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Franchise Costs: Detailed Estimates of Einstein Bros. Bagels Franchise Costs (2016 FDD)

by Franchise Chatter on September 20, 2015

in Bagel Franchise, Franchise Costs

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Einstein Bros. Bagels Photo by Earl - What I Saw 2.0

This post was updated on January 30, 2017 to reflect information from Einstein Bros. Bagels’ 2016 FDD (Item 7).

Detailed Estimates of Einstein Bros. Bagels Franchise Costs Based on Item 7 (Estimated Initial Investment) of Einstein Bros. Bagels’ 2016 Franchise Disclosure Document

Development Costs

1.  Construction Costs:  $210,000 to $310,000

  • These estimates are for traditional locations, primarily in strip-type shopping center and end cap locations.
  • Landlords sometimes provide tenant improvement allowances. Tenant improvement allowances are not included in this Item 7 chart because if they are offered, the terms vary widely.

2.  Computer Equipment and Electronics:  $26,000 to $34,000

  • The estimate is for the electronic equipment you will need to operate the Restaurant, such as a point-of-sale (POS) system, software, phone system, and music system.

3.  Furniture, Fixtures, and Equipment:  $209,000 to $261,000

  • The estimate is for the furniture, fixtures, and equipment you will need to operate the Restaurant such as baking equipment, proofers, refrigeration, freezers, sandwich lines, and lighting.

4.  Signage and Graphics:  $30,000 to $50,000

  • The cost of signage and graphics will vary from location to location depending on lease requirements, local ordinances and restrictions, store frontage, and related factors.

5.  Professional Fees (including architectural or engineering fees and permit and impact fees):  $30,000 to $35,000

  • The estimate is for legal, accounting, administrative, permitting, traffic studies, demographic studies, brokerage, and miscellaneous other professional fees that you may incur before you open for business.

6.  Sub-Total Development Costs:  $505,000 to $690,000

Pre-Opening Costs

1.  Initial Franchise Fee:  $35,000

2.  Design Review Fee:  $2,000

  • You must pay the franchisor a design review fee if you select a previously unapproved architect or contractor to prepare drawings for the Restaurant.

3.  Real Estate Leasing:  $25,000 to 56,250

  • While Restaurant sizes vary from 2,000 square feet to 2,500 square feet, 2,500 square feet is optimal.
  • The figures in the estimate are calculated on the following assumptions:  (a) you will have to pay six months’ rent (made up of one month’s rent before you open, three months’ rent after you open, one month’s rent as a security deposit, as well as payment of the last month’s rent); (b) for space in the range of 2,000 to 2,500 square feet; (c) at $25 to $45 per square foot per year.

4.  Opening Inventory, Smallwares, and Supplies:  $15,000 to $25,000

  • Items of inventory, smallwares, and supplies which you are required to obtain from the franchisor or from its designated sources of supply are paid for at standard prices and terms.

5.  Initial Marketing and Promotion:  $10,000

  • The amount in the table is for the initial promotion and marketing efforts you are required to make under the Franchise Agreement.

6.  Insurance:  $7,500 to $15,000

  • The estimate is for the annual premium for the policies required under the Franchise Agreement.
  • You must obtain general liability insurance and product liability insurance with minimum limits of $1 million per occurrence, and an umbrella liability policy with minimum limits of $5 million per occurrence, as well as workers’ compensation insurance as required by local and state laws.

7.  Training Expenses:  $1,000 to $14,000

  • For the initial training period, the “low” estimate assumes that you are located within commuting distance of the training facilities and that you do not incur per diem expenses. The “high” estimate assumes travel, meals, auto, and lodging for two individuals, for six weeks (5 in a training store and 1 at the Bagel Academy in Colorado).

8.  Miscellaneous Opening Costs:  $1,300 to $3,600

  • These include things such as office supplies, first aid kits, fire extinguishers, and similar items.

9.  Business Licenses:  $500 to $5,000

  • Local, municipal, county, and state regulations vary on what licenses and permits are required by you to operate. These fees are paid to governmental authorities before starting business.

10.  Security Deposits:  $4,000 to $10,000

  • These figures are the estimated costs of telephone and utility deposits.

11.  Additional Funds (three months):  $12,000 to $50,000

  • You will need additional capital to support ongoing expenses, such as payroll and utilities, to the extent these costs are not covered by sales revenue. The franchisor estimates that the amount given will be sufficient to cover ongoing expenses for the start-up phase of the business, which the franchisor calculates to be three months.

12.  Sub-Total Pre-Opening Costs:  $113,300 to $225,850

Total Estimated Initial Investment:  $618,300 to $915,850

  • The franchisor relied on its own experience when preparing these figures.

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