Franchise Costs: Detailed Estimates of Great American Bagel Franchise Costs (2014 FDD)

Detailed Estimates of Great American Bagel Franchise Costs Based on Item 7 (Estimated Initial Investment) of Great American Bagel’s 2014 Franchise Disclosure Document

For Production Store

1.  Initial Franchise Fee:  $20,000

• The initial franchise fee is waived for all additional Airport Stores within the same airport.

• Great American Bagel does not finance any fee.

2.  Development Fee:  $5,000 per franchise for which development rights are granted

3.  Real Estate:  Amount Not Specified

Non-Airport Stores

• You must either purchase or lease the land and building for your Store.

• If your Store is to be a free-standing unit rather than a space in a larger structure (such as a storefront), Great American Bagel recommends that you lease or purchase a lot approximately 100 to 150 feet wide and 100 to 150 feet deep on a major traffic artery with good access to parking. The location is subject to Great American Bagel’s acceptance.

• If your Store is to be a space in a larger structure (such as a storefront), Great American Bagel recommends that you lease or purchase space approximately 1,600 to 2,500 square feet in a building easily accessible to the public and with good exposure to pedestrian traffic.

• Land and building costs vary from location to location. If you buy land and a building, the expense should approximate $400,000.

• If you rent, the annual cost should approximate $10 to $30 per square foot of rented space. There may also be charges for real estate taxes, common area maintenance costs, and other items charged by the landlord. Those additional costs may account for additional annual expenses of $2 to $8 per square foot of rented space. All forms of rent are generally paid to the landlord on a monthly basis, and are not refundable.

• These costs will vary depending on your local real estate market demographics, and your charges may be higher or lower than these estimates.

Airport Stores

• The location of your Airport Store is subject to Great American Bagel’s acceptance. It must be located within an airport terminal building easily accessible to the public and with good exposure to pedestrian traffic.

• Great American Bagel recommends that you lease space approximately 200 to 2,500 square feet. The annual rent should approximate $50 to $150 or more per square foot of rented space. Alternatively, your rent may be computed as a percentage of gross annual or monthly sales, such percentage of gross annual or monthly sales ranging from 10% to 20%.

• There may also be charges for real estate taxes, common area maintenance costs, and other items charged by the landlord. Those additional costs may account for additional annual expenses of $5 to $25 per square foot of rented space. All forms of rent are generally paid to the landlord on a monthly basis, and are not refundable.

4.  Equipment:  $101,000 to $175,000

5.  Improvements and Decorating:  $30,000 to $200,000

6.  Initial and Ongoing Food and Paper Inventory:  $9,000

7.  Additional Funds for 3 Months:  $15,000 to $50,000

• This estimates your initial start-up expenses. These expenses include payroll costs. These figures are estimates and Great American Bagel cannot guarantee that you will not have additional expenses starting the business.

• Your costs will depend on factors such as:  your management skill, experience, and business acumen; local economic conditions; the local market for Great American Bagel products; the prevailing wage rate; competition; and the sales level reached during the initial period.

8.  Media Advertising and/or Promotional Programs Prior to and During Initial Operation of Store:  $1,500 to $3,000

9.  Other Miscellaneous Payments Prior to Commencement of Store Operation:  $10,850 to $26,000 for a non-Airport Store; $10,334 to $76,000 for an Airport Store

• Includes:

• leasehold security deposit (which varies according to the individual lease but is typically one or two months’ rent) estimated at $1,350 to $12,500 for a non-Airport Store, and $834 to $62,500 for an Airport Store;

• telephone and utility deposits which amount to approximately $1,000;

• insurance, which customarily amounts to approximately $4,000 to $5,000 per year;

• initial attorney and accounting expenses amounting to $2,000 to $5,000; and

• living and travel expenses during your 30-day training session amounting to approximately $2,500.

10.  Going Concern Value:  $1 to $500,000

• On occasion, Great American Bagel may sell a Store that has been previously operated by it or another franchisee. Great American Bagel may sell the Store for its going concern value which includes increments for equipment, inventory, supplies, leasehold improvements, and goodwill.

• The going concern value may range from $1 to $500,000 per Store.

11.  Total Estimated Initial Investment for a Non-Airport Store:  $192,350 to $488,000

• This range does not include real estate costs and does not include going concern value, but does include a $5,000 area development fee.

12.  Total Estimated Initial Investment for an Airport Store:  $191,834 to $538,000

• This range does not include real estate costs and does not include going concern value, but does include a $5,000 area development fee.

• Great American Bagel relied on its experience in the restaurant business to compile these estimates. You should review these figures carefully with a business advisor before making any decision to purchase the franchise.

• Great American Bagel does not offer direct or indirect financing for any items.