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Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Rib City Franchise Costs (2014 FDD)

by Franchise Chatter on November 15, 2014

in BBQ Franchise, Franchise Costs

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

1.  Franchise Application Fee:  $5,000

2.  Entry Fee:  $35,000

3.  Travel and Living Expenses While Training:  $2,500 to $5,000

  • The initial costs of the Training Program are included in the Entry Fee. In addition, you must pay your own or your representative’s salary, food, lodging, travel, telephone, dry cleaning, and other miscellaneous expenses associated with the Training Program or arrangements made with your Trainee.

4.  Real Estate and Improvements:  Not Specified

  • If you do not already own space, you must buy or lease the land and building for your Rib City Restaurant. Typical locations will be on a primary street or highway in an already developed commercial area. The typical Rib City Restaurant location will have between 2,800 to 4,000 square feet of space and seat between 80 and 120 customers.
  • Former restaurants, especially if they are located on a primary street, are ideal. Drive-by visibility is essential.

5.  Land and Closing Costs:  Not Specified

  • Real Estate and Land costs will vary widely and are not included in these estimates.

6.  Construction:  $35,000 to $255,000

  • Construction costs include typical “hard” construction costs, HVAC, furniture, fixture, and signage. Not included are costs listed in other categories, such as contingency funds, impact fee, etc.
  • This estimate is based on the cost of a Rib City Restaurant constructed using prototype designs. Rib City requires that you construct and furnish your Rib City Restaurant in accordance with approved plans and specifications. Rib City does not directly or indirectly sell construction materials to you.
  • The estimate shown is based solely upon Rib City’s prototypical plan and does not include architectural and engineering costs or other soft costs.

7.  Design Fee:  $4,000 to $10,000

8.  Soil Tests:  $3,000

  • The estimate shown includes a typical charge for Topographical Survey and Test Borings for the pre-construction phase which is usually supervised by your contractor.

9.  Landscaping:  $5,000 to $10,000

10.  Market Study:  $4,000 to $5,500

  • Rib City reserves the right to require you, at your expense, to hire a consultant to conduct a market feasibility or impact study for the proposed Rib City Restaurant location. Payment for the study would be made by you directly to the consultant. Regardless of Rib City’s requirements, a feasibility study is strongly advised.

11.  Environmental Study (Phase I):  $3,000 to $5,000

  • The Phase I Study involves a review of the property to determine whether any adverse conditions exist. Should the study reveal the existence of any adverse conditions, additional studies may have to be performed at an additional cost to you.
  • The Phase I Study may or may not be required by Rib City but is strongly advised before you purchase or lease your site. However, mortgage lenders often require this study as a condition to lending. These amounts will vary with the size of the facility.

12.  Signs:  $13,000 to $27,000

13.  Miscellaneous Opening Costs:  $5,000 to $25,000

  • Includes accounting, legal fees, stationery and business cards, office supplies, menus, and forms.

14.  Opening Inventory:  $5,000 to $25,000

  • Rib City is not required to supply operating inventories to you directly, although it requires that certain supplies and specified mark-bearing supplies be purchased from an approved list of suppliers which includes its affiliates. Suppliers sell inventories on terms negotiated between the supplier and you.
  • The estimate shown includes administrative supplies, ice machines, paper supplies, and initial food supplies.
  • You may request written approval for other vendors not currently on the approved list.

15.  Advertising/Marketing (3 months):  $15,000

16.  Additional Funds:  $25,000 to $50,000

  • Estimate of labor needed to get your Rib City Restaurant open for business, and extra labor expense you will incur while training your staff before and after opening.
  • Based on past experience of Rib City’s affiliate and on management’s experience, the typical start-up period during which labor costs can be expected to run higher than normal is 90 days.
  • The figures above are estimates and should be viewed as such.

17.  Insurance (Prepaid):  $10,000

  • Estimated cost of down payment required to activate policy coverage. Required coverages include, without limitation, casualty, liability, and workers’ compensation.

18.  Financing:  Not Specified

  • Rib City does not finance any fee.

19.  Operating Equipment:  $125,000 to $250,000

20.  Point of Sale Equipment:  $15,000 to $25,000

21.  Fixtures, Furniture, and Decor:  $40,000 to $60,000

22.  Bookkeeping Services (5 months):  $5,000

23.  Total:  $354,500 to $825,500

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