Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Cosi Franchise Costs (2016 FDD)

by Franchise Chatter on October 13, 2015

in Franchise Costs, Sandwich Franchise

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Cosi Sandwich Photo by srhbth

This post was updated on January 2, 2017 to reflect information from Cosi’s 2016 FDD (Item 7).

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

Franchise and Facility Investment

1.  Initial Franchise Fee:  $40,000 (unless you are buying your second or later franchise, in which case it is $35,000)

2.  Business Licenses and Permits:  $3,000 to $6,000

  • These are general estimates for permits and licensing (including construction and operating permits) that may be required by local and state governments. Local, municipal, county, and state regulations vary on the licenses and permits you will need for construction and to operate a Cosi Restaurant.

3.  Leasehold Improvements:  $287,000 to $500,000

  • These estimates are based on Cosi’s current prototype design and the assumption that the location is approximately 3,000 square feet, and that your lessor will provide a shell space that includes, at a minimum, a level concrete floor suitable for floor covering, finished demising walls, and electricity, gas, sewer, and water and plumbing suitable for a retail business.

4.  Fixtures, Furnishings, and Equipment:  $329,000 to $427,000

  • These estimates include fixtures and equipment required for a Cosi Restaurant, including a gas-fired brick oven, coolers and refrigeration equipment, display cases, food preparation tables, other fixtures and equipment, serving and customer tables and seating, other various decor items, and small wares.
  • These amounts also include costs of your office furniture, filing cabinet and miscellaneous office supplies, and equipment.
  • You must purchase or lease specified computers and related hardware, along with required third-party software necessary to operate the Franchised Restaurant.
  • The estimates include the costs for interior and exterior signage.

5.  Architect Fees:  $17,000 to $45,000

  • You will be required to retain the services of a qualified architect, whom Cosi has approved or designated for use by its franchisees, to adapt its standardized plans and specifications based upon its prototype Cosi Restaurants for the remodeling or build-out of your Franchised Restaurant.

6.  Subtotal:  $676,000 to $1,018,000

Pre-Paid Expenses and Initial Operating Costs

1.  Rent (3 months):  $15,000 to $75,000

  • Locations for Cosi Restaurants will typically need approximately 3,000 square feet. Lessors customarily require tenants to pay first and last months’ rent, plus security equal to one month’s rent, when signing a lease.

2.  Utility Deposits:  $1,000 to $9,000

  • The estimate in the chart includes utility deposits (based on the assumption of one month of gas and electricity).

3.  Other Professional Fees:  $3,500 to $7,500

  • The estimate assumes you will employ an attorney to help you negotiate your lease for the Franchised Restaurant premises.

4.  Insurance Deposit:  $2,000 to $3,000

  • The estimate represents an initial deposit for the coverage necessary to operate the business and represents approximately 2 to 3 months of coverage.

5.  Initial Inventory of Food and Paper Supplies:  $11,000 to $23,000

  • The estimate includes an initial inventory of paper goods and supplies and a “now hiring” kit. You will need to replenish your initial inventory on an as-needed basis and food items and other supplies as used. Company-owned Cosi Restaurants typically place orders for replacement items once or twice per week.

6.  Training Expenses:  $4,000 to $15,000

  • For the training program, Cosi provides instructors and instructional materials at no charge for up to four persons, but you must pay for transportation, lodging, food, and wages for your trainees.

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

  • This advertising and marketing promotion is intended to provide initial awareness and momentum for your new Franchised Restaurant. You must spend a minimum of $5,000 on this advertising.

8.  Additional Funds – Initial Period of Operations:  $34,000 to $81,400

  • You will need additional capital to support on-going expenses, such as rent (for 2 months, as the first month’s rent will be credited from the deposit made before opening), payroll, and utilities, to the extent that these costs are not covered by sales revenue.
  • Cosi estimates that the amount given will be sufficient to cover on-going expenses for the start-up phase of the business, which it calculates to be three months.

9.  Subtotal:  $75,500 to $228,000

Total Estimated Initial Investment:  $751,500 to $1,246,900

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