Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Bonchon Franchise Costs (2017 FDD)

by Franchise Chatter on June 6, 2015

in Chicken Wings Franchise, Franchise Costs

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BonChon Chicken Photo by HawBone

This post was updated on April 25, 2017 to reflect information from Bonchon’s 2017 FDD (Item 7).

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

1.  Initial Franchise Fee:  $40,000

2.  Pre-Opening Training Expenses:  $6,500 to $10,000

  • Bonchon provides the Initial Training Program for you (if the franchisee is an individual), your Operating Principal, and your Restaurant Manager at no charge. The charge for replacement attendees is $4,000 per person.
  • You pay all your trainees’ living and transportation expenses.
  • The lower estimate in this range covers the travel expenses for you (if the franchisee is an individual) only for a 15-day Initial Training Program and the higher estimate in this range covers the travel expenses for you (if the franchisee is an individual), your Operating Principal, and your Restaurant Manager for a 15-day Initial Training Program.

3.  Real Property:  Amount Not Specified

  • If you do not have acceptable space for your Restaurant, you will have to lease at least 2,000 to 4,000 square feet in a suitable commercial building for a Restaurant location.
  • Bonchon Restaurant locations are usually at a strip shopping center or mall, and may be downtown, suburban, rural, or on a highway.
  • Monthly rental costs range from approximately $10,500 to $25,000 or more per month for a Restaurant location in New York City at an annual leasing rate of between $63 and $75 per square foot.

4.  Construction and Leasehold Improvements:  $140,000 to $350,000

  • Estimates are for the improvement of a property with 2,000 to 4,000 square feet of space, with a range of improvement costs of between $70.00 per square foot for the low estimate and $87.50 per square foot for the high estimate.
  • These figures are indicative of standard pricing in or near New York, New York.
  • The estimate applies to a site which has been obtained in the “vanilla box” stage.

5.  Equipment:  $49,000 to $120,000

  • These figures represent the purchase of the kitchen production equipment, such as deep fryers, refrigeration, steel tables and work surfaces, gas ranges, and ice makers that are necessary to produce all menu items.

6.  Furniture and Fixtures:  $15,000 to $40,000

  • The range of costs for Furniture and Fixtures covers the purchase of tables, chairs, and various items of decor that will be installed into a premise that has been designed to seat 45 to 150 people.

7.  Hand Wares and Small Appliances:  $3,000 to $5,000

  • Hand wares are mechanical kitchen tools, small appliances, kitchen utensils, storage containers, and cleaning equipment, as well as other items that would not be considered on their own as major equipment purchases.
  • This range of expenses also includes the cost of employee uniforms.

8.  Computer, Electronics, and Point-of-Sale System:  $10,090 to $21,268 ($8,664 to $18,392 represents the cost of the point-of-sale system)

  • You must purchase the required computer hardware; software; Internet connections and service; required dedicated telephone and power lines; and other computer-related accessories, peripherals, and equipment.

9.  Inventory to Begin Operating:  $30,010 to $33,010

  • The initial inventory to open your business includes all food, cleaning products, and packaging necessary for the opening of the Restaurant.
  • Additionally, each Restaurant will order packaging items, cooking utensils, sweet sugar, brushes, pallets, and Bonchon’s proprietary sauce that will cover sales during a period of no less than one month. You must purchase these items from Bonchon’s affiliate at an estimated cost of $13,010. This amount is included in the estimate.

10.  Rent Deposit:  $31,500 to $75,000

  • The range of expenses assumes a prepayment of three months of rent, based upon a Restaurant location with between 2,000 and 4,000 square feet of interior space.

11.  Security Deposits, Utility Deposits, Business Licenses, and Other Prepaid Expenses:  $14,000 to $16,000

12.  Professional Fees:  $4,500 to $6,000

13.  Signs:  $7,000 to $12,500

  • This is an estimate of the cost to produce signage (one building fascia sign) for the outside of the building as well as interior signage, such as a menu board.

14.  Architect and Engineering Fees:  $9,000 to $30,000

  • Bonchon may designate an architect and general contractor whose services you will be required to use, at your own expense, for the development of your own Restaurant.

15.  Opening Advertising:  $5,000 to $7,500

  • Bonchon will provide you with a Market Introduction Program, which will contain your advertising and promotional obligations during the period beginning one month before the scheduled opening of the franchised Restaurant and continuing until three months following the commencement of operation of the franchised Business. This is the range of expenditures to satisfy the Market Introduction Program.

16.  Pre-Opening Labor:  $3,000 to $6,000

  • The estimate includes the expenses incurred in the training of hourly employees plus one Restaurant Manager and an Assistant Restaurant Manager.

17.  Additional Funds (initial period – 3 months):  $30,000 to $90,000

18.  Total (excluding real property):  $397,600 to $862,278

  • In compiling these estimates, Bonchon relied on its and its affiliates’ experience in operating and franchising businesses.

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