Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Jack in the Box Franchise Costs (2015 FDD)

by Franchise Chatter on April 25, 2015

in Franchise Costs, Hamburger Franchise



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Detailed Estimates of Jack in the Box Franchise Costs Based on Item 7 (Estimated Initial Investment) of Jack in the Box’s 2015 Franchise Disclosure Document

  • These initial investment figures are based on Company costs in fiscal year 2014 to open a Mark 9-Style Restaurant. The Mark 9-Style building is the building style currently approved for new construction.
  • All portions of the initial investment paid to the Company are fully earned by it when paid, and are not refundable.
  • Your financing cost may affect your total investment significantly.
  • The Company does not have sufficient experience or information to estimate the initial investment for Non-Traditional locations. If you are developing a Non-Traditional Restaurant, the costs you incur may vary significantly from those disclosed below. You may not incur all the costs identified and you may incur additional costs.

1.  Development Fee (if applicable):  $25,000

  • When you sign a Development Agreement, you must pay the Company a Development Fee of $25,000 for each site to be developed.

2.  Initial Franchise Fee:  $0 to $50,000

  • The Initial Franchise Fee is typically $50,000 for each franchised Restaurant, plus any tax or other fee imposed upon the Company due to the collection of the franchise fee.
  • If your franchise term is for less than the standard 20 years, the Initial Franchise Fee is $2,500 for each year or partial year exceeding 6 months.
  • The Company may reduce the Initial Franchise Fee or accept installment payments.

3.  Fee for Trade Area Survey Analysis:  $0 to $7,000 (plus expenses)

  • The amount listed is for a single site survey.

4.  Land:  Not included

  • The cost of land will vary widely, depending upon size and location of the property and whether you purchase or own the land or enter into a lease arrangement therefore.
  • Typical physical site criteria would include 20,000 to 30,000 square feet, 150 feet of frontage, 2,032 to 2,561 square feet for building, and parking to accommodate 20 to 30 spaces.

5.  Fee for Architect/Engineering Services:  $40,000 to $165,000

6.  Environmental Assessment:  $3,000 to $23,000

  • A “Phase One” assessment costs approximately $2,500 to $3,500. The cost of a “Phase Two” assessment varies considerably, ranging from $10,000 to $20,000. The cost of a “Phase Three” assessment ranges from $30,000, up.

7.  On-Site Improvements (excluding landscaping):  $206,000 to $472,000

  • Site improvements include excavation, grading, utility work, and outdoor lighting, among other things. Offsite development costs, if any, are excluded.
  • Please note that approximately $25,000 to $40,000 of these site improvement costs are fees that apply only to the development of Company-Initiated Sites.
  • Company-Initiated Sites. If you want to develop a site that the Company is already in the process of acquiring or developing, you will be required to pay certain fees relating to the site. If the site is developed by you after the Company acquires it, you will be required to pay a fee of $25,000. The Company charges a fee of $40,000 if you want it to manage the construction and development project for you.

8.  Construction:  $418,000 to $622,000

  • The Company compiled these estimates based on its experience building its prototypical building where there were no unusual conditions such as special signage needs or city-required exterior finishes.
  • The estimate does not include costs of building permits; onsite or offsite site improvements such as lighting, land excavation or fill, utility work, and paving; landscaping; or complying with the requirements of any governmental authority.
  • Construction costs will vary widely depending upon the size, condition, and location of the property.

9.  Furniture, Fixtures, and Equipment:  $340,000 to $441,000

  • Depends upon kitchen configuration and dining room size. Excludes security equipment.

10.  IT Equipment and Installation:  $35,000 to $45,000

  • Includes purchase and installation of Back-Office PC, Web-based training device, CBT terminal, point-of-sale system, kitchen display equipment, and order confirmation system.

11.  Computer-Related Services and Licensing:  $4,100

12.  Initial Inventory:  $12,000 to $20,000

13.  Pre-Opening Training and Inventory Expenses:  $50,000 to $55,000

  • The pre-opening training and inventory expenses in a new market can be significantly higher.

14.  Pre-Opening Additional Funds:  $13,000

15.  Uniforms:  $1,500 to $3,000

16.  Operating Cash:  $1,200 to $3,000

17.  Business Licenses and Utility Deposits:  $2,000 to $8,000

  • Business licenses and utility deposit costs vary greatly by municipality and state.

18.  Additional Funds (3 months):  $165,300 to $458,600

  • “Additional Funds” include the following for the first 3 months of operations:
  • initial employee wages;
  • management compensation;
  • ongoing purchases of inventory of food and supplies;
  • utilities;
  • repairs and maintenance; and
  • insurance (annual premium)
  • It excludes income taxes, officer compensation, workers’ compensation insurance, property insurance, general and administrative expenses, interest, other income and expense, royalties, marketing fees, depreciation, rent, taxes and license expenses, other labor expenses, bonuses, travel expenses, and cash overage/shortage.
  • You may have additional expenses starting the business. Costs may vary widely depending upon your restaurant location, sales volume, staffing choices, management skill and experience, economic conditions, the labor market, and competition.

19.  Total Estimated Cost for Prototypical Mark 9-Style Restaurant (excluding land, financing, and certain other costs):  $1,316,100 to $2,414,700

  • Financing rates, lease rates, cash injection, loan or lease fees, creditworthiness, lender selection and interest rates, closing costs and factors may vary greatly, and will significantly affect your initial investment.
  • The company may offer some limited financing.



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