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Franchise Costs: Detailed Estimates of Live Basil Pizza Franchise Costs (2014 FDD)

by Franchise Chatter on May 21, 2014

in Franchise Costs, Pizza Franchises

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Live Basil Pizza

Detailed Estimates of Live Basil Pizza Franchise Costs Based on Item 7 (Estimated Initial Investment) of Live Basil Pizza’s 2014 Franchise Disclosure Document

  • All fees payable to Live Basil or its affiliates are not refundable. Whether any of the other payments are refundable will depend on arrangements between you and the supplier.

1.  Initial Franchise Fee:  $25,000

2.  Initial Training Fee:  $0 to $10,000

  • The initial training fee is only paid if you are acquiring your first Live Basil Business. The initial training fee is non-refundable under the terms of the Franchise Agreement.

3.  Leasehold Improvements:  $195,000 to $250,000

  • Live Basil’s estimate for leasehold improvements does not include any tenant improvement allowance that may be granted by landlords towards lease improvements. Tenant improvement allowances are site-specific and dependent upon several variables, including rent, occupancy levels, and local market conditions, which are beyond Live Basil’s control.

4.  Furniture, Fixtures, and Equipment:  $115,000 to $145,000

  • This estimate includes freight, installation, and applicable state and local taxes.

5.  Signage:  $14,000 to $20,000

6.  Computer System:  $12,500 to $15,000

7.  Three Months’ Rent:  $13,500 to $25,000

  • The cost of acquiring or leasing a location for your Business will vary significantly depending upon factors such as the size of the market in which the proposed site is located. Suitable premises will range in size from approximately 1,600 square feet to 2,800 square feet.
  • The location of the premises, its relationship to and the nature of any adjoining uses, and its accessibility may also affect both its size and price.
  • Lease agreements vary, but usually require the tenant to pay for maintenance, insurance, taxes, and any other charges or expenses for the land and building and the operation of the business, or they may require that the tenant reimburse the landlord for its proportionate share of these payments (plus interest) made for the tenant, and pay minimum monthly rent or percentage rent.
  • You must get Live Basil’s approval of your proposed lease before signing it.

8.  Security Deposit:  $0 to $10,000

  • The rent deposit may be refundable under the terms of the lease.

9.  Opening Inventory and Supplies:  $5,000 to $12,500

  • Due to differences in local laws, prices, suppliers, geography, and commercial practices, you may elect to carry a larger inventory. Local costs will greatly affect this investment.

10.  Grand Opening Advertising:  $5,000 to $12,500

  • You must conduct an approved grand opening advertising program. The type of program and the amount you are required to spend to conduct the program may vary, depending on factors such as whether your Business is in a rural or urban market.

11.  Training Expenses:  $12,500 to $20,000

  • This estimate covers the associated cost for payroll of management and staff training before the opening of your Business. The estimated budget also takes into consideration the travel budget for training.
  • The estimated initial investment is subject to substantial variance due to delays and the securing of the required permits and license to train and operate the business as well as geographic location.

12.  Miscellaneous Opening Costs:  $2,500 to $10,000

  • Typical pre-opening expenses include salaries and living expenses for you and your managers in training, training expenses incurred for staff, pre-opening training menus, related pre-opening marketing and personnel ads.
  • Additionally, you will likely have to prepay or make deposits for various utilities such as gas, electricity, sewer, water, telephone, and garbage disposal.
  • You must obtain state and local licenses and business licenses. You may have to post bonds in order to obtain certain governmental permits.

13.  On-Site Opening Assistance:  $0 to $15,000

  • For the first two Live Basil Businesses opened by you or your affiliates, Live Basil will, at its expense, send a training team (the identity and composition of which will be in its discretion) to your Business to assist with the grand opening.
  • If Live Basil determines it to be necessary to also send a representative to your Business to provide grand opening assistance for the third or subsequent Live Basil Businesses, you will be responsible for reimbursing the franchisor the costs and expenses incurred by its representative, including the costs of travel, lodging, meals, and a per diem to cover the representative’s salary.
  • The cost to you of the on-site opening assistance will typically range from $6,100 to $15,000 and is not refundable under any circumstances.

14.  Professional Fees:  $5,000 to $16,000

15.  Insurance Premium:  $5,000 to $10,000

  • You must, at your own expense, keep in force insurance policies for each of your Live Basil Businesses. The franchisor reserves the right to change types and amounts of coverage. This estimate is based on Live Basil’s current requirements which include:  “all risk” property insurance; business interruption insurance; automobile liability; and comprehensive general liability with product and completed operations, broad form contractual liability, personal injury and advertising injury, property damage, and fire and water damage legal liability.
  • You will likely have to prepay all or a portion of the first year’s premiums for insurance.

16.  Lease Review Fee:  $1,500

17.  Schematic Development Fee:  $0 to $1,200

  • Live Basil reserves the right to require that you use its services or the services of a vendor that it designates to develop schematic drawings for the layout and design of your Business and premises.
  • Live Basil does not currently impose such a requirement, therefore your schematic drawings fee may be $0. But if Live Basil requires you to use such services in the future, it estimates the fee will range from $800 to $1,200, as determined by it depending on the size and configuration of the premises.

18.  Additional Funds – 3 Months:  $5,000 to $20,000

  • Live Basil’s estimates of the amounts needed to cover your Businesses’ expenses for the start-up phase (i.e. 3 months from the date your Business opens for business) include:  replenishing your inventory, lease payments, initial advertising and promotional expenditures, payroll for managers and other employees, uniforms, utilities, and other variable costs.
  • These figures are estimates and Live Basil cannot assure you there will not be additional expenses.
  • These amounts do not include any estimates for debt service on loans that you obtain to finance your Business.

19.  Total Estimated Initial Investment:  $416,500 to $618,700

  • The estimated initial investment figures shown above for constructing and opening a Live Basil Business are based primarily on the costs incurred by and the experiences of the franchisor’s affiliates in opening the 5 Live Basil Businesses that are opened as of the date of this Disclosure Document.

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