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

This post was updated on October 2, 2016 to reflect information from Saladworks’ 2016 FDD (Item 7).

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

For a Single Restaurant

1.  Initial Franchise Fee:  $30,000 to $35,000

• If you sign a franchise agreement for a single location, the initial franchise fee is $35,000. If you are an existing Saladworks franchisee in good standing, the initial franchise fee is $30,000. If you sign a multi-unit development agreement for 3 or more locations, the initial franchise fee is $30,000 for each location.

2.  Architectural Plan Review:  $0 to $1,000

• The franchisor’s preferred architect, to be engaged by you, will prepare the architectural plans for your restaurant based on the PDP, which is provided at no cost.

• You must provide the franchisor with complete architectural plans for its review and approval. The cost of using the franchisor’s preferred architect will be $11,500. If you do not use the franchisor’s preferred architect and choose to use a local architect, you must pay the franchisor an architectural plan review fee of $1,000, payable when you request the PDP.

3.  Architect Fees:  $11,500 to $12,500

• You will be responsible for the cost of your local architect, which the franchisor estimates will range from $11,500 to $12,500 or more, depending on the architect you choose and the geographic region of the country in which you are located.

4.  Permits and License Fees:  $0 to $250

• The cost for some required permits and license fees have been included in the Leasehold Improvements estimate for restaurants using the new buildout design. Depending on your general contractor or subcontractor, some permit costs and license fees also may be included in the construction estimate for the premises of your restaurant.

5.  Leasehold Improvements:  $249,232

• These estimates are based on the new Saladworks prototypical restaurant design of about 2,000 square feet and assume that your landlord will contribute between $40,000 and $60,000 toward the cost of the buildout of your restaurant, and that the premises contains a level concrete floor suitable for floor covering, demising walls, air conditioning, electricity, gas, sewers, bathroom facilities, water, and plumbing that meet code in your geographic area and that are suitable for your restaurant.

• The franchisor estimates that leasehold improvement costs for the new Saladworks prototypical restaurant design are about $125 per square foot for a strip center location.

• Your construction, remodeling, and decorating costs in a food court location may be lower due to the reduced size of a food court location.

6.  Equipment and Furniture:  $110,701

• The estimate set forth in the table assumes that you purchase your furniture, fixtures, and equipment. If you lease these items, you should expect to pay an initial payment of 20% of the price of the furniture, fixtures, and/or equipment (as a “down payment”) and the first and last month’s rent under the lease.

7.  Millwork:  $20,756

• Some millwork costs may be included in the Leasehold Improvements estimate for some restaurants, depending on your general contractor and subcontractor.

8.  Smallwares:  $4,872

9.  Point of Sale System:  $11,000 to $14,200

• This estimate assumes that you purchase the point of sale system (“POS System”) through the franchisor’s designated third party vendors. If you choose to lease the POS System, your costs will be lower.

10.  Signage (interior and exterior) and Small Goods:  $34,158

11.  Travel and Living Expenses While Training:  $2,500

12.  Grand Opening Advertising:  $5,000

• You must spend at least $5,000 to conduct a Grand Opening Advertising Program before and immediately on opening your restaurant, and you must provide proof of such expenditures before the franchisor approves your restaurant opening.

13.  Miscellaneous Opening Costs:  $10,095 to $12,000

• Miscellaneous opening costs include a sound system, security deposits, uniforms, menus, office supplies, and installation on your POS system of on-line customer ordering software from orderTalk, the franchisor’s third party vendor.

14.  Opening Inventory:  $7,145

• You must at all times maintain sufficient inventory levels to satisfy your restaurant’s operations for a minimum of 3 days.

Turnkey Costs:  $494,459 to $509,314

15.  Real Property Lease/Purchase Costs:  Amount Not Specified

• In the past, a Saladworks location in a strip center, pad site, freestanding, or downtown location typically ranged from 2,000 to 2,600 square feet. Under the new building design, the franchisor recommends a 2,000 square foot location for a strip center, pad site, freestanding, or downtown location. A Saladworks location in a mall food court typically ranges from 600 to 900 square feet.

• In addition, the cost to purchase, lease, or sublease a location may also include the additional cost for “extras,” such as the advertising fund, security, maintenance, sprinkler system, real estate taxes, other tenant expenses, percentage rent, or “key money,” which landlords sometimes charge for mall locations.

16.  Insurance (1st 3 months):  $700 to $2,500

• You must obtain insurance policies protecting yourself and the franchisor, and your and the franchisor’s respective officers, directors, partners, and personnel, against any demand or claim for personal injury, death, or property damage, or any loss, liability, or expense arising from the operation of your restaurant.

17.  Additional Funds (1st 3 month):  $18,000 to $21,000

• The estimate for additional funds includes funds you will need during the 1st 3 months of operations, and is based on the franchisor’s experience and includes, but is not limited to, wages for hourly employees (does not include a salary or draw for you), supplier payments, utilities, bank fees, and other miscellaneous costs and purchases. However, this is only an estimate.

Total (excluding real property costs):  $18,700 to $23,500

Total Initial Investment (excluding real property costs):  $513,159 to $532,814

• This is an estimate of your initial start-up expenses for the 1st 3 months, but does not include (i) real property costs, (ii) royalty fee or advertising fee payments, which are based on your Net Sales, or (iii) your draw or payment of expenses on your behalf.

• These figures are estimates only and are based on the franchisor’s experience, its president’s 14 years of experience with its predecessors, and its projections for buildout costs for the coming year.

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