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Franchise Costs: Detailed Estimates of Orange Julius Franchise Costs (2014 FDD)

by Franchise Chatter on July 16, 2014

in Franchise Costs, Smoothie Franchise

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Orange Julius

Detailed Estimates of Orange Julius Franchise Costs Based on Item 7 (Estimated Initial Investment) of Orange Julius’ 2014 Franchise Disclosure Document

1.  Initial Franchise Fee:  $25,000

  • You must pay Orange Julius a $25,000 initial franchise fee for a single franchise when you submit your franchise application. If you are an existing, qualifying franchisee, you may be eligible for Orange Julius’ ARD program under which you would pay a $20,000 initial franchise fee, which is due when you submit an ARD franchise application.
  • Orange Julius has the right to charge a reduced, non-refundable initial franchise fee in certain situations, including, but not limited to: (1) when a franchisee is opening an Orange Julius franchise in a previously closed location; and (2) certain captive locations, including those in airports, colleges, and universities, and with certain national food service operators specializing in providing food service in these types of locations.
  • Neither Orange Julius nor its affiliates finance any part of the initial franchise fee.

2.  Initial Training Fees and Costs:  $650 to $4,650

  • There are three required components to training:  (1) the Manager Training Readiness Assessment (MTRA); (2) SERVSAFE certification; and (3) Orange Julius’ training program, which is made up of three phases.
  • The MTRA is $125/person, a SERVSAFE course is $200-$400/person, and Orange Julius’ training program is $1,800/person.
  • If you pay the full $25,000 initial franchise fee, you can send two people to Orange Julius’ training program without paying a training fee; if you are an ARD franchisee, you can send one person to Orange Julius’ training program without paying a training fee.
  • The low end of the range assumes you pay for two people to pass the MTRA and obtain SERVSAFE certification. The high end of the range assumes you pay two people to take the MTRA, obtain SERVSAFE certification, and attend Orange Julius’ training program.
  • In limited instances, you may be required to pay Orange Julius a fee for on-site pre-opening and opening assistance. Availability of this assistance is at Orange Julius’ discretion, and you must pay for the full opening program as determined by Orange Julius. The fee is approximately $1,000 per day, per person that provides assistance, which Orange Julius may change at any time, and is due prior to the time the on-site pre-opening and opening assistance is rendered.

3.  Travel and Living Expenses for Training Programs:  $3,800 to $6,700

  • The total amount of travel and living expenses will vary depending on the number of training attendees and the types of training completed by your training attendees; these estimates assume you send three people to all three training components.
  • Orange Julius estimates you will pay approximately $0-$250/person for the MTRA (the MTRA is generally available at locations reasonably close to prospective franchisees), $0-$400/person for a SERVSAFE course, and $1,900-$2,700 for all phases of Orange Julius’ training program.

4.  Building, Construction, and Leasehold Improvements:  $100,000 to $170,000

  • The average Orange Julius store will have approximately 400 to 800 square feet and will ordinarily be leased. The initial investment for leasehold improvements will vary depending upon local labor costs, anticipated traffic through the store, and whether the building is a completed structure immediately adaptable to installation of necessary fixtures and equipment or whether it is a location where construction is in progress.

5.  Prepaid Rent and Security Deposit:  $2,500 to $5,500

  • You usually will be required to pay one month base rent as a security deposit to the landlord and may be required to pay an additional security deposit under a sublease.
  • Orange Julius estimates base rent for 500 square feet will be approximately $2,500 to $5,500 per month, plus approximately 8% to 15% of gross sales in excess of a specified amount to which a base rent is credited.
  • Leases also usually impose an obligation toward common area maintenance costs, insurance charges, real estate taxes and special assessments, HVAC charges, utility charges, water and sewer charges, security charges, trash removal charges, mall charges, promotional and marketing charges, food court charges and improvements, and charges for membership in a merchants association.

6.  Construction Consultation Services:  $0 to $5,000

  • Orange Julius requires that it consult with and assist you on all pre-opening construction costs and equipment installation for the franchised premises, and that you sign the construction consultation services agreement included in the Disclosure Document.
  • Orange Julius will not charge the construction consultation services fee if you pay the full new or ARD initial franchise fee, but you must pay the construction consultation services fee of $5,000 if you pay a reduced or no initial franchise fee.

7.  Building Plans, Design Intent Plans, and Architectural Seal:  $7,000 to $20,000

  • Orange Julius or one of its affiliates will provide you with design criteria information which should assist you, your architects and engineers in preparing building plans for your store.
  • The building plans must be full architectural, mechanical, electrical, plumbing, and food service drawings showing equipment layout, manufacturer and model numbers, and bearing the seal of a registered architect in the state where your store will be located.
  • You must submit your store building plans for Orange Julius’ approval before you begin construction, and your architect must obtain any local building plan approval.

8.  Equipment (includes signs and point-of-sale systems):  $100,000 to $140,000

  • Your investment in equipment and fixtures is highly variable for your store. The investment depends to a great extent on the size and location of your proposed store, whether you lease or own, the anticipated traffic through the store, local labor costs, current prices charged by equipment suppliers, discretionary expenditures, inflation, financing costs, and similar factors beyond Orange Julius’ or your control.

9.  Training Inventory:  $1,000 to $4,000

  • You must purchase the training inventory used by you and your employees at your store during Orange Julius’ on-site opening assistance.

10.  Opening Inventory:  $3,000 to $7,000

11.  Utility Deposits, Business Licenses, and Government Charges:  $4,000 to $8,000

  • This amount includes utility and security deposits and business licenses. Deposits are generally refundable, but license fees are not.

12.  Attorneys’ Fees:  $1,000 to $7,500

  • This amount is an estimate for attorneys’ fees in connection with your purchase of the franchise, and purchase or lease of the franchised premises.

13.  Additional Funds (3 months):  $25,500 to $102,300

  • This amount is projected to cover initial operating expenses for three months, such as managerial salaries, rent, debt service, local advertising, taxes, freight, office expenses, security, Payment Card Industry (“PCI”) compliance, and/or authorized music systems, but you may have additional expenses starting the business.
  • This amount does not include hourly labor or food costs beyond the opening inventory costs listed.

14.  Total:  $273,450 to $505,650

  • This total is an estimate of your initial investment and is based upon Orange Julius’ estimate of nationwide average costs and market conditions prevailing as of the date of the Disclosure Document, and Orange Julius’ and its predecessors’ experience in the business since 1926.

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