Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Shula Burger Franchise Costs (2014 FDD)

by Franchise Chatter on September 17, 2014

in Franchise Costs, Hamburger Franchise

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Shula Burger Photo by Jason Perlow

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

  • Shula Burger does not offer direct or indirect financing for any items. Any fees you pay to Shula Burger are non-refundable, including the Initial Franchise Fee.
  • All payments to Shula Burger and its affiliates are non-refundable. Whether amounts paid to third parties are refundable is a matter you will have to negotiate with them. This table estimates the initial investment for a single Shula Burger Restaurant.

1.  Initial Franchise Fee:  $17,500 to $40,000

  • When you sign your Franchise Agreement to develop one Shula Burger franchise, you must pay the franchisor a $35,000 Initial Franchise Fee.
  • If the franchisor grants you the right to open your Shula Burger Restaurant at a non-traditional venue such as a hotel, airport, or shopping mall, you must pay the franchisor an Initial Franchise Fee of $40,000.
  • The Initial Franchise Fee for the first Shula Burger Restaurant you develop under an Area Development Agreement is waived, although you will pay the franchisor an Area Reservation Fee equal to $35,000, plus $17,500 multiplied by the total number of Shula Burger Restaurants (other than the first Restaurant) the franchisor grants you the right to develop under the Area Development Agreement.
  • If you sign an Area Development Agreement, the Initial Franchise Fee for each Shula Burger Restaurant (other than the first Restaurant) you agree to develop is $17,500, payable upon execution of a Franchise Agreement.

2.  Travel, Lodging, and Meals for Basic Training Expenses and Site Visit:  $4,000 to $7,500

  • You may also be required to pay the wages of your employees who attend Basic Training. These payments are paid directly to your employees and depend on your individual agreements with such employees.

3.  Real Property (whether purchased or leased):  $0 to $20,000

  • These figures assume that the premises for your Franchised Business will range in size from 2,000 to 2,500 square feet and, if the property is leased, they include the estimated required payment to enter into the lease.

4.  Real Estate Improvements:  $200,000 to $450,000

  • The cost of real estate improvements will vary depending on numerous factors, including:
  • the size and configuration of the premises;
  • pre-construction costs;
  • cost of materials and labor;
  • location of the premises and local conditions; and
  • whether costs will be incurred by the landlord if the premises are leased.
  • These costs include, but are not limited to, demolition, rough carpentry, finish carpentry, gypsum board, ceilings, tile flooring and walls, millwork, carpet and floor finishes, wall finishes, fire protection, HVAC, FRP and kitchen walls, hoods and venting, electrical systems, lighting, furniture, and a P.O.S. System.

5.  Kitchen Equipment and Improvements:  $92,000 to $102,000

6.  Signs:  $10,000 to $15,000

  • These costs include the costs for obtaining local business licenses which typically remain in effect for one year. These costs do not include occupancy and construction permits, which were included in the real estate improvement costs. These costs will vary substantially depending on the location of your Franchised Business.

7.  Operating Supplies and Equipment:  $5,000 to $20,000

8.  Advertising Expenses:  $2,500 to $10,000

9.  Inventory to Begin Operating:  $5,000 to $10,000

10.  Security Deposits, Utility Deposits, Business Licenses, and Other Prepaid Expenses:  $4,000 to $10,000

11.  Grand Opening:  $10,000 to $15,000

12.  Insurance:  $1,000 to $3,000

13.  Additional Funds (3-month initial phase):  $150,000 to $200,000

  • These represent an estimate of the range of expenses for your initial start-up phase, which is estimated to be three months from when you begin operating your Franchised Business.
  • The additional funds you will need to operate during this phase include payroll costs, rent, utilities, and ongoing advertising, but do not include any salary or allowance for an owner’s draw; any royalty fees, advertising contributions, or any other amounts you must pay Shula Burger; or any additional inventory you may need after your initial inventory is consumed.
  • These figures are estimates and Shula Burger cannot guarantee that you will not have additional expenses starting the business.
  • The estimates are of your expenses only and do not reflect any offsetting sales revenue you may earn from operations to pay those expenses.

14.  Total Initial Investment:  $501,000 to $902,500

  • Shula Burger relied on its management’s past experience as well as industry trends to compile these estimates.

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