Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Auntie Anne’s Franchise Costs (2016 FDD)

by Franchise Chatter on August 19, 2014

in Franchise Costs, Pretzel Franchise

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Auntie Anne's Franchise Photo by Nick Stango

This post was updated on June 6, 2016 to reflect information from Auntie Anne’s 2016 FDD (Item 7).

Detailed Estimates of Auntie Anne’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Auntie Anne’s 2016 Franchise Disclosure Document

1.  Initial Franchise Fee:  $30,000

2.  Real Estate:  Amount Not Specified

  • The franchisor expects that the most attractive locations for Shops will be in enclosed retail malls, airports, and travel plazas.
  • Auntie Anne’s cannot estimate your initial investment for real estate improvements. Several factors will bear on the amount of your investment. If you do not already have adequate space, you will have to lease the premises for the Shop.
  • The typical location for a Shop is in a high-traffic or retail mall area. Shops typically range in size from 400 to 600 square feet.
  • You may be responsible for other expenses related to the space, such as common area maintenance, promotional expenses, advertising, and other expenses.
  • Security deposits should not exceed an average of 2 months’ rent on the property.

3.  Leasehold Improvements, Furniture, and Fixtures:  $90,000 to $185,000

  • The costs of construction, leasehold improvements, furniture, and fixtures depend upon the size and condition of the premises, the nature and extent of leasehold improvements required, the local cost of contract work in accordance with local governing authorities, and the location of the Shop.
  • The typical high-end construction cost is around $185,000; however, you may experience unique circumstances based on your location which cause certain costs to far exceed the range typically experienced by Auntie Anne’s franchisees. Factors contributing to such extraordinary costs may include construction within major metropolitan markets, delays in government approvals that delay timely opening, or required use of union labor in a given geographic market.

4.  Equipment and Smallwares:  $35,000 to $45,000

  • Equipment necessary for the operation of a Shop is listed on Auntie Anne’s The Grid website. These purchases are not refundable.

5.  Business Permits and Licenses:  $175 to $600

  • You must obtain and pay for all necessary permits and licenses required to construct and operate your Shop, and these fees are generally not refundable.

6.  Initial Inventory:  $3,300 to $4,000

  • Your initial inventory must be purchased from approved or designated suppliers or according to Auntie Anne’s specifications. Initial inventory consists of various food products, beverages, paper products, cleaning supplies, and other supplies utilized in the operation of the Shop as well as other merchandise or products sold by the Shop.

7.  Insurance:  $2,000 to $5,000

  • You must obtain and maintain during the term of your Franchise Agreement, at your expense, a comprehensive business insurance program, including property, commercial general liability, automobile liability, business property, umbrella, employment practices liability, and workers’ compensation insurance.
  • This figure estimates the cost of your insurance premiums for your first year of operation based on Auntie Anne’s minimum requirements. You should be aware that this cost may increase in the future if Auntie Anne’s exercises its right to require you to obtain insurance with higher policy limits.

8.  Training:  $1,000 to $7,500

  • For the initial training, you will need to arrange transportation, lodging, food, and incidental expenses for you and your initial store manager(s) and other individuals involved in the Shop you desire to have trained, to attend the training program.
  • A minimum of 3 people must attend the training program. The estimate contemplates 3 individuals attending Auntie Anne’s initial training program.

9.  Grand Opening Advertising:  $1,000 to $5,000

  • You must spend a minimum of $1,000 up to a maximum of $5,000 on a grand opening advertising program for each Shop. In some cases, the grand opening advertising requirements of your landlord may exceed those of Auntie Anne’s.

10.  Signage:  $4,000 to $12,000

  • The range of signage costs in the table is typical for most locations; however, the cost of the signage for a kiosk could be as high as $18,000 because of the need for signs on multiple sides of the kiosk.

11.  Office Equipment and Supplies:  $13,000 to $25,000

  • Prior to beginning operations, you must purchase an assortment of office equipment and supplies. Included in the required expenditures for office equipment is the POS System, computer systems, mobile hardware, tablets, software, associated computer hardware, telephone lines, network connections, communications equipment, high speed internet access (e.g. DSL or cable), credit card, gift card and loyalty card processing equipment, and other equipment that the franchisor requires from time to time.
  • In addition, there are license, installation, maintenance, and service fees associated with the implementation and maintenance of the POS System.

12.  Professional Fees:  $5,000 to $10,000

  • Auntie Anne’s encourages you to, and in some cases you must, employ professionals, such as architects, attorneys, and accountants, to advice you in connection with the purchase and operation of your Shop. These fees will vary significantly depending upon the nature and extent of the advice that you seek, and the level of professional fees charged in your area. These fees are generally not refundable.

13.  Additional Funds (3 months):  $15,000 to $51,000

  • This estimates the funds needed to cover your expenses during the first 3 months of operation, including employees’ salaries and utility costs. These figures are estimates based on past business experience. Auntie Anne’s cannot guarantee that this amount will be sufficient.

14.  Total:  $199,475 to $380,100

  • In compiling these estimates, the franchisor relied on its experience in franchising Auntie Anne’s businesses.

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