expenditure obligation.
4. Real Estate: Variable
- The cost of acquiring a location for the Franchised Restaurant will vary significantly depending on the geographic location. The franchisor expects that you will lease the land and building for the Franchised Restaurant. Alternatively, you may wish to buy land for the Franchised Restaurant.
- If you choose to lease, the rent may range from $40 to $50 per square foot per year based on the franchisor’s affiliate’s experience in the Dallas/Fort Worth market. This estimate is based on a restaurant of approximately 2,200 square feet. You may be required to pay the first and last month’s lease payment upon signing your lease agreement.
5. Architectural Design Services: $10,000 to $20,000
- The cost of architectural design services will vary depending on the geographic location, size, and condition of the premises.
6. Construction/Leasehold Improvements: $180,000 to $222,000
- This estimate is based on the buildout costs for a building shell for a Pie Five Restaurant of approximately 2,200 square feet in a typical in-line retail center space with construction costs ranging from approximately $55 to $88 per square foot.
- All construction materials and fixtures must meet the franchisor’s standards and specifications but may be purchased from any supplier.
7. Travel and Living Expenses While Training: $10,000 to $15,000
- Prior to opening a Pie Five Restaurant, you (or your Operating Principal), the Franchise Restaurant’s general manager, and any other managerial personnel whom the franchisor designates must attend the MIT Program.
- The franchisor does not charge tuition for this training program, but you are responsible for all salaries, benefits, and travel, living, and other expenses incurred by you and your employees while attending the training.
8. Furnishing, Fixtures, Equipment: $125,000 to $155,000
- You must purchase certain items of furniture, fixtures, and equipment. You may purchase or lease approved brands and models of equipment and signs from any approved supplier.
9. Signage: $7,500 to $15,000
- The high end of the range represents an end cap location. This estimate includes costs for a building sign, pylon sign (if allowed by landlord and local code requirements).
10. Exterior Trade Dress: $0 to $61,000
- The high end of the range represents an end cap location, including patio, umbrellas, and architectural design elements on the building.
11. Smallwares: $12,000 to $16,000
12. Initial Inventory: $4,000 to $6,000
- The cost of an opening inventory of food, beverages, ingredients, and other supplies and materials will vary depending on shipping distances from suppliers and price differences between suppliers. These items must conform to specifications established by the franchisor and/or be purchased from the franchisor and/or approved suppliers.
13. Miscellaneous Opening Costs: $12,000 to $20,000
- This item covers such miscellaneous pre-opening costs and expenses as manager and employee labor, utilities and utility deposits, lighting supplies, office supplies, security deposit, pest control, postage and shipping, storage fees, bank service charges, payroll service charges, licenses, permits, and a three-month premium for typical insurance coverage.
- Manager and employee labor expenses vary according to the wage rate and number of employees and managers hired and trained before opening your Franchised Restaurant.
14. Register or Point of Sale System: $10,000 to $16,000
15. Additional Funds – 3 Months: $8,000 to $18,000
- This is the franchisor’s estimate of your operating expenses for the initial 3 months of your business, including payroll costs for management, rent, insurance, and utilities.
- These expenses do not include advertising or royalty payments made to the franchisor. The estimate also does not take into account revenue you may take in.
- These figures are estimates, and the franchisor cannot guarantee that you will not have additional expenses starting the business.
16. Total: $418,500 to $604,000 (Does not include real estate)
- The franchisor relied on the experience of its affiliate in the restaurant business to compile these estimates.