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Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Bad Daddy’s Burger Bar Franchise Costs (2014 FDD)

by Franchise Chatter on November 13, 2014

in Franchise Costs, Hamburger Franchise, Restaurant Franchise

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Bad Daddy's Burger Bar 3

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

1.  Initial Franchise Fee:  $35,000

  • The Initial Franchise Fee includes the loan of Bad Daddy’s Operations Manual and initial training for up to 4 individuals having responsibility for the day-to-day operations of your Restaurant.

2.  Development Fee:  $35,000 plus $10,000 for any additional Restaurants to be developed

  • The Development Fee includes the entire Initial Franchise Fee payable for the first Restaurant to be developed.
  • You will pay a Development Fee based on the number of Restaurants you must develop under the Development Agreement.
  • In most circumstances, the Development Fee is credited against the Franchise Fee you must pay for each Restaurant developed and opened according to your Development Schedule. If a Restaurant is not established in accordance the Development Schedule, the Development Fee that would have otherwise been credited towards payment of the Franchise Fee for that Restaurant will be forfeited and retained by Bad Daddy’s.

3.  Rent – 3 months:  $18,000 to $36,000

  • These figures presume that you will be leasing the Restaurant premises and only represent rent, common area maintenance fees required by your landlord, and property taxes for three months.
  • These figures are based upon Bad Daddy’s general restaurant experience in Charlotte, North Carolina. These figures may vary considerably in other parts of the United States.
  • A typical Restaurant occupies approximately 2,500 to 4,000 square feet of net rentable space, plus a patio. A Restaurant may be in a freestanding building, an in-line retail plaza space, or an end-cap plaza space, but, in any event, the Restaurant requires ample parking, good visibility, and availability of prominent signage, and unless Bad Daddy’s otherwise agrees, a patio.

4.  Security and Utility Deposits:  $12,000 to $40,000

  • Your lessor may require a security deposit before you take possession of the premises. This deposit may or may not be refundable.

5.  Leasehold Improvements:  $150,000 to $450,000

  • The cost of leasehold improvements will vary widely depending upon the size and condition of the premises, whether or not there are any existing and comparable leasehold improvements in the premises, the extent and quality of improvements desired by you over and above the minimum requirements, the landlord’s cash contribution to the cost of the improvements, and the like.
  • Improvements include electrical, carpentry, floor covering, painting, plumbing, heating, ventilation, and air conditioning.
  • Your costs in the area of leasehold improvements may be positively affected if you are able to receive a tenant improvement allowance or cash contribution from your landlord for the cost of improvements.
  • You can expect to receive between $0 and $200,000 from your landlord towards the cost of improvements.

6.  Training, Travel, and Living Expenses:  $20,000 to $60,000

  • Bad Daddy’s provides initial training at no charge for up to four individuals, but you must arrange and pay for all food, transportation, lodging, and incidental expenses for the people who attend the initial training program. Costs vary depending on the distance traveled and the type of lodging.

7.  Furnishings, Fixtures, Equipment, and Decorating:  $100,000 to $150,000

  • You must purchase or lease certain equipment (like kitchen equipment), machinery, furniture, and decor and trade dress items, all of which must comply with Bad Daddy’s specifications and standards.
  • Certain used equipment may be purchased and used at your franchise location, if approved in advance by Bad Daddy’s, in its sole discretion.

8.  Architectural Plans:  $25,000 to $65,000

9.  Site Investigation:  $1,000 to $5,000 (for investigations after the first free investigation)

10.  Exterior Signage:  $8,000 to $30,000

  • The cost of your exterior sign will vary depending upon the size, color, and back-lite channel letters of the sign and other specifications Bad Daddy’s may require or are otherwise specified in the Operations Manual.

11.  Opening Inventory:  $15,000 to $25,000

12.  Liquor, Beer, Wine, Spirits (including licensing):  $3,000 to $100,000

  • The cost of liquor and other licenses required to sell alcoholic beverages can be significant, particularly where such licenses are purchased in a private sale. Further, the cost of liquor and other licenses varies widely depending on the state in which your franchise is located.
  • You are required to obtain all such licenses for the Restaurant unless local regulations prohibit the sale of liquor and other alcoholic beverages or the costs are determined by Bad Daddy’s to be prohibitive, in its sole discretion.

13.  Restaurant Equipment:  $120,000 to $180,000

14.  POS System and Computer System:  $25,000 to $50,000

15.  Grand Opening:  $10,000 to $20,000

  • You must conduct a grand opening promotion with the opening of your Restaurant. You must pay all costs of the grand opening, including publicity costs, pre- and/or post-opening training, promotional costs, plus the full cost of any price reductions or other customer inducements.
  • Costs may vary depending on your market and the type of advertising used, however, you must spend a minimum of $10,000 during the period 30 days prior and 30 days after the opening of your Restaurant or, if you purchased an existing Restaurant, 60 days after the purchase of your Restaurant.

16.  Audio/Video/Music:  $10,000 to $40,000

17.  Professional Fees:  $5,000 to $20,000

18.  Insurance:  $3,000 to $6,000

  • This figure is an estimate of the cost of maintaining the insurance required by the Franchise Agreement for the first three months of operation.

19.  Additional Funds:  $30,000 to $70,000

  • This estimates the funds needed to cover your expenses during the first three months of operation. These expenses include payroll costs (excluding any wage or salary paid to you), other miscellaneous expenses, and additional funds.

20.  Total Estimated Initial Investment:  $590,000 to $1,382,000

  • Bad Daddy’s relied on its management’s business acumen to compile these estimates. The amount shown is based on the franchisor’s experience in Charlotte, North Carolina. These figures may vary considerably in other parts of the United States, and assume you open a single Restaurant.

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