Franchise Costs: Detailed Estimates of Cheba Hut Franchise Costs (2015 FDD)

Detailed Estimates of Cheba Hut Franchise Costs Based on Item 7 (Estimated Initial Investment) of Cheba Hut’s 2015 Franchise Disclosure Document

1.  Initial Fee:  $15,000 to $30,000

2.  Leasehold Improvements:  $50,000 to $150,000

• These figures represent the approximate cost to lease and remodel an existing building to a Cheba Hut Restaurant.

• Cheba Hut Restaurants are generally located in strip malls and require from 1,400 square feet to 2,400 square feet of floor space with seating for from 20 to 50 guests. The rental rate will generally be between $24 and $32 per square foot.

• You should consult real estate professionals to determine the prevailing rental rates in your market.

3.  Furniture, Fixtures, Decor, and Equipment:  $70,000 to $100,000

• This includes the costs for decor items and installation services that may be provided by Cheba Hut. Your furniture, fixtures, decor, and equipment may be financed through a bank or other financial institution, leased, or purchased outright.

4.  Point-of-Sale Systems and Other Computer and Communications Equipment:  $12,000 to $15,000

• This includes the cost of the computer hardware, peripherals, and software that will serve as your point-of-sale system, and the monthly license and maintenance fees for the support services provided by Cheba Hut’s supplier for the point-of-sale system for one year.

5.  Wages, Travel, and Living Expenses for You and Your Management Staff During Training:  $2,500 to $5,000

• You must pay for salaries and benefits, travel expenses, and other expenses while you and your management staff attend the training program.

• You do not have to pay for the initial training provided by Cheba Hut, but if Cheba Hut determines that the Opening Team must include more than three Cheba Hut representatives or that the Opening Team must be present at the Restaurant for more than seven 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 that these expenses will be from $1,000 to $3,000.

6.  Architectural and Engineering Fees:  $7,000 to $10,000

7.  Signs:  $3,500 to $8,500

8.  Restaurant Lease Payments – 3 Months:  $9,000 to $18,000

• The monthly rental for your Franchised Location may include common area maintenance fees and real estate taxes. The amount indicated also includes a one-month advanced rental payment, security deposit, and prepaid expenses.

9.  Miscellaneous:  $3,000 to $8,000

• Miscellaneous fees include such items as security, utility and license deposits, 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 Restaurant.

• Environment impact fees vary significantly for each location, and may range from 0.5% to 3% of the value of the land.

10.  Grand Opening Celebration:  $2,500 to $4,000

• You must spend a minimum of $2,500 on the grand opening celebration for your Restaurant.

11.  Additional Funds – 3 Months:  $30,000 to $60,000

• This figure estimates the funds needed to cover your expenditures for labor, supplies, food and beverage inventories, local advertising, monthly online ordering fees, utilities, and other miscellaneous operating costs.

• This estimate has not been offset by any allowance for your operating revenues during this three-month period.

• This estimate does not include the salaries for you or your Management Staff during training.

• If you do not open your Restaurant by the Required Opening Date, then you will have the right to request, in writing, one or more 30-day extension periods to open the Restaurant, not to exceed 90 days from the Required Opening Date in total.

12.  Total:  $204,500 to $408,500

• These figures are estimates only, and it is possible that you may have additional or greater expenses during this period. Your costs will vary depending on the size of your Cheba Hut Restaurant, your geographic area, economic and market conditions, competition, interest rates, wage rates, sales levels attained, and other economic factors.