This post was updated on November 2, 2016 to reflect information from Nestle Toll House Cafe by Chip’s 2016 FDD (Item 7).
Detailed Estimates of Nestle Toll House Cafe by Chip Franchise Costs Based on Item 7 (Estimated Initial Investment) of Nestle Toll House Cafe by Chip’s 2016 Franchise Disclosure Document
For In-Line Unit
- The amounts you pay are typically non-refundable. The franchisor does not finance any part of the initial investment.
1. Initial Franchise Fee: $15,000 to $30,000
- You must pay an initial franchise fee of $30,000 ($15,000 for a non-traditional venue) if you sign a Franchise Agreement to obtain a single Cafe or for the first Cafe under a Development Agreement.
- The initial franchise fee is non-refundable under the terms of the Franchise Agreement.
2. Buildout: $40,000 to $210,000
- You must adapt the franchisor’s prototypical plans and specifications for the construction and finish-out of the Cafe.
- These figures are the franchisor’s best estimate based on construction/finish-out rates and conditions in Dallas, Texas. These amounts may vary substantially based on local conditions, including the availability and prices of labor and materials. These costs may also vary depending on whether certain of these costs will be incurred by the landlord and allocated over the term of the lease.
3. Architectural Engineering: $3,000 to $11,000
- The architectural engineering fees will vary depending on location of the firm, location of the Cafe, number of final plans required, state and local regulations, and various other factors.
4. Project Manager Fees: $3,000 to $6,000
- The project manager fees will vary depending on location of the firm, location of the Cafe, state and local regulations, and various other factors.
5. Legal Fees: $1,500 to $3,000
- The legal fees will vary depending on the scope of work performed by your legal counsel. Legal fees also vary depending on the size and location of your legal counsel.
6. Lease Payments and Other Rental Expenses: $2,500 to $12,000
- The figures are for the first month’s rent and assume that the premises of the Cafe will be in a regional or super-regional mall, outlet center, lifestyle center, or shopping center, ranging from 400 to 1,700 square feet, and that no security deposit is required.
- Further, the figures assume base annual rental rates ranging from $20 to $150 per square foot. Landlords may also vary the base rental rate and charge rent based on a percentage of gross sales.
- In addition to base rent, the lease may require you to pay common area maintenance charges (“CAM charges”) for the mall or center, your pro rata share of the real estate taxes and insurance for the mall or center, and your pro rata share of HVAC and trash removal.
7. Equipment and Furniture: $30,000 to $95,000
- You must purchase certain equipment meeting the franchisor’s specifications to be used in the Cafe, including ice machine, refrigerator, walk-in cooler and freezer, oven, coffee brewer, espresso machine, ice cream display, work tables, shelving, and other items including smallwares.
- The franchisor has established relationships with equipment vendors for certain equipment used in the Cafe that meets the franchisor’s specifications. The franchisor does not require you to purchase from these vendors.
8. Signage: $13,000 to $20,000
- These amounts represent your cost for menu boards, menu panels, graphics, graphics hardware, neon logo, and descriptive signs. Each mall or center has different restrictions it places on interior and exterior signage that may affect your costs.
9. Initial Inventory: $4,000 to $9,000
- These amounts represent your initial inventory of food supplies, cups and paper goods, and gift cards for use in the first month of operating the franchise business.
10. Electronic Point-of-Sale System, Monitoring Software, and Required Hardware: $2,300 to $4,600
- Typically, you will use 2 terminals per Cafe; however, many locations use 3 terminals. The franchisor’s approved supplier will make available to you certain customized database configurations and upgrades specific for the Cafe to be loaded on to your system.
- This total also includes the various software and hardware necessary to complete back office reporting, polling, credit card and gift card transactions.
11. Phone and Internet Service: $350 to $500
- You must have a back office PC with Internet access and a fully integrated POS system with full Internet access. You must also have an all-in-one printer unit that scans, prints, copies, and faxes.
12. Travel, Lodging, and Meals for Initial Training: $1,900 to $2,700
- The franchisor provides initial training to your initial Operating Principal and General Manager at no charge. These estimates include only your out-of-pocket costs associated with the training of the Operating Principal and General Manager (including travel, room, and board).
- These amounts do not include any fees or expense for training any other personnel.
- Training is for an 11-day period.
13. Business Supplies (Stationery, Business Cards, Brochures, Presentation Folders, Paper, and Other Materials): $1,000 to $1,500
- You must purchase business cards, brochures, and other written materials for use in the franchise business. You will typically purchase amounts that may last as long as 6 months.
14. Business Licenses, Permits, Etc. (for first year): $250 to $1,500
- These are estimates of the costs for obtaining local business licenses that typically remain in effect for 1 year. These figures do not include occupancy and construction permits that were included in the leasehold improvement costs.
15. Insurance Deposits and Premiums (for first year): $1,500 to $3,500
- These figures are estimates of the costs of the annual premiums for the insurance you must obtain and maintain for the franchised business.
16. Opening Advertising: $5,000
- You must spend a minimum of $5,000 on opening advertising and promotion of your Cafe.
17. Additional Funds: $30,000 to $60,000
- These amounts are the franchisor’s estimate of the amount needed to cover your expenses for the start-up phase of your business, including: professional fees in connection with obtaining and establishing the franchise business; 2 months’ lease payments; the cost of 3 months’ advertising and promotional expenditures; 3 months’ payroll for a manager, 2 assistant managers, and 4 hourly employees; utilities and telephone service for 3 months; and other costs.
18. Total: $154,300 to $475,300
- The total estimated initial investment necessary to begin operation of a Nestle Toll House Cafe by Chip kiosk ranges from $151,750 to $299,400.
For Non-Baking Satellite Cart or Kiosk
- The total estimated initial investment necessary to begin operation of a Nestle Toll House Cafe by Chip non-baking satellite cart or kiosk ranges from $37,900 to $78,700.