Franchise Costs: Detailed Estimates of Auntie Anne’s Franchise Costs (2020 FDD)

Updated September 16, 2020.

Detailed Estimates of Auntie Anne’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Auntie Anne’s 2020 Franchise Disclosure Document

1.  Initial Franchise Fee:  $30,000

2.  Construction and Build Out Costs:  $40,000 to $150,000

• This estimate includes fees paid to a general contractor you engage to build out the Shop to meet the franchisor’s Standards and to obtain a site selection analysis from an Approved Supplier.

• Leasehold improvements include, but are not limited to, HVAC, electrical, carpentry, floor covering, and painting.

• In certain major metropolitan markets such as Boston, Chicago, New York, Los Angeles, San Francisco, Seattle, and Washington, D.C., costs could be significantly higher than the estimates provided here due to local market rates for materials and labor.

• You may be able to negotiate tenant improvement allowances from your landlord.

• For the low estimate, the franchisor estimated a tenant improvement allowance of $2,500, which is approximately the average tenant improvement allowance that Auntie Anne’s franchisees have reported to the franchisor. For the high estimate, the franchisor assumed that a tenant improvement allowance was not available.

3.  Permitting:  $2,000 to $4,000

• This estimate includes the cost of acquiring construction permits, including permit fees. In some markets, the costs of required permits may significantly exceed the franchisor’s estimates.

4.  Equipment Package:  $28,000 to $47,000

• You must purchase or lease from an Approved Supplier certain equipment (like kitchen equipment) and machinery that comply with the franchisor’s Standards.

5.  Millwork:  $5,000 to $24,000

• You will incur expenses for millwork at the Shop, which may include the cost of purchasing and installing cabinets and counters.

6.  Furniture:  $0 to $2,500

• You must purchase from an Approved Supplier furniture, such as tables, chairs, and office furniture, that meets the franchisor’s Standards.

7.  Menu Board, Graphics, and Interior Signage:  $250 to $12,000

• This estimate includes the cost of digital and/or static menu boards and interior signage.

8.  Exterior Signage:  $1,500 to $8,500

• The cost of your exterior sign will vary depending on the size, color, quantity, and backlit channel letters of the sign and other specifications as the franchisor requires.

• 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.

9.  Computer System and Software Training:  $4,300 to $13,000

• You must purchase, lease, and/or license and install at the Shop the POS System, computer systems, mobile hardware, software, online ordering platform, 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 (collectively, the “Computer System”).

• You may also be required to purchase training software from a vendor that the franchisor designates.

• The franchisor requires the use of an electronic gift/credit card acceptance system and you are required to purchase any related equipment and network connections necessary to process gift card transactions and communicate with gift/credit card services.

• In addition, there may be installation, maintenance, and recurring service fees associated with the implementation and maintenance of the electronic gift/credit card acceptance systems.

10.  Smallwares:  $1,000 to $4,500

• This estimate includes the cost of purchasing cooking utensils and supplies and other smallwares.

11.  Architect/Engineer:  $2,000 to $12,000

• You must engage licensed architects and engineers (for mechanical, electrical, plumbing, and structural) to draft standard construction plans for your Shop.

12.  Rent:  $2,000 to $10,000

• The figures in the table reflect the franchisor’s estimates for leasing the Shop premises and include only one month of rent. A typical Shop occupies about 400 to 600 square feet of space and is located in a high-traffic or retail mall area.

• In certain major metropolitan markets such as Boston, Chicago, New York, Los Angeles, San Francisco, Seattle, and Washington, D.C. and in certain other high demand districts, prevailing market rents could be significantly higher than the high estimate.

13.  Grand Opening Marketing:  $1,000 to $5,000

• You must conduct a grand opening advertising campaign with the opening of your Shop. You must pay all costs of the grand opening, including publicity costs, promotional costs, plus the full cost of any price reductions or other customer inducements.

• Costs may vary depending on your market and the type of advertising used; however, you must spend a minimum of $1,000 on grand opening advertising for your Shop.

14.  Legal and Accounting Fees:  $5,000 to $10,000

• This estimate includes the cost of legal and accounting fees that you may incur in establishing your business. Such expenses may include fees payable to attorneys and accountants that you will need to use for the review of the Disclosure Document and the related agreements, as well as for entity formation and lease negotiation.

15.  Insurance:  $2,000 to $10,000

• 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, workers’ compensation, employment practices liability, cyber liability, and (if you serve alcohol) dram shop liability insurance.

16.  Miscellaneous Opening Costs/Office Supplies:  $13,000 to $25,000

• This includes office supplies and other miscellaneous opening expenses, such as utility costs, business licenses and permits, opening assistance, and the cost of training your employees.

17.  Security Deposits:  $0 to $15,000

• This estimate includes the cost of deposit expenses to obtain utility services, which includes deposits to initiate telephone, gas, electricity, water, and other services. These costs will vary due to municipality requirements, local provider requirements, and your creditworthiness.

• These deposits are generally refundable depending on the provider’s policies.

18.  Travel and Living Expenses During Training:  $1,000 to $7,500

• This estimate is for the cost of three people to attend the Initial Training Program. You are responsible for the travel and living expenses, wages, and other expenses incurred by your trainees during the program.

19.  Opening Inventory:  $3,300 to $4,000

• You must purchase an opening inventory of food, beverages, paper products, cleaning supplies, and other supplies utilized in the operation of your Shop, as well as other merchandise or products sold in the Shop.

20.  Additional Funds for 3 Months:  $15,000 to $51,000

• This estimates the additional funds you may need to cover expenses you will incur before your Shop opens and in its first three months of operation. These expenses may include, without limitation, employee salaries, wages, and benefits, payroll taxes (including payroll to cover the pre-opening training period for your staff), Royalty Fees, Advertising Contributions, additional advertising expenses, additional inventory, miscellaneous supplies and equipment, rent, bank charges, state tax and license fees, deposits, prepaid expenses, Owner background checks, and other miscellaneous items.

• The franchisor has based these figures on its experience franchising Shops and its affiliate’s experience opening and operating Shops. You may incur other categories of expenses or expenses in excess of this estimate.

21.  Total Initial Investment:  $156,350 to $445,000