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Franchise Costs: Detailed Estimates of Wholesome Tummies Franchise Costs (2014 FDD)

by Franchise Chatter on October 23, 2014

in Child-Related Franchises, Franchise Costs

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Wholesome Tummies Photo by advantagebizmag.com

Detailed Estimates of Wholesome Tummies Franchise Costs Based on Item 7 (Estimated Initial Investment) of Wholesome Tummies’ 2014 Franchise Disclosure Document

  • The franchise offered is for a business providing specialty food production and distribution of fresh and healthy foods for children, to partner schools and other educational facilities under the names “Wholesome Tummies” and “WT Cafe.”
  • The high-end amounts listed for these initial investments assume that your Business includes delivery and one on-site school in the initial three months of your Business.

1.  Initial Franchise Fee:  $37,500

  • The initial franchise fee does not include the cost to purchase an oversized territory.

2.  Proprietary Software License Fee:  $5,000 to $7,500

  • If your Franchised Business includes on-site locations that require a POS system, you must pay an additional $2,500 for each on-site location.

3.  Rent – 3 Months:  $0 to $18,000

  • You must occupy a commercial kitchen for your Business. You may make arrangements to use a portion of an existing commercial kitchen within a school facility.
  • Wholesome Tummies’ estimate assumes that you will lease commercial kitchen space. Businesses that provide on-site services, however, may not have any rent payments.
  • The typical size commercial kitchen (including storage space) you will need is 1,500 to 2,000 square feet.
  • Rental costs may vary widely depending on the region of the country, and may be significantly higher than projected in this table depending on factors such as property location, population density, economic climate, prevailing interest rates and other financing costs, condition of the property, and extent of alterations required for the property.
  • You should investigate all of these costs in the area where you wish to establish a Business.

4.  Security Deposits:  $0 to $2,000

  • Wholesome Tummies expects that you will need to pay deposits for your local utilities, such as telephone, electricity, and gas, and your landlord may require you to pay a security deposit. The amount of your deposits will depend, in part, on your credit rating and the policies of the individual utility companies.

5.  Leasehold Improvements:  $0 to $1,000

  • Wholesome Tummies anticipates that you will be leasing an existing commercial kitchen that will not require any leasehold improvements.
  • If you choose to build out your own commercial kitchen, you will incur leasehold improvement costs of between $50,000 to $200,000 (including equipment), which are not included in the figures above.
  • If you choose to purchase real property on which to build out your commercial kitchen, you will incur additional costs to purchase the real estate that Wholesome Tummies cannot estimate.

6.  Equipment and Fixtures:  $0 to $20,000

  • Wholesome Tummies expects the commercial kitchen you lease will include most of the equipment and fixtures you will need for your Business, but you may need to purchase some equipment or fixtures. Wholesome Tummies will provide you with a list of the minimum equipment you will need in your kitchen.
  • Businesses that provide on-site services, however, may not need to purchase any equipment or fixtures.

7.  Computer System:  $1,000 to $3,000

  • You must have a computer system of which Wholesome Tummies approves, as described under Item 11.

8.  Insurance – 3 Months:  $900 to $2,200

  • You must have the insurance that Wholesome Tummies specifies for your Business at all times during the term of your Franchise Agreement. Wholesome Tummies’ insurance requirements are included in Item 8.

9.  Permits and Licenses:  $0 to $800

  • Wholesome Tummies’ estimate includes the cost of obtaining local business licenses which typically remain in effect for one year. The cost of these permits and licenses will vary substantially depending on the location of the Business and whether you provide on-site versus delivery service.
  • You should consult the appropriate governmental authority concerning the availability of required licenses and the associated expenses for your Business before you sign a Franchise Agreement.

10.  Initial Inventory:  $8,000 to $20,000

  • Wholesome Tummies’ estimate includes your initial inventory of food products, ingredients, beverages, paper and packaging goods, and other office and kitchen supplies for both on-site and delivery services.

11.  Signage:  $0 to $20,000

  • Wholesome Tummies does not expect that you will need interior or exterior signage for your leased kitchen.

12.  Grand Opening Advertising:  $5,000 to $10,000

  • You must conduct a grand opening advertising campaign to promote the opening of your Business. Wholesome Tummies reserves the right to approve all advertisements used in your grand opening advertising campaign and your campaign must be completed in the 90-day period that includes 45 days before and 45 days after the opening of your Business.
  • At Wholesome Tummies’ request, you must give the grand opening advertising money to it and it will conduct the grand opening advertising campaign on your behalf.

13.  Travel Expenses for Training:  $0 to $4,500

  • These estimates include only your out-of-pocket costs associated with attending the initial training program, including travel, lodging, meals, and applicable wages for the first three trainees. These amounts do not include any fees or expenses for training any other personnel.
  • Your costs may vary depending on your selection of lodging and dining facilities and mode and distance of transportation. The lower end of the estimate assumes that the trainees live within driving distance of Wholesome Tummies’ training facility.

14.  Professional Fees:  $2,500 to $5,000

  • Wholesome Tummies expects that you will retain an attorney and an accountant to assist you with evaluating this franchise offering, and with negotiating your lease or purchase agreement for the approved location.

15.  Delivery Vehicle:  $0 to $24,000

  • Wholesome Tummies requires that you purchase or lease a delivery vehicle, if you offer delivery services as part of your Franchised Business. The vehicle must be either a sports utility vehicle (SUV) or delivery van. Wholesome Tummies reserves the right to designate the make and model of the vehicle you must purchase, but if it does not designate a specific make and model, then the vehicle you wish to use must be approved by it.
  • You must hire employees to conduct your deliveries.

16.  Vehicle Wrap:  $0 to $3,500

  • You must have your delivery vehicle wrapped, even if you use your personal vehicle for deliveries.
  • You must obtain the vehicle and vehicle wrap within 90 days of executing the Franchise Agreement.

17.  Additional Funds:  $12,000 to $25,000

  • This estimates your initial start-up expenses for an initial three-month period, including staff training wages and recruiting expenses, but does not include any revenue that your Business may earn in the first three months of operation.
  • These figures are estimates only and Wholesome Tummies cannot guarantee that you will not have additional expenses starting your business.

18.  Total:  $66,900 to $186,000

  • Wholesome Tummies relied on its Affiliate’s experience in operating a delivery Wholesome Tummies/WT Cafe Business since 2007 and an on-site Wholesome Tummies/WT Cafe Business since 2011 to prepare these estimates.

Captive Market

  • In certain circumstances, Wholesome Tummies will offer to you the right to sign a Captive Market Franchise Agreement to develop a specific Business to be located at a particular location (the “Accepted Location”). The Accepted Location is site-specific and you will have no territory rights whatsoever.
  • Wholesome Tummies has the right to develop, license, or franchise the following Captive Market locations:  K-12, secondary education, or other similar college or university facilities with an enrollment of over 750 students.
  • The estimated initial investment necessary to begin operation of a Wholesome Tummies Business in a captive location ranges from $45,500 to $263,200.

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