Franchise Costs: Detailed Estimates of Cheba Hut Franchise Costs (2019 FDD)

Updated October 2, 2019.

Detailed Estimates of Cheba Hut Franchise Costs Based on Item 7 (Estimated Initial Investment) of Cheba Hut’s 2019 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 $99,000 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.

• These costs may increase in the future depending on when you open the additional Cheba Hut Businesses.

2.  RECON Assistance Fee:  $15,000

3.  Leasehold Improvements:  $200,000 to $365,000

• 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:  $75,000 to $125,000

• This estimate involves the furniture, fixtures, and equipment you will need to open a Cheba Hut Business, such as chairs, tables, casework, refrigerators, freezers, grills, a range, deep fryer, 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 a custom spice rack and 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:  $8,500 to $10,000

• This includes the cost of the computer hardware that will serve as your point-of-sale system.

6.  Opening Team Expenses:  $0 to $3,000

• 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 $1,000 and $3,000.

7.  Training Expenses:  $2,500 to $7,500

• 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.

8.  Architectural and Engineering Fees:  $6,000 to $12,000

9.  Master Architect Fee:  $4,000

• 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:  $1,500 to $3,500

11.  Signs:  $7,500 to $12,500

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

• Your actual rent payments may vary depending upon your location and your market’s retail lease rates. Restaurants will typically be 1,800 square feet to 2,500 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:  $3,000 to $8,000

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

• You must host a one-day grand opening celebration (“Grand Opening Celebration”) at your Cheba Hut Business within 14 days of opening and spend a minimum of $2,500 on the Grand Opening Celebration.

• Cheba Hut will provide advertising and promotional materials for the Grand Opening Celebration.

15.  Additional Funds – 3 Months:  $30,000 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.  Total:  $404,500 to $687,500