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Franchise Costs: Detailed Estimates of Twin Peaks Restaurant Franchise Costs (2015 FDD)

by Franchise Chatter on December 13, 2014

in Franchise Costs, Pub Franchise, Restaurant Franchise, Sports Bar Franchise

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Twin Peaks Restaurant

This post was updated on February 9, 2016 to reflect information from Twin Peaks’ 2015 FDD (Item 7).

Detailed Estimates of Twin Peaks Restaurant Franchise Costs Based on Item 7 (Estimated Initial Investment) of Twin Peaks’ 2015 Franchise Disclosure Document

For a Conversion Restaurant

1.  Development Fee:  Varies

  • The development fee is equal to 100% of the initial franchise fee for the first Restaurant plus 50% of the initial franchise fee for each additional Restaurant to be developed under the Area Development Agreement.

2.  Initial Franchise Fee:  $50,000

  • If you develop a single Restaurant, your initial franchise fee is $50,000. If you commit to develop multiple Restaurants under the Area Development Agreement, Twin Peaks credits the allocable portion of your development fee against each applicable initial franchise fee.

3.  Leasehold Improvements:  $485,000 to $1,230,000

  • Twin Peaks Restaurants are typically located in commercially zoned shopping or entertainment areas.
  • The leasehold improvement amounts for a conversion assume that you will lease the premises for the Restaurant and do not include costs of land acquisition and construction of a building.
  • The conversion leasehold improvements estimate is based on the cost of converting an existing space and adapting Twin Peaks’ prototypical architectural and design plans (including architect fees) to a facility containing approximately 6,000 to 10,000 conditioned square feet.
  • The estimate assumes that the landlord will provide connections to adequate electrical, gas, water, and sewage service. Your actual costs may or may not include site preparation and finish-out costs, depending on the arrangements you negotiate with your landlord.
  • If your landlord contributes to the cost of finish-out, total leasehold improvement costs should be reduced.
  • These costs are Twin Peaks’ best estimate based on commercial leasing and remodeling/finish-out rates that its affiliates have experienced with company-owned Twin Peaks Restaurants.
  • The above estimates assume that you will use an approved general contractor and architect.

4.  General Contractor Approval Fee:  $0 to $5,000

  • If you request Twin Peaks to approve a general contractor not on its list of approved contractors, it may require you to pay a $5,000 processing fee for its cost in determining whether the contractor is qualified.

5.  Equipment, Furniture, Fixtures, and Signage:  $560,400 to $965,000

  • These amounts include the cost of the furniture, fixtures, equipment, decor items, signage, a POS System and multiple terminals, computer hardware and software, and audio visual package required for your Twin Peaks Restaurant.
  • If you open a Restaurant that has more square footage than the ranges stated in Note 3 above, then you should expect to pay more.
  • The high end of the range assumes that all items in this category were purchased as new items, not used or refurbished items.

6.  Liquor License:  Varies

  • Twin Peaks is unable to estimate the cost of your liquor license because of wide variations in costs, depending on factors like location, the availability of liquor licenses, the ability to move a license, and the market value of liquor licenses.

7.  Business Licenses and Permits:  $3,000 to $4,000

  • This amount represents the estimated cost of health and various operating licenses required at the local, regional, or state level.

8.  Initial Training Costs:  $25,000 to $50,000

  • Twin Peaks provides initial training to your initial Control Person, Unit General Manager, and all assistant managers at no additional charge. The initial training takes place at one of Twin Peaks’ certified training restaurants and may last up to 8 weeks for your Control Person or Director of Operations and up to 7 weeks for your Unit General Manager or other restaurant-level managers.
  • You must pay all expenses you or your employees incur in the initial training program, like travel, lodging, meals, and wages, and these costs will vary depending upon your selection of salary levels, lodging and dining facilities, mode of transportation, and distance traveled.
  • Due to the wide variances in wages, the range of estimated costs does not include wages or salaries.
  • The lower dollar amount assumes trainees live near one of Twin Peaks’ certified training restaurants and that no hotel or transportation costs are incurred.

9.  Opening Training Team Costs:  $60,000 to $75,000

  • Twin Peaks provides an Opening Training Team of its trained representatives to provide on-site pre-opening and opening training, supervision, and assistance to you for a minimum of 14 days based on its assessment of your needs in connection with the opening of your Restaurant.
  • The support is provided for the opening of your first three Restaurants only. You must pay for the hourly wages, costs of travel, lodging, and per diem of the Opening Training Team.

10.  Initial Inventory and Supplies:  $34,000 to $90,000

  • Twin Peaks estimates that this range will cover the cost of food, beverages, condiments, supplies, and other miscellaneous items for approximately the first 7 to 10 days of operations.

11.  Professional Services:  $8,000 to $19,000

  • This estimate includes the cost to establish your franchise entity and to have the franchise documentation reviewed. This fee also includes the cost of hiring a company that specializes in helping restaurant operators submit and obtain licenses and permits.

12.  Restaurant Opening Promotion:  $12,500

  • You must carry out a grand opening promotion for the Restaurant that complies with Twin Peaks’ written specifications. It must approve all advertising items, methods, and media.

13.  Insurance:  $11,250 to $25,000

  • This amount represents an estimate of the down payment on your annual insurance premiums.

14.  Audio Visual Bid Review Fee, Final Inspection Fee, and Installation Approval Fee:  $650 to $900

  • Twin Peaks may require you to pay a bid review fee of $150 and a final inspection fee of $500 upon completion of installation of your audio visual system (in addition to travel expenses of the inspector), regardless of whether you use a newly approved or previously approved audio visual provider and installer.
  • If you ask Twin Peaks to approve an audio visual equipment provider and/or installer who is not on the list of approved suppliers, it may require you to pay an additional $250 fee for review of the audio visual equipment provider and/or installer that you submit for its qualification.

15.  Architect Training Fee:  $10,000

16.  Site Evaluation Software Fee:  $0 to $500

17.  Additional Funds for Initial 3-Month Period:  $80,000 to $150,000

  • You will need additional funds during the start-up phase of your business to pay employees, purchase supplies, and pay other expenses, such as monthly rent and security deposit. Twin Peaks estimates the start-up phase to be 3 months from the date you open for business.
  • These amounts do not include any estimates for debt service. You must also pay the royalty and other related fees described in Item 6 of the disclosure document.
  • These figures are estimates and Twin Peaks cannot assure you that you will not have additional expenses.
  • Twin Peaks relied on the experience of its affiliates’ company-owned Restaurants to compile these estimates.

18.  Total:  $1,329,800 to $2,686,900

Substitute Range of Costs for New Construction

3.  Leasehold Improvements:  $1,850,000 to $1,925,000

  • The leasehold improvement amounts for new construction include the site improvement costs and the costs to build a building, but they do not include amounts to purchase land.
  • The new construction leasehold improvements estimate is based on the cost of adapting Twin Peaks’ prototypical architectural and design plans (including architect fees) to build a facility containing approximately 6,000 to 8,000 conditioned square feet with a typical patio area.

5.  Equipment, Furniture, Fixtures, and Signage:  $900,000 to $965,000

18.  Total:  $3,034,400 to $4,046,900

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