Franchise Costs: Detailed Estimates of Tom+Chee Franchise Costs (2014 FDD)

Detailed Estimates of Tom+Chee Franchise Costs Based on Item 7 (Estimated Initial Investment) of Tom+Chees’s 2014 Franchise Disclosure Document

• Tom+Chee restaurants are quick service restaurants selling grilled cheese sandwiches, other sandwiches, soups, salads, desserts, and other menu items.

1.  Franchise Fee:  $40,000

2.  Real Estate/Rent:  $6,000 to $45,000

• Typically, the facility will range in size from 1,500 to 3,000 square feet. Lease costs will vary based upon square footage, cost per square foot, and required maintenance costs.

• The low estimate is based on an assumption that you will have to pay a security deposit equal to one month’s rent and is based on leasing a facility of 1,500 square feet. The high estimate is based on leasing a facility of 3,000 square feet at a higher cost per square foot.

• The estimated range of costs in this category only includes your costs to enter into a lease agreement for the facility. Estimated rental costs for 3 months are included with the category “Additional Funds” below.

3.  Utility Deposits:  $500 to $2,500

• If you are a new customer of your local utilities, you will generally have to pay deposits to obtain services, including electric, telephone, gas, and water. The amount of the deposit and whether the deposit is refundable will depend on the local utilities.

4.  Leasehold Improvements:  $125,700 to $431,000

• The low estimate assumes that your landlord will provide a partial build-out allowance. The cost of leasehold improvements includes preparation of a site verification survey, preliminary design documents, construction documents, construction administration services, and construction.

5.  Furniture, Fixtures, and Equipment:  $55,000 to $150,000

• You must purchase and/or lease and install furniture, fixtures, equipment, and decor necessary to operate your franchise. The cost of the furniture, fixtures, equipment, and decor will vary according to local market conditions, the size of the facility, suppliers, and other related factors.

6.  Initial Inventory:  $5,000 to $7,000

• Costs vary based on the size and location of the franchise, time of season, suppliers, and other related factors.

7.  Insurance:  $1,500 to $3,000

• You must purchase the following types and amounts of insurance:

• 1.) workers’ compensation insurance and employer liability coverage with a minimum limit of $1,000,000 or higher if your state law requires;

• 2.) comprehensive general liability insurance covering Premises and Operations, Products and Completed Operations, Contractual Liability, and Broad Form Property Damage with minimum liability coverage of $1,000,000 per occurrence, or higher if your state law requires;

• 3.) owned, hired, and non-owned vehicle liability insurance of at least $1,000,000 or higher if your state law requires.

8.  Signage:  $5,000 to $20,000

• This range includes the cost of all signage used in the franchise. The signage requirements and costs will vary based upon the size and location of the franchise, local zoning requirements, landlord requirements, and local wage rates for installation.

9.  Office Supplies:  $200 to $500

• You must purchase general office supplies including stationery, business cards, and typical office equipment. Factors that may affect your cost of office equipment and supplies include market conditions, competition among suppliers, and other factors.

10.  Grand Opening Advertising:  $4,000 to $10,000

• You must spend the minimum amount Tom+Chee specifies on grand opening advertising during the first 3 months of operation. Tom+Chee determines the minimum amount based on its assessment of the advertising costs in your area and the time of year that you are opening. You may choose to spend more.

• Factors that may affect the actual amount you spend include the type of media used, the size of the area you advertise to, local media cost, location of the franchise, time of year, and customer demographics in the surrounding area.

11.  Computer Equipment (Hardware/Software/POS System):  $7,000 to $15,000

12.  Training:  $2,500 to $5,000

• The cost of initial training is included in the franchise fee. You are responsible for your travel, meals, and lodging expenses when you attend training.

13.  Licenses and Permits:  $500 to $5,000

• State and local government agencies typically charge fees for occupancy permits, operating licenses, and construction permits. Your actual costs may vary from the estimates based on the requirements of state and local government agencies.

14.  Legal and Accounting:  $1,500 to $3,000

• You will need to employ an attorney, an accountant, and other consultants to assist you in establishing your franchise. These fees may vary from location to location depending on the prevailing rates of local attorneys, accountants, and consultants.

15.  Additional Funds (3 months):  $7,000 to $30,000

• Tom+Chee recommends that you have a minimum amount of money available to cover operating expenses, including rent, utilities, and employees’ salaries for the first 3 months that your franchise is open. The predominant factors for calculating the 3-month estimate are amounts paid for employee wages and inventory.

• Tom+Chee cannot guarantee that its recommendation will be sufficient.

16.  Total:  $261,400 to $767,000

• In compiling this chart, Tom+Chee relied on its and its affiliate’s history, knowledge, and experience.