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Franchise Costs: Detailed Estimates of Savory Spice Shop Franchise Costs (2014 FDD)

by Franchise Chatter on October 17, 2014

in Franchise Costs, Retail Franchise

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Savory Spice Shop Photo by RickBakas

Detailed Estimates of Savory Spice Shop Franchise Costs Based on Item 7 (Estimated Initial Investment) of Savory Spice Shop’s 2014 Franchise Disclosure Document

For a Standard Retail Center

  • These estimated initial expenses are Savory Spice Shop’s best estimate of the costs you may incur in establishing and operating the Franchise for a Standard Retail Center.
  • The Standard Retail Center will typically occupy between 900 to 1,200 square feet and be located in retail centers, street front locations, or other similar locations. The Standard Retail Center is designed to function as a stand-alone business, but is not designed to be able to support any additional locations.
  • Savory Spice Shop does not offer direct or indirect financing for these items.
  • Savory Spice Shop’s estimates are based on its experience, the experience of its affiliate, and the current requirements for Savory Spice Shop Franchises.
  • All expenses payable to third parties are non-refundable, except as you may arrange for utility deposits and other payments.

1.  Initial Franchise Fee:  $20,625 to $27,500

  • The Initial Franchise Fee is due when you sign the Franchise Agreement and is non-refundable once paid, except that if you require bank financing and indicate this on the Franchise Agreement upon signing, and you are unable to secure financing from the Small Business Administration within six months from the signing of the Franchise Agreement, you can terminate the Franchise Agreement at your option. Savory Spice Shop will refund the Initial Franchise Fee less an administrative fee of $10,000 to cover training, legal, and real estate assistance costs.
  • Savory Spice Shop will not provide direct or indirect financing.

2.  Lease Deposit:  $0 to $10,000

  • If you do not own adequate space, you must lease space for your Standard Retail Center. Generally, this will require that you pay the first and last month’s rent, plus a security deposit, at the time you sign the Lease.
  • Standard Retail Centers are generally located in retail centers, street front locations, or other similar locations. The typical size of a Standard Retail Center is approximately 900 to 1,200 square feet.

3.  Utility Security Deposit:  $500 to $2,500

4.  Leasehold Improvements:  $50,000 to $90,000

5.  Equipment:  $2,500 to $5,000

  • This estimate includes the cost to purchase the equipment necessary to open your Standard Retail Center.

6.  Signage:  $3,500 to $7,500

  • You must purchase Savory Spice Shop’s approved exterior sign for the front of your Standard Retail Center. Savory Spice Shop will provide you with the specifications that must be followed.

7.  Furniture and Fixtures:  $30,000 to $38,000

  • This estimate includes the cost to purchase the furniture and fixtures necessary to open your Standard Retail Center. You must purchase these from Savory Spice Shop’s approved suppliers.

8.  Computer Hardware and Software:  $3,000 to $4,000

  • The estimated initial investment includes costs related to the purchase of specified computer hardware and software for the designated point of sale computer system. You must also provide Savory Spice Shop with electronic access to certain daily information.

9.  Office Equipment and Supplies:  $3,000 to $4,000

10.  Extension Fee:  $0 to $2,500

11.  Stationery Package:  $500 to $1,000

  • You will be required to purchase business cards, letterhead, and other materials utilizing the Marks from Savory Spice Shop’s approved supplier.

12.  Initial Inventory:  $21,250 to $29,000

  • This range will fluctuate depending on when you purchase your Franchise. Franchise purchased in the fourth quarter of the year will result in higher inventory purchases because of the holiday season.

13.  Initial Retail Center Supplies and Utensils:  $3,000 to $5,000

  • You must purchase certain supplies and utensils from Savory Spice Shop, its affiliates, or from other suppliers and vendors. These supplies are necessary to set up and operate your Retail Center on an ongoing basis.

14.  Uniforms:  $250 to $1,000

15.  Business Licenses and Permits:  $1,500 to $3,000

16.  Membership Dues:  $75 to $500

17.  Professional Fees:  $1,500 to $4,000

18.  Insurance:  $1,200 to $4,400

19.  Training Expenses:  $6,186 to $10,253

  • Savory Spice Shop provides training at its corporate office located in Denver, Colorado or at another location designated by it. You must pay for airfare, meals, transportation costs, salaries, benefits, lodging, and incidental expenses for all initial training program attendees.

20.  Pre-Opening Marketing Program:  $7,500

  • The Franchise Agreement requires you to spend $7,500 for pre-opening advertising and marketing. Savory Spice Shop reserves the right to conduct the Pre-Opening Marketing Program on your behalf and have you pay this fee directly to it.

21.  Additional Funds (3 Months)/Working Capital:  $18,000 to $38,000

  • This estimate includes your initial start-up expenses (other than the items separately identified in the table) during the Standard Retail Center’s first three months of operation, including three months of rent payments.
  • This is for budgeting purposes only to account for unanticipated expenses and does not include any revenue generated by your Retail Center.
  • These figures do not include any taxes or other permitting or licensing fees that you may pay.

22.  Lease Negotiation Fee:  $0 to $4,500

  • This fee is only payable if you are unable to incorporate the required terms into the Lease.

23.  Site Selection Assistance:  $800 to $2,500

  • You must reimburse Savory Spice Shop for its travel and lodging expenses for the Site Selection Assistance.

24.  Construction Management Services:  $13,000 to $16,000

  • This fee is paid to Savory Spice Shop’s approved supplier, currently Prestige Development Services. Prestige Development Services oversees the architectural, permitting, and construction of your Standard Retail Center.

25.  Royalty and National Marketing Fund Prepayment Option:  $0 to $31,500

26.  Ongoing Inventory Prepayment Option:  $0 to $45,000

  • These fees are optional. The low estimate assumes you will pay weekly fees as stated in Item 6. The high estimate is for the prepayment option.

27.  Total Estimated Initial Investment:  $187,886 to $394,153

  • These figures are estimates only. You may incur additional expenses starting your Standard Retail Center.

For a Full-Sized Retail Center

  • Savory Spice Shop also offers franchises for a larger, Full-Sized Retail Center, which typically occupies between approximately 1,400 to 1,600 square feet and is typically located in retail centers, street front locations, or other similar locations.
  • Besides an expanded retail floor, this type of Franchise will also offer significant amounts of storage for additional products and gift sets and could potentially be used as a hub to support additional Retail Centers that may be opened by the Franchisee in the future.
  • The total estimated initial investment necessary to begin operation a Full-Sized Retail Center ranges from $210,000 to $434,653.

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