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Franchise Costs: Detailed Estimates of Christian Brothers Automotive Franchise Costs (2016 FDD)

by Franchise Chatter on February 22, 2015

in Auto Repair Franchise, Auto Service Franchise, Automotive Franchise, Franchise Costs

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Christian Brothers Automotive Photo from tirebusiness.com

This post was updated on March 19, 2017 to reflect information from Christian Brothers Automotive’s 2016 FDD (Item 7).

Detailed Estimates of Christian Brothers Automotive Franchise Costs Based on Item 7 (Estimated Initial Investment) of Christian Brothers Automotive’s 2016 Franchise Disclosure Document

1.  Initial Franchise Fee:  $125,000 ($112,500 with IFA VetFran Program Discount)

  • You must pay Christian Brothers Automotive an initial franchise fee of $125,000. This initial franchise fee is paid in two installments.
  • The first installment is in the amount of $75,000 and is due at the earlier of your signing the Franchise Agreement or your signing the Receipt and Acknowledgement Agreement.
  • The second installment is in the amount of $50,000 and is due on or before 3 business days after Christian Brothers Automotive informs you in writing that building permits have been obtained, the land has been purchased, or the land has been leased for the building where your franchise will operate.

2.  Real Estate and Improvements:  $0 at startup, but monthly thereafter

  • Either Christian Brothers Automotive or an entity affiliated with it or contracted by it will purchase real property and construct the building the franchise will operate from, or Christian Brothers Automotive will lease the land and building for the franchise from an unaffiliated party.
  • You will lease or sublease the building and property from Christian Brothers Automotive or an affiliate for a period of 15 years, for rent of approximately $12,000 to $16,500 per month for base rents. This amount will vary due to the cost of constructing the improvements and the underlying financing costs.
  • On a case by case basis, Christian Brothers Automotive may, in its sole discretion, decide to sell a site and building to a franchisee or to an unrelated third party.
  • Any such sale to a franchisee will be contingent upon and result in an amendment to the Franchise Agreement revising the terms that Christian Brothers Automotive deems appropriate; provided that such amendment shall not change the percentage of the Split Profits that you will receive or the term of your Franchise Agreement.
  • Any such sale to a third party will result in Christian Brothers Automotive leasing the site and building from such third party and continuing to sub-lease it to you.
  • Christian Brothers Automotive may also, in its sole discretion and on a case-by-case basis, decide to contract for an unaffiliated third party to acquire land and construct the building for a franchise, which Christian Brothers Automotive then leases from that unaffiliated party.
  • Christian Brothers Automotive does not currently anticipate requiring a security deposit at startup and generally attempts to provide up to a six month rent-free period. Consequently, it does not expect your initial funds to include rent. This is subject to change and will vary depending on the financial terms negotiated on each construction project.
  • When the monthly lease payments do begin, they will be between $12,000 and $16,500 for base rent amounts, depending on a variety of factors.
  • In addition to the base rent, you will be required to pay other fees and expenses related to the real property such as property taxes, assessments, common area maintenance fees, and property owners’ association fees.
  • Christian Brothers Automotive will charge development, construction management, and legal fees of up to 5% of project costs for each project. These fees will be included in the cost of construction of the improvements.

3.  Equipment:  $190,000 to $203,000

  • The franchisee will be required to purchase equipment. This equipment will include a shuttle car that will be used to transport customers of the franchise.
  • Some of the equipment may be purchased by Christian Brothers Automotive in order to obtain a better price than individual purchasers could obtain. In these cases, Christian Brothers Automotive will pay the equipment vendors, and the franchisee will pay the franchisor the amount it paid such vendors for equipment for the franchisee’s location.

4.  Inventory:  $11,000

5.  Security Deposits:  $5,000

  • You will be required to pay security deposits to the local utility companies. You must call them to determine the amounts and methods of payment.

6.  Signs:  $0

  • You will be required to keep and maintain a sign for your franchise. Christian Brothers Automotive will select the sign, the location for the sign, and the company to build and install the sign.
  • The cost of this sign is included in your project cost or a construction loan. All costs and expenses related to maintaining, repairing, and/or replacing the sign will be your obligation on an ongoing basis throughout the term of your lease.

7.  Insurance and Business License:  $5,000 to $35,000

  • Christian Brothers Automotive estimates that you will spend between $5,000 and $35,000 per year on insurance premiums and licenses.
  • Normally, these premiums can be financed on a monthly payment plan that will reduce the initial cash outlay to approximately $5,000, depending on your providers and your credit worthiness.

8.  Marketing/Advertising:  $17,600 to $23,600 incurred during your first year in business

  • Christian Brothers Automotive requires that if you market/advertise in any local medium, that it be done according to the company’s Marketing Guide and in conjunction with and approved by the company’s Marketing Department.
  • You should budget between $17,600 to $23,600 per year for marketing/advertising in your first year of business.

9.  Grand Opening Marketing/Advertising:  $15,000 to $18,000

  • Christian Brothers Automotive estimates you will spend between $15,000 to $18,000 for marketing/advertising from about 30 days prior to store opening until about 60 days after store opening.

10.  Additional Funds During Initial 3 Months:  $30,000 to $40,000

  • Christian Brothers Automotive estimates that you will spend between $30,000 and $40,000 over the first three months of the operation of the franchise on items such as general office supplies, employees, vendors, and utilities. These expenditures are often categorized as expenditures made from working capital.
  • These amounts are estimates. They will, to a considerable degree, represent discretionary expenses that you may or may not choose to incur.

11.  Pre-Opening Training Travel/Salary:  $7,500 to $10,000

  • You will spend about $7,500 to $10,000 for pre-opening traveling for training, including general travel expenses such as flight, rental car, hotel and food costs for a period of approximately 30 to 45 days.

12.  Other Payments:  $2,000 to $7,000

  • You will need to make estimated payments of $2,000 to $7,000 at or near startup for miscellaneous expenses which include items such as:  financing or application fees, legal or professional fees, extra office supplies, and extra inventory or supplies that are unique to your location which may consist of some of the items described in Note 5 above.

13.  Total:  $408,100 to $477,600

  • Christian Brothers Automotive estimates that your total initial start-up expenses will be between $408,100 and $477,600. These figures are estimates only, and Christian Brothers Automotive does not warrant, represent, or guarantee that you will not incur additional expenses as you start your business.
  • Christian Brothers Automotive relied on the experience of its management to compile these estimates.
  • Christian Brothers Automotive does not offer direct or indirect financing to you for any items in connection with your initial investment.

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