Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Schlotzsky’s Franchise Costs (2016 FDD)

by Franchise Chatter on May 11, 2015

in Franchise Costs, Sandwich Franchise

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Schlotzsky's Photo by Holly S.

This post was updated on May 17, 2016 to reflect information from Schlotzsky’s 2016 FDD (Item 7).

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

For a Schlotzsky’s Restaurant with a Cinnabon Express Bakery

1.  Initial Franchise Fee:  $30,000

2.  Real Property/Site Lease:  Amount Not Specified

  • The total estimated initial investment does not include real estate. The cost of leasing or purchasing real estate will vary, depending on location and other factors, and Schlotzsky’s cannot accurately project this cost.

3.  Leasehold Improvements:  $173,350 to $309,000

  • Restaurants are typically end-cap or freestanding locations with a drive-thru in suburban shopping centers ranging in size from 2,100 square feet to 3,600 square feet, or in other non-traditional venue.
  • Schlotzsky’s prototype is for a 3,000 square foot end-cap restaurant with a drive-thru, although the franchisor can adapt the prototype to provide for a variety of restaurant designs of varying square footage.
  • The low estimates in the chart are based on a 2,100 square foot end-cap location that does not include a drive-thru. The high estimates in the chart are based on a 3,600 square foot end-cap location that includes a drive-thru.
  • Except for certain non-traditional venues, Schlotzsky’s does not generally recommend building a Restaurant smaller than 2,400 square feet.

4.  Furniture, Fixtures, Equipment, Smallwares, Millwork, Menu Boards, Graphics, and Point-of-Sale System:  $148,000 to $216,000

  • You must use a standard interior decor style and standard equipment (including the standard Computer System that includes installation, maintenance, and help desk services).
  • These amounts do not include the costs of any owned, hired, or leased delivery motor vehicles that you may utilize in the operation of the Restaurant.

5.  Exterior Signage:  $9,000 to $18,000

  • Freestanding locations may require substantially more signage and cost substantially more than the range provided.

6.  Licenses and Permits:  $1,000 to $3,000

  • You must obtain licenses and permits to operate the Restaurant that may include business and health licenses depending on state and local licensing requirements.

7.  Due Diligence/Lease Acquisition/Professional Fees (Architect):  $10,000 to $25,000

  • Included in this amount are due diligence studies and reports that may include an architectural and engineering feasibility analysis, photographic sign survey, and traffic impact study.
  • The cost also includes legal and professional fees (including the fee for the approved professional architect), business set-up costs, and other lease acquisition costs (does not include lease deposits).

8.  Supplies and Inventory:  $18,000 to $25,000

  • Included in this estimate are items such as uniforms, initial inventory orders, and cash on hand for the opening of the Restaurant.

9.  Insurance:  $8,000 to $14,000

  • You must obtain and maintain during the term of your Franchise Agreement, at your expense, a comprehensive business insurance program, including property, commercial general liability, automobile liability, business property, umbrella, employment practices liability, and workers’ compensation insurance.

10.  Deposits:  $3,000 to $5,000

  • Schlotzsky’s estimates that you will incur deposit expenses to obtain utility service, which includes deposits to initiate telephone, gas, electricity, water, and other services that will vary due to municipality requirements, local provider requirements, and your creditworthiness.
  • This estimate specifically excludes any security deposit under any lease for the Restaurant.

11.  Training Costs (Travel, Meals, Lodging, Salaries, Pre-Opening Crew Labor):  $24,500 to $37,000

  • The estimated cost is based on an estimate of the cost for training 2 to 4 individuals who will work in your Restaurant full time in one of Schlotzsky’s training facilities around the country, and having full crew labor at your Restaurant one week before the opening of your Restaurant.

12.  Grand Opening Advertising and Promotions Expenditure:  $15,000 to $25,000

13.  Additional Funds – 3 Months:  $39,000 to $48,000

  • This item estimates funds that may be required during the first 3 months of operations to cover restaurant operating expenses, excluding insurance premiums (covered in #9) and excluding rent or mortgage payments (see below), but including wages, inventory, initial set-up and monthly bookkeeper costs, Advertising Contribution, royalty payments, controllable expenses, computer hardware and software maintenance contracts, and support service payments and facility expenses not expressly covered elsewhere in the chart.
  • Although mortgage payments and rent are excluded from this chart, you could expect to pay about $10,000 to $20,000 in monthly mortgage payments if you purchase the land and building for the Restaurant and about $3,000 to $20,000 in monthly rent payments if you lease the Restaurant.

14.  Cinnabon Express Bakery Initial Franchise Fee:  $7,500

15.  Cinnabon Express Bakery:  $17,064 to $24,484

  • Although it’s expected that each Restaurant will have a Cinnabon Express Bakery, if for some reason the franchisor does not require this for your Restaurant (e.g. non-traditional locations), then these expenses would not apply to your Restaurant.

16.  Total Initial Investment:  $503,814 to $786,984

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