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Franchise Costs: Detailed Estimates of The Oilerie Franchise Costs (2014 FDD)

by Franchise Chatter on November 6, 2014

in Franchise Costs, Retail Franchise

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The Oilerie

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

  • The Oilerie Stores sell premium olive oils, Balsamic vinegars, spices, and other food products and items prepared and displayed according to the franchisor’s specified standards and procedures.
  • Except where otherwise noted, The Oilerie does not offer direct or indirect financing to franchisees for any items. Except where otherwise noted, all amounts that you pay to The Oilerie or its affiliates are nonrefundable. Third party suppliers will decide if payments to them are refundable.
  • The Oilerie’s founder appeared on a recent episode of ABC’s Shark Tank seeking an investment from the sharks (first segment in episode below).

1.  Initial Franchise Fee:  $37,500

  • The Initial Franchise Fee is $37,500.
  • The Oilerie offers a program which allows for a partial reduction in the Initial Franchise Fee (i.e. $26,250 for your second and third Stores) and deferred payment of part of the Initial Franchise Fee to franchisees willing to commit to open three Stores.

2.  Leasehold Improvements:  $1,500 to $2,500

  • The costs of construction and leasehold improvements depend on the size and condition of the premises, the nature and extent of leasehold improvements required, the local cost of contract work, and the location of your Store.
  • The estimate includes your architectural and engineering fees.
  • If you already own or lease the premises, you should review your lease or purchase documents to evaluate the cost of real estate leasehold improvements. Otherwise, lease situations will vary in rental amounts, lease terms, amount of space required, and tenant improvements required.
  • Size, configuration, and landlord requirements will be major factors in cost.
  • Some landlords finance leasehold improvements by amortizing them over the lease term and charging a higher rental rate amount to cover the cost.
  • Even if you are taking over or continuing in an existing The Oilerie premises or another existing facility, the franchisor may require that you remodel, redecorate, or make other changes to the premises to comply with its specifications, at your cost.
  • You must maintain the premises at your expense, including furniture, fixtures, interior and exterior paint, and landscaping, in accordance with The Oilerie’s specifications.

3.  Furniture, Fixtures, and Equipment:  $19,258 to $25,992

  • The Operations Manual lists the furniture, fixtures, and equipment necessary for the operation of a Store and includes refrigerators, stainless steel tanks, point-of-sale system, racks, screen, sink, tables, chairs, and other equipment, furniture, and fixtures.
  • The initial investment required will depend on financing terms available and other factors.

4.  Signage:  $3,250 to $5,375

5.  Vehicle and Vehicle Signage:  $4,435 to $36,830

6.  Computer POS System (POS Register):  $2,500 to $4,500

7.  Lease and Utility Security Deposits:  $4,942 to $10,900

  • The franchisor recommends that you lease 1,000 to 1,200 square feet of retail space and another 1,000 square feet of off-site storage. It does not recommend leasing all retail space and eliminating off-site storage as your rent expenses likely will be higher.
  • Landlords may require a security deposit, and utility companies may require that you place a deposit prior to installing telephone, gas, electricity, and related utility services. A typical utility security deposit is one month’s lease. A typical lease deposit will be an amount equal to first and last months’ rent. These amounts may be refundable in accordance with the agreements made with the utility companies and landlord.
  • You may be required to provide a security deposit for your warehouse location. A typical deposit for the warehouse location will be an amount equal to first and last months’ rent.
  • The low estimate assumes that you will pay rent equal to $14 per square foot for the retail space and $0.25 per square foot for the storage space, while the high estimate assumes rent charges equal to $26 per square foot for the retail space and $0.50 per square foot for the storage space.

8.  Initial Inventory:  $45,000 to $63,000

  • Your initial inventory must be purchased from approved suppliers (including the affiliate or the franchisor) and otherwise consistent with The Oilerie’s specifications.
  • The initial inventory includes various oils, vinegars, spices, food products, bottles, corks, seals, shipping supplies, paper goods, skin care products, cleaning supplies, and other supplies used in the operation of the Store, as well as other merchandise or products sold by the Store.
  • The initial inventory expenditures will vary according to anticipated sales volume and current market prices for supplies.

9.  Insurance:  $1,125 to $2,250

  • You must obtain and maintain throughout the term of the Franchise Agreement insurance in such amounts as described in the Franchise Agreement. The estimate is for approximately 50% of an annual premium. The balance of the annual premium is generally payable over a 9-month period.
  • The cost of insurance will vary based on policy limits, type of policies procured, any lease requirements, nature and value of physical assets, number of employees, square footage, contents of the business, geographical location, and other factors bearing on risk exposure.

10.  Training:  $3,200 to $4,100

  • You must make arrangements and pay the expenses for you and up to 2 other people to attend The Oilerie’s training program, including transportation, lodging, meals, and wages.
  • The amount expended will depend, in part, on the distance you must travel and the type of accommodations you choose.
  • The estimate provided contemplates initial training of 3 people for 10 days as well as the follow-up pre-opening training.

11.  Uniforms:  $570 to $810

12.  Grand Opening Advertising/Marketing:  $5,000 to $7,500

  • The Oilerie recommends a “grand opening” appropriate for your community, competitive situation, and similar factors. The cost of a grand opening is difficult to estimate with accuracy because of local market factors, including the types of marketing media available, the cost of marketing space or time, and the local competitive situation.
  • The Oilerie estimates that, in most areas, you can accomplish an adequate grand opening for between $3,000 and $8,500, although, because of local conditions, you may decide that more or less is necessary.
  • These amounts generally will be spent before and through the first 45 days of operation of your Store, although in certain instances The Oilerie will recommend a delay in grand opening promotional activities based on the weather or other related reasons.
  • You must conduct your grand opening advertising and promotion according to The Oilerie’s written specifications.

13.  Professional Fees and Business Licenses and Permits:  $820 to $2,200

14.  Additional Funds (three month period):  $12,838 to $20,490

  • This estimates your initial start-up expenses. You may have to use some of these additional funds to pay for The Oilerie’s management assistance if you request from it extraordinary management or support services during the early stages of your Store operation.
  • This amount of working capital is projected as sufficient to cover initial operating expenses, including management salaries, for a period of 3 months.
  • These figures are estimates and The Oilerie cannot guarantee that you will not have additional expenses starting the business.
  • Expenses not included are hourly labor costs, food and product costs, and rent.

15.  Total:  $141,938 to $223,947

  • The Oilerie has used its affiliate’s 8 years of experience in the business to compile these estimates.

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