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Franchise Costs: Detailed Estimates of Kilwins Chocolates Franchise Costs (2017 FDD)

by Franchise Chatter on January 14, 2015

in Chocolate Franchise, Franchise Costs, Retail Franchise

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Kilwins Chocolates Photo by KelleyAdam

This post was updated on May 30, 2017 to reflect information from Kilwins Chocolates’ 2017 FDD (Item 7).

Detailed Estimates of Kilwins Chocolates Franchise Costs Based on Item 7 (Estimated Initial Investment) of Kilwins Chocolates’ 2017 Franchise Disclosure Document

1.  Initial Franchise Fee:  $40,000

2.  Lease/Rent:  $2,169 to $4,530

  • If you do not own a location for your Store, you must purchase or lease a space. You will probably need to lease a space at least four months in advance; however, you may attempt to negotiate an abatement from the landlord.
  • Store locations include resort and tourist areas, downtown storefronts, entertainment centers, and shopping centers. The expenses represented in the table reflect stores that are within the preferred target range of 1,200 to 1,500 square feet.
  • For Stores opened from 2014 to 2016 within the 1,200 to 1,500 square feet range, lease rates per square foot range from $19 to $40, with annual rates between $26,030 and $54,360 and are representative of the first year rent for 12 stores.
  • Rent at Stores of all sizes that opened during the past three years ranged from $19.00 to $59.81 per square foot per year with total rent of $1,817 to $9,197 per month.

3.  Plans and Construction (includes architectural and building permits):  $165,194 to $214,988

  • Kilwins will provide you, at no charge, its Style Guide and construction requirements based on an AutoCAD formatted layout to include an equipment schedule and specifications for the Store. You must adapt, at your expense, the layout Kilwins provides, subject to its approval.
  • Kilwins provides no other drawings unless you engage it to construct a Kilwins-Build Store and sign a Store Construction Agreement and/or enter into an Architectural and Engineering Agreement with it.
  • If you elect Kilwins to construct a Kilwins-Build Store, Kilwins will hire an architect and contractor, obtain permits and a certificate of occupancy, and you will pay the Cost of Work (which will be equal to the plans and construction costs, plus a construction management fee of 10%). These costs do not include sales or use tax applicable to your location.

4.  Equipment:  $117,370 to $159,418

  • The franchisor requires franchisees to purchase equipment needed to operate the Store, such as dipping cases, freezers, refrigerators, marble tables, stoves, sinks, cabinetry, fixtures, graphics, and many other miscellaneous items. You will need to obtain the exact equipment Kilwins specifies and in some cases from the vendor it specifies.
  • If you enter into the Equipment Management Agreement, Kilwins will procure the equipment used in the Store, and you will pay the cost of equipment (which will be equal to Kilwins’ cost to procure and manage the installation of select items from the equipment list, plus a 7.5% management fee).

5.  POS:  $12,292 to $13,252

  • Kilwins requires its franchisees to purchase a Kilwins Point of Sale (POS) system consisting of a PC-based hardware platform combined with proprietary Kilwins POS software. The costs may reflect a 5% equipment management fee.

6.  Inventory:  $22,203 to $24,273

  • Start-up inventory of products and supplies will vary based on expected volume of business and size of storage areas in the building. This estimate is for the initial inventory only.
  • If you elect to have Kilwins construct a Kilwins-Build Store, it will install an opening merchandise inventory in a quantity and variety that it estimates is appropriate for the size, location, and market of your Store.
  • These costs reflect all available discounts offered by affiliated suppliers.

7.  Signs and Awnings:  $1,060 to $20,596

  • Kilwins will provide assistance to you in designing your signs and awnings; you must submit the final design to Kilwins for its review and approval. You will pay your sign and awning fabricator directly.
  • If you elect to have Kilwins construct a Kilwins-Build Store, it will obtain and install the signs and awnings used in the Store, and it will charge you a management fee for its services equal to 7.5% of the signage cost.

8.  Advertising:  $5,000 to $8,000

  • Kilwins will assist you in tailoring a marketing plan appropriate to your market. The estimate is for the initial marketing efforts you will need to make, which include the Grand Opening marketing program.

9.  Insurance:  $500 to $9,810

  • This estimate is for the annual premium for the policies required under the Franchise Agreement. You must obtain general liability insurance and product liability insurance with minimum limits of $1,000,000 per occurrence, $2,000,000 in the aggregate, which you will have to obtain through third parties, such as your own insurance agent.
  • The range does not include Florida coastal locations.

10.  Training Expenses:  $900 to $6,000

  • The estimates assume travel, meals, auto, and lodging, for two individuals. The cost you incur will vary depending upon factors such as the distance traveled, mode of transportation, per diem expenses actually incurred, and the number of persons who will attend training.
  • If you send more than two persons to attend training, Kilwins estimates that the additional cost, on a per person basis, will range from $1,000 to $3,000.

11.  Business Licenses:  $100 to $4,050

  • Local, municipal, county, and state regulations vary on what licenses and permits are required by you to operate. These fees are paid to governmental authorities before starting business.

12.  Professional Fees:  $500 to $18,006

  • The estimate is for legal, accounting, administrative, traffic studies, demographic studies, and miscellaneous other professional fees that you may incur before you open for business, including (among other things) to assist you in reviewing the Franchise Agreement.

13.  Additional Funds (3 months):  $25,000 to $66,094

  • You will need additional capital to support on-going expenses, such as payroll and utilities, to the extent that these costs are not covered by sales revenue.
  • You will need to have staff on-hand before opening to prepare the Store for opening, training, orientation, and related purposes. Kilwins estimates that you will need approximately 100 hours of staff time to get ready for your opening.

14.  Security Deposits:  $235 to $2,500

  • The figure is the estimated cost of telephone and utility deposits.

15.  Total:  $392,523 to $591,517

  • Kilwins relied on its own experience and information provided to it by its franchisees when preparing these figures.

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