Franchise Costs: Detailed Estimates of Cheba Hut Franchise Costs (2021 FDD)

Updated August 17, 2021.

Detailed Estimates of Cheba Hut Franchise Costs Based on Item 7 (Estimated Initial Investment) of Cheba Hut’s 2021 Franchise Disclosure Document

1.  Initial Franchise Fee:  $40,000

• The Initial Franchise Fee is $40,000 for the purchase of a single Cheba Hut Business.

• If you purchase a Multi-3 Franchise, the only additional initial cost that you will incur over the purchase of a single franchise will be the increase in Initial Franchise Fee until you open the additional Cheba Hut Businesses.

• The Initial Franchise Fee for a Multi-3 Franchise is $85,000 and allows you to open up to three Cheba Hut Businesses. Once you open additional Cheba Hut Businesses, you will incur the costs listed in this Item 7 (except for the Initial Franchise Fee) at the time you open the additional Cheba Hut Businesses.

2.  RECON Assistance Fee:  $15,000

• The RECON Assistance Fee is $15,000 for the first Cheba Hut Business that you purchase. If you have purchased a Multi-3 Franchise, the RECON Assistance Fee for the second and third Cheba Hut Business opened under the Multi-Franchise Addendum will be $10,000.

3.  Leasehold Improvements:  $250,000 to $500,000

• This estimate does not include any construction allowances that may be offered by your landlord. This estimate includes setup expenses you will incur in building out your location, including all costs required to set up the equipment.

• Building and construction costs will vary depending upon the condition and size of the premises for your Restaurant and local construction costs.

4.  Furniture, Fixtures, Decor, and Equipment:  $140,000 to $170,000

• This estimate involves the furniture, fixtures, and equipment you will need to open a Cheba Hut Business, such as chairs, tables, casework, refrigerators, freezers, toasters, exhaust hood, and other items.

• Some of these expenses will depend on the Cheba Hut Business size, shipping distances, supplier chosen, and your credit history.

• You must purchase certain décor pieces from Cheba Hut and it estimates that your cost for these items will be between $420 and $1,000.

5.  Point-of-Sale Systems and Other Equipment:  $8,200 to $10,200

• This includes the cost of the computer hardware that will serve as your point-of-sale system, as well as installation from Cheba Hut’s approved supplier.

6.  Pre-Open Technology Fee:  $1,200 to $1,800

• The low estimate assumes you open within 12 months and the high estimate assumes you open within 180 days following the end of the first year with extensions.

7.  Opening Team Expenses:  $0 to $6,000

• If Cheba Hut determines that the Opening Team must include more than three representatives or that the Opening Team must be present at the Cheba Hut Business for more than 14 days, you will reimburse Cheba Hut for the travel expenses and the salaries and benefits attributable to the extra representatives and/or extra days.

• Cheba Hut estimates these additional expenses to be between $2,000 and $6,000.

8.  Training Expenses:  $15,000 to $18,000

• Cheba Hut provides training at its training center in Fort Collins, Colorado or at another location designated by it. You must pay for airfare, meals, transportation costs, lodging, and incidental expenses for all initial training program attendees.

• Initial training is provided at no charge for up to three people, one of which must be a principal owner; if additional initial training is required, or more people must be trained, an additional fee will be assessed.

• You are required to attend Cheba Hut’s two-and-a-half day “Culture Daze” training within 45 days of signing your Franchise Agreement. You must pay for airfare, meals, transportation costs, lodging, and incidental expenses for all Culture Daze program attendees.

• If you do not attend the Culture Daze training, you will be in default of your Franchise Agreement, which could result in the termination of your Franchise Agreement.

9.  Architectural and Engineering Fees:  $15,000 to $22,000

• This fee is paid directly to the approved supplier for floor plans, construction drawings, and oversight and ensures the uniform fit, finish, and function of the location.

10.  Site Survey Fee:  $2,000 to $3,500

11.  Signs:  $6,500 to $20,000

• This estimate is for a single exterior sign. These estimates assume you purchase your exterior signage.

• The type and size of the signage you install will be based upon the zoning and property use requirements and restrictions. There could be an occasion where certain signage is not permitted because of zoning or use restrictions.

12.  3-Months’ Lease Payments:  $16,500 to $30,000

• Your actual rent payments may vary depending upon your location and your market’s retail lease rates. Restaurants will typically be 2,000 square feet to 2,600 square feet in size. Restaurants are typically located in free standing outlets, shopping malls, and strip malls.

• If you purchase instead of lease the premises for your Restaurant, then the purchase price, down payment, interest rates, and other financing terms will determine your monthly mortgage payments.

13.  Miscellaneous:  $14,000 to $20,000

• These fees include such items as security, utility and license deposits, feasibility studies, impact fees, insurance premiums for three months, and professional services such as attorneys and accountants.

• You should check with the local agency that issues building permits to determine what impact, connection, or other site development fees might be required for the specific site for your Cheba Hut Business.

14.  First Party:  $3,500

• You must host a one-day grand opening celebration “First Party” at your Cheba Hut Business within 60 days of opening, and spend a minimum of $2,500 on the First Party.

• Cheba Hut will provide advertising and promotional materials for the First Party.

15.  Additional Funds – 3 Months:  $45,000 to $60,000

• These amounts represent Cheba Hut’s estimate of the amount needed to cover your expenses for the initial three-month start-up phase of your Cheba Hut Business. They include payroll, uniforms, administrative, janitorial, maintenance, utilities, and other items.

• These figures do not include standard pre-opening expenses, Royalties or advertising fees payable under the Franchise Agreement, or debt service, and assume that none of your expenses are offset by any sales generated during the start-up phase.

16.  Initial Inventory – Food & Bar:  $6,000 to $10,000

17.  Professional Fees:  $5,000 to $10,000

18.  Liquor License:  $2,000 to $10,000

• These amounts are the estimated cost of obtaining a license or permit from a state agency to sell alcoholic beverages at your Cheba Hut Business, but not the price to purchase a liquor license from an existing licensee in states that permit that practice. In some cities/markets, it may be necessary to purchase a liquor license.

• In Cheba Hut’s experience to date, the cost to obtain a liquor license will vary substantially, depending on the city and state in which the Premises is located and the variety of liquor types being sold.

19.  Total:  $584,900 to $950,000