Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Zoup! Franchise Costs (2017 FDD)

by Franchise Chatter on December 24, 2014

in Franchise Costs, Soup Franchise

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Zoup Photo by tory.me 2

This post was updated on June 25, 2017 to reflect information from Zoup!’s 2017 FDD (Item 7).

Detailed Estimates of Zoup! Franchise Costs Based on Item 7 (Estimated Initial Investment) of Zoup!’s 2017 Franchise Disclosure Document

1.  Initial Franchise Fee:  $39,900

  • You will pay the Initial Franchise Fee in full upon signing the Franchise Agreement.

2.  Grand Opening Advertising:  $5,000

  • Zoup! will provide guidance for you on an initial grand opening promotion (“GO! Plan”), which may include grand opening advertising, free-standing inserts, direct mail, neighborhood and business-to-business marketing, fundraising or other on-site events, newspaper advertising, public relations, and publicity ideas.
  • The grand opening and advertising promotions will occur beginning 2 months before the opening of your Restaurant and ending 4 months after the opening of your Restaurant. You are responsible for all costs and expenses related to the grand opening advertising.
  • You are required to spend at least $5,000 to conduct grand opening advertising and promotions. You will pay this amount on your first day of initial training to the vendors designated by Zoup! or to Zoup! for payment to the vendors. The vendors will use this amount to plan and conduct grand opening activities on your behalf in accordance with the GO! Plan.

3.  Real Estate Rental:  $5,000 to $10,000

  • You will probably lease space for your Restaurant. The typical Zoup! Restaurant is located in a retail shopping center and ranges from 1,700 to 2,600 square feet in size. Rental rates per square foot may vary substantially per site.
  • Zoup! estimates that your monthly rent for a Restaurant (which includes only base rent) will range from $3,000 to $9,000 depending on size and location. This figure does not include an initial deposit which varies upon the lease you sign. You may also be responsible for common area maintenance and other charges under the lease.
  • At the time of signing your lease, you may be required to pay a lease deposit equal to one or two months’ rent, and the first month’s rent. Your rent may be subject to escalation charges based on inflation or may be based on a percentage of gross sales.
  • If you purchase and construct your franchise location, your expenses will be significantly greater. Zoup! does not have any estimates for the cost to purchase or build a franchise location.

4.  Leasehold Improvements:  $240,000

  • Leasehold improvements must conform to Zoup!’s standard specifications and local ordinances. In some situations, your landlord may pay for some of the costs for leasehold improvements.

5.  Landlord Contribution:  ($160,000 to $0)

  • The estimated range of what your landlord may pay is included in the table as a reduction of your initial investment. If your landlord pays some of your costs for leasehold improvements, the landlord may charge a higher rent.

6.  Technology Package:  $32,000 to $37,000

  • The estimate includes the cost of the computer hardware and software, as well as installation fees and initial annual fees for hardware and software maintenance; and online and smartphone ordering subscriptions.

7.  Kitchen Equipment:  $85,000

  • The major equipment necessary for development of a Restaurant includes a walk-in cooler/freezer, soup heating unit, and Bain Marie tables and other foodservice equipment. The estimated amounts are for new items.

8.  Furniture and Fixtures:  $55,000

  • The furniture and fixtures Zoup! specifies for a Restaurant include counters, tables, chairs, beverage area, soup counter and sneeze guard, and millwork package. When applicable, you may be required to purchase outdoor furniture after opening for a cost of $2,500 to $5,000.

9.  Signs (Interior and Exterior):  $15,000

  • The price for signage will vary depending on the type of site and local ordinances for outdoor signage. The estimated price for interior signage includes an electronic menu board system with a cost of approximately $9,000.

10.  Blue Prints, Architect, Plans, Permits:  $14,000

  • You will need to hire an architect and/or engineer, as required by state or local law, approved by Zoup!, to prepare sealed construction documents and final construction documents to submit for building permits and other applicable government review.
  • It will be your responsibility to obtain all necessary building permits and other governmental approvals as necessary before and during construction.

11.  Initial Inventory and Operating Supplies:  $30,000

12.  Insurance:  $1,500 to $3,000

  • This estimate is for one year of coverage. Alternate monthly or quarterly payment arrangements may be possible depending on your insurance provider.
  • Zoup! currently requires that you obtain and maintain the following insurance coverages: General Liability Insurance, Auto Liability, Property Insurance, Umbrella, Workers’ Compensation and Employer’s Liability, and Employment Practices Liability.

13.  Travel and Living Expenses While Training:  $0 to $3,600

  • Although Zoup! does not charge any additional fees for the initial training program, you are responsible for paying any wages due to your employees as well as travel, food, and lodging expenses incurred by you and your employees during initial training.
  • The cost will depend on the distance you and your employees must travel and the type of accommodations you choose.

14.  Legal, Accounting, and Other Miscellaneous Expenses:  $5,250 to $16,250

  • Miscellaneous pre-opening expenses may include legal fees, organizational and accounting expenses, business licenses, utility and phone deposits, equipment deposits, and other pre-paid expenses incurred before opening.

15.  Additional Funds – 3 Months:  $5,000 to $15,000

  • This category covers expenses you may incur during the 3-month initial period. These expenses may include royalty, national brand marketing fund payments and other advertising fees and expenses, insurance premiums, payroll costs, additional inventory and supplies, etc. The estimate does not include an owner’s salary or draw.
  • The figures are estimates and Zoup! cannot guarantee that you will not have additional expenses starting the business.

16.  Total Estimated Initial Investment:  $372,650 to $568,750

  • Zoup! relied on the experience of its affiliate and the costs reported by other franchisees in opening and operating Zoup! Restaurants to compile these estimates.

Development Agreement

  • If you enter into an Area Development Agreement with Zoup!, your initial investment will increase by the additional amount of the Development Fee you will pay under the Area Development Agreement.
  • Assuming a range of 2 to 5 Restaurants to be developed, the additional amount of the Development Fee will be $20,000 to $50,000. So your initial investment will range from $392,650 to $618,750.
  • You will also incur the expenses in the table for each of the additional Restaurants you develop under the Area Development Agreement, except for the initial franchise fee which will have been paid in full when you sign the Area Development Agreement.

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