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

Option I:  Standard Unit – Purchase of Land, Building, Signs, and Equipment

1.  Initial Franchise Fee:  $25,000

2.  Travel and Living Expenses While Training:  $4,000 to $8,000

• Although Huddle House does not charge a separate training fee for initial training, you will incur all expenses in attending training, such as travel, room, board, and wages.

3.  Real Estate (Land):  $168,000 to $250,000

4.  Site Development:  $143,000 to $270,000

5.  Improvements:  $130,000 to $497,000

6.  Equipment and Seating:  $127,000 to $168,000

• You are responsible for paying any applicable state and local sales and other taxes, in addition to the actual cost of the equipment package.

7.  Signs and Decor:  $32,000 to $68,000

• The low figure is for a standard sign package. The high figure assumes that you will need a standard sign package for the building and a high-rise road sign (including, where applicable, a standard highway sign).

• Specific circumstances may cause costs to be different.

8.  Site Plan/Engineering Drawings:  $5,000 to $25,000

9.  Smallwares, Opening Inventory, and Uniforms:  $40,000 to $50,000

10.  POS System:  $12,000 to $25,000

• Huddle House has implemented a point-of-sale system (the “POS System”) that you must purchase before opening your franchise according to the company’s specifications and criteria.

• Huddle House is not currently a supplier of the POS System, but it may choose to become a supplier in the future (but is not required to do so).

• The estimated initial investment includes the estimated cost of purchasing all elements of the POS System, as currently configured, which requires the use of 2 POS terminals.

• You will incur certain costs and expenses to purchase revised or upgraded components or services, or replacement systems, when specified by Huddle House.

11.  Help Desk and Maintenance:  $225 to $275

• There are ongoing fees for hardware and software maintenance and a “help desk.” Based on the current system, Huddle House estimates that the monthly fees for software maintenance service and a “help desk” will cost approximately $225 to $275 for a POS System.

• This expense covers monthly services for assistance in operating and maintaining the POS System.

12.  Computer-Related Security Services:  $900 to $2,000

• The use of broadband communications requires security features and services (such as antivirus, antispam, firewall, and intrusion detection).

• Costs for these services and timing of payments will be as you determine with service providers; however, Huddle House estimates the total cost to be approximately $900 to $2,000 per year.

• You must also be PCI compliant. “PCI” means the Payment Card Industry Data Security Standards, which are a set of requirements designed to ensure that all companies that process, store, or transmit credit card information maintain a secure environment.

• Huddle House estimates that costs for PCI compliance should not exceed $3,500 annually.

13.  Customer Feedback Program:  $45

• You must also participate in the customer feedback program that Huddle House designates from time to time. As of the date of the disclosure document, Voice of the Customer is the required receipt survey program.

• Huddle House may require franchisees to pay the monthly charges for their Franchised Restaurants. This fee is currently $43.51 per month per restaurant, but may increase in the future.

• You will also be responsible for the cost of the survey receipt offer, which is currently a free menu item, but this may change and the fee may vary and will be determined by Huddle House in its sole right and discretion.

14.  Miscellaneous Opening Costs:  $6,000 to $16,000

• This includes the security deposit payable to Huddle House (which is generally $7,500 to $10,000), business license fees, cash register money, first month’s insurance deposit and tax escrow deposit, and utility deposits.

15.  Additional Funds – 3 Months:  $6,000 to $12,000

• This estimates your initial start-up expenses, including payroll.

• These figures are estimates and are based on Huddle House’s experience with respect to franchised and company-owned Huddle House Restaurants. Huddle House cannot guarantee that you will not have additional start-up expenses.

16.  Totals:  $699,170 to $1,416,320

Option II:  Standard Unit – Lease of Land, Building, Signs, and Equipment (Non-Resale Units and Resale Units)

• The total estimated initial investment necessary to begin operation of a Huddle House standard unit (lease of land, building, signs, and equipment) ranges from $100,670 to $150,820 for a non-resale unit and $100,670 to $650,820 (inclusive of business goodwill of up to $500,000) for a resale unit.

Option III:  Standard Unit – Lease of Land and Building; Purchase of Equipment, Signs, and Leasehold Improvements

• The total estimated initial investment necessary to begin operation of a Huddle House standard unit (lease of land and building; purchase of equipment, signs, and leasehold improvements) ranges from $392,670 to $904,320.