Franchise Costs: Detailed Estimates of Pizza Studio Franchise Costs (2014 FDD)

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

• Payments to Pizza Studio are not refundable. Whether any costs paid to third parties are refundable will vary based on the practice in the area where your Pizza Studio Business is located.

• If you are signing your Franchise Agreement in connection with the transfer or renewal of an existing franchise, many items in this table are not applicable to you because your Pizza Studio Business is currently open and operating. But under the Franchise Agreement, Pizza Studio may require you to remodel, renovate, modernize, or refurbish the restaurant to its then-current standards.

1.  Initial Franchise Fee:  $25,000

2.  Construction:  $125,000 to $240,000

• These estimates assume that your location will be a leased, unimproved, unfinished “vanilla shell” retail store-type unit.

• These figures may vary considerably depending on such factors as material and labor costs in your area.

• These estimates do not include tenant improvement allowances, if any.

• Pizza Studio estimates the cost to remodel a “vanilla shell” retail-restaurant space that is 1,500 to 1,800 square feet will range from $100 to $133 per square foot using conventional on-site construction methods.

• This estimate assumes that you will not purchase real estate or construct the building or premises, and that you will not engage in any demolition or site work. If you purchase real estate and must construct the building, your initial investment will be greater, the exact amount of which will depend upon the size and location of the premises.

3.  Architectural/Engineering:  $5,000 to $15,000

• You must retain Pizza Studio’s approved or designated architect, or another architect it approves, in its discretion, to prepare your architectural plans.

4.  Accountant and Attorney:  $1,500 to $10,000

5.  Equipment, Furniture, and Fixtures:  $50,000 to $150,000

• These figures are based on you purchasing substantially all of your equipment and fixtures.

6.  Signage:  $6,000 to $12,000

7.  Opening Inventory, Small Wares, and Supplies:  $6,000 to $12,000

8.  Computer Equipment and Information Systems:  $7,500 to $10,000

• Pizza Studio has not included the cost of required hardware and software maintenance agreements, if any. This figure also does not include any technical support costs associated with operating the hardware or software.

9.  Pre-Opening Advertising (including VIP Party):  $0 to $5,000

10.  Prepaid Expenses, Licenses, and Permits:  $5,000 to $15,000

11.  Wages, Travel, and Living Expenses During Training:  $3,500 to $15,000

• Pizza Studio does not charge tuition or materials for the initial training for the first two trainees, but you are responsible for all other costs associated with attending training. Your costs will vary depending upon your point of origin, method of travel, class of accommodation, and living expenses during your initial 14 day training program.

• The figures include estimated payroll expenses for training for one person (assuming that you are also attending the training as the second trainee) for 14 days.

• Training will be held at Pizza Studio’s headquarters in Los Angeles, California or at another location of the franchisor’s choosing.

• The lower estimate in this range assumes no travel or lodging expenses, while the higher estimate assumes higher priced flights, rental car, and accommodations.

12.  Insurance:  $400 to $750

• You are required to obtain and maintain the minimum amount of insurance specified in Item 8 of the Disclosure Document.

• An insurance deposit may be required by the issuing company in order to obtain the minimum types and amounts of insurance as required.

• The cost of coverage will vary based upon the geographic area in which your Pizza Studio Business will be located, your experience with the insurance carrier, the loss experience of the carrier, and other factors beyond the franchisor’s control.

• You are responsible for obtaining and maintaining all required permits and licenses necessary to operate your Pizza Studio Business. This estimate is based on Pizza Studio’s estimate of requirements in the Los Angeles, California area. You will need to check with your advisors and state and local government authorities regarding these requirements in your market area.

13.  Additional Funds – 3 Months:  $10,000 to $50,000

• The estimate of additional funds for the initial phase of your business is based on your staff salaries and operating expenses for the first 3 months of operation.

• The estimate includes items such as Continuing Royalty Fees, Brand Fund contributions, inventory, professional and accounting fees, additional advertising and marketing, insurance, computer maintenance, repairs and service, bank charges (including interest), miscellaneous supplies and equipment, health insurance and workers’ compensation, state tax and license fees, deposits and prepaid expenses (if applicable), and other unforeseen miscellaneous items.

• The estimate of additional funds does not include an owner’s salary or draw.

• Pizza Studio cannot guarantee that you will not have additional expenses in starting the Pizza Studio Business.

14.  Total:  $244,900 to $559,750 (exclusive of land costs)

• In compiling these estimates, Pizza Studio relied on the experience of its Parent and affiliate in the construction and development of its Pizza Studio Business in Los Angeles, California.