Great Harvest Franchise Costs: Estimated Initial Investment (Item 7, 2022 FDD)

The estimated initial investment level for a new franchisee (including existing franchisees acquiring additional Great Harvest Bakery Cafe locations) based on the actual low and high costs for the various line-item expenses in the table below incurred by 6 first-time franchisees who opened their first Great Harvest Stores operating as a bakery cafe between January 2020 and December 2021 (and who reported this information to Great Harvest out of 8 first-time franchisees), ranges from $176,678 to $725,431 (assuming the currently-charged $35,000 initial franchise fee and currently-mandated $12,000 grand opening marketing spend).

However, the actual total investment level of those 6 first-time franchisees for their 6 Great Harvest Stores operating as a bakery cafe ranged from a low of $311,061 to a high of $591,860, with an average of $411,463.

1. Initial Franchise Fee: $35,000

2. Expenses While Training: $2,049 to $10,300

3. One Month’s Rent: $2,500 to $32,892

Most Great Harvest franchisees lease their space. The initial monthly lease cost ranged from $2,500 to $32,892 (the $32,892 includes more than one month’s rent due to delayed opening because of COVID) for first-time franchisees who opened between January 2020 and December 2021, depending on the square footage costs in the community.

A bakery cafe’s premises typically is in a strip center or stand-alone location in a commercial area or downtown area when that area is viable for every-day retail.

Lease and leasehold improvement costs depend on the condition, location, and size of the premises; the demand for the premises among possible lessees; whether the premises were used for similar operations; the build-out required; and any construction or other allowances the landlord gives you.

Your lease costs are an important consideration. You are responsible for this cost for the entire lease term regardless of your Bakery Cafe’s performance and, more often than not, will have personal liability for the lease costs even if you have an entity to own and operate your Bakery Cafe.

4. Real Estate and Improvements: $965 to $287,500

5. Equipment: $84,785 to $234,353

Costs vary because necessary equipment is based on estimated sales at the location (determined after the Franchise Agreement is signed). The availability of used equipment also is a factor.

One item not readily reflected in the range is the cost of having a mill meet certain manufacturing standards that historically have not applied to that piece of equipment. While Great Harvest is aware of only 2 Great Harvest Stores in its system ever having to satisfy that requirement, it might be required in the future.

If you must buy a mill meeting this different manufacturing standard, Great Harvest estimates the incremental cost to be between $5,000 and $20,000 depending on the age and size of the “old” mill to which you are comparing it.

6. Signs: $4,059 to $15,321

7. Prepaid Expenses and Deposits: $4,500 to $32,000

Prepaid expenses and deposits include security deposits, utility deposits, permit costs, insurance premiums, and similar items. Some of these items might be refundable.

8. Opening Inventory (Ingredients and Supplies): $10,000 to $25,949

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You must spend at least $12,000 on a grand opening advertising program beginning before, and extending 4 months after, your Bakery Cafe opens.

9. Grand Opening Advertising Costs: $12,000

10. Organizational Costs/Miscellaneous: $820 to $19,116

Organizational costs include legal and accounting fees, incorporation costs, and other miscellaneous expenses incurred before opening.

11. Additional Funds – 3 Months: $20,000

This item estimates your initial start-up expenses (other than the items identified separately in the table). These expenses include payroll costs but not any draw or salary for you.