Detailed Estimates of Peoples Organic Coffee & Wine Cafe Franchise Costs Based on Item 7 (Estimated Initial Investment) of the Company’s 2013 Franchise Disclosure Document
For a Full Cafe
1. Initial Franchise Fee: $35,000
- If you sign a Development Agreement, the franchisor will charge you a reduced initial franchise fee for the second or subsequent Full Cafe you develop under the Development Agreement, and will further reduce the initial franchise fee you are required to pay the franchisor for each Full Cafe you develop under the Development Agreement by the $7,500 Per Cafe Fee, provided you meet certain requirements for each Full Cafe.
- In certain limited circumstances, the franchisor may charge a reduced initial franchise fee or waive the initial franchise fee.
- The table assumes that you do not ask the franchisor for any additional assistance beyond the 7 days of on-site pre-opening and opening assistance it provides to you at no additional charge if you pay the full, applicable initial franchise fee.
2. Architectural Fees: $8,000 to $15,000
- You are required to use the services of an architect the franchisor approves.
3. Real Estate/Rent: Not Included
- Depending upon such factors as Cafe location, size, and type; the Cafe system used; menu items offered; whether a commissary is used; and the lease terms, a Full Cafe will typically occupy approximately 1,000 to 3,500 or more square feet of space, and a Kiosk will typically occupy approximately 100 to 500 or more square feet of space.
- Due to the cost of land acquisition and new construction, the franchisor anticipates that you will rent the Cafe premises. For a Kiosk Cafe, the franchisor anticipates you will purchase the kiosk.
4. Leasehold Improvements: $150,000 to $600,000
- These amounts do not include plan review fees assessed by the municipality in which the Cafe will be located.
- These amounts might be reduced if the landlord contributes any tenant finish allowance.
- The amounts do not include any applicable sales taxes (which are your responsibility). Sales tax will be included in equipment invoicing as appropriate to your state and locality.
- In addition, actual costs may exceed these ranges in certain metropolitan areas.
5. Equipment, Furniture, Fixtures, Signage, Music and Phone Systems, and Wi-Fi/Internet: $140,000 to $400,000
- These amounts include the cost of equipment, furniture, fixtures, decor items, signage, music and phone systems, and Wi-Fi/Internet required for your Cafe.
6. Liquor License: Not Included
- If you are allowed to serve alcoholic beverages from your Cafe, the cost of your liquor license will vary widely depending on factors like location, the availability of liquor licenses, the ability to move a license, and the market value of liquor licenses.
- Due to the number of variables in obtaining your liquor license, the franchisor has not included the cost of you obtaining one in the estimated initial investment described in the Table.
7. Initial Training Costs: $2,500 to $6,000
- The franchisor provides an initial management training program to your initial Operating Principal, District Manager (if applicable), and Cafe Managers at no additional charge. Therefore, these amounts include only your out-of-pocket costs relating to this training program.
- Training will take place in Minneapolis, Minnesota, or at another location the franchisor designates.
- You must pay all expenses you or your employees incur in attending the initial management training program, like travel, lodging, meals, and wages.
8. Computer System and Related Fees for First 6 Months of Operation: $15,000 to $20,000
- The estimate in the table assumes that you purchase 2 to 3 point-of-sale terminals for your full Cafe.
9. On-line Bookkeeping Services: $3,000 to $4,000
- This amount estimates fees for on-line bookkeeping services for the first 6 months of operation, as well as related initial set-up and training costs.
- You are required to purchase on-line bookkeeping services from RSI. RSI currently charges a $13,000 set-up fee, as well as a $285 per week fee for its on-line bookkeeping services.
10. Initial Inventory/Supplies: $8,000 to $20,000
- The franchisor estimates that this range will cover the cost of certain small wares including utensils and dishes. This estimate also includes the cost of food, beverages, condiments, and supplies for approximately the first 2 to 10 days of operations.
11. Uniforms: $500 to $1,000
12. Professional Services: $1,500 to $10,000
- This estimate is for the cost to establish an entity to hold the franchise and review the franchise documentation. The cost of professional services can vary widely.
13. Grand Opening/Promotional Expenses: $2,000
- You must carry out a grand opening promotion for the Cafe in compliance with the franchisor’s written specifications. The franchisor must approve all advertising items, methods, and media.
14. Insurance: $2,000 to $6,000
- This amount represents an estimate of the down payment on your annual insurance premiums. You must obtain the insurance coverage described in the Franchise Agreement. The franchisor must be named as an additional insured on these policies.
15. Additional Funds – 6 Months: $20,000 to $50,000
- You will need additional funds during the start-up phase of your business to pay employees, purchase supplies, and pay other expenses. The franchisor estimates the start-up phase to be 6 months from the date you open your Cafe.
- These amounts include estimates for debt service, royalty, and other related fees described in the disclosure document.
- These figures are estimates, and the franchisor cannot assure that you will not have additional expenses.
16. Total (excluding real estate costs and liquor license): $387,500 to $1,169,000
- In compiling these estimates, the franchisor relied on the experience of its officers and directors in developing the French Meadow Bakery & Cafe concept, and the experience of its affiliate, Galleria, in opening and operating the Galleria Cafe.