This post was updated on January 25, 2016 to reflect information from Lenny’s Sub Shop’s 2016 FDD (Item 7).
Detailed Estimates of Lenny’s Sub Shop Franchise Costs Based on Item 7 (Estimated Initial Investment) of Lenny’s Sub Shop’s 2016 Franchise Disclosure Document
1. Initial Franchise Fee: $20,000 to $25,000
- The Initial Franchise Fee is non-refundable and earned upon receipt. The Initial Franchise Fee is collected by and payable to the franchisor.
2. POS System and Related Equipment: $11,715 to $14,775
3. Training: $1,500 to $8,000
- You must arrange transportation and pay the expenses for meals and lodging for any persons attending the initial training program.
- This estimate contemplates attendance for approximately five weeks (one week at the franchisor’s headquarters in Memphis, and four weeks at a training store location near you if possible) by 2-3 people traveling to the franchisor’s headquarters or other location that it designates.
4. Pre-Opening and Opening Marketing (over 2 months): $10,000
5. Insurance: $1,000 to $3,000
- You are required to procure the required insurance policies with their respective minimum limits of coverage.
- Your insurance carrier may not require prepayment of the entire year’s premium but will probably require prepayment of at least the first quarterly or semi-annual premium, which will likely be in the range of $1,000 to $3,000.
6. Security Deposit: $0 to $9,000
- The typical Restaurant will require approximately 1,800 to 2,200 square feet. Preferred locations for Restaurants are highly-visibility locations on main thoroughfares, near offices, large businesses, and hotels.
- This figure includes the payment of a security deposit of up to one month’s rent.
7. Leasehold Improvements: $60,000 to $149,500
- The estimates include the cost of reasonable renovation or leasehold improvements to a location that is considered “vanilla shell.”
- These figures account for a possible landlord contribution toward leasehold improvements.
- Payments for leasehold improvements are generally non-refundable.
- The range shown is for all Lenny’s Sub Shops constructed in 2014 to 2015. The average cost for leasehold improvements for the Restaurants constructed in 2014 to 2015 was $125,000.
8. Furniture, Fixtures, Equipment, and Smallwares: $40,000 to $98,000
- You must purchase furniture, equipment, fixtures, millwork, and smallwares for the operation of the Restaurant as specified in the Manual.
- You must purchase or lease approved brands and models of fixtures from approved suppliers.
- The primary difference between the low and high estimates is based upon (a) the cost of purchasing used equipment versus new equipment; (b) additional Restaurant seating in larger Restaurants; and (c) equipment, like walk-in freezers, for Restaurants with higher volume.
9. Lease to Key Program Fee: $12,000
- You must use the franchisor’s approved supplier(s) to oversee the design and construction of your Restaurant.
10. Professional Fees: $7,000 to $13,500
- In addition to the Lease Key Program fee, you are responsible for payment of the architectural and engineering fees incurred to prepare the plans for your Restaurant as well as any fees required for submission of permits to applicable governmental authorities.
- In addition, restaurant development costs may be incurred for site surveys, engineering, architectural, design, permit expediting, and real estate, legal, accounting, and other professional services.
11. Signage: $7,500 to $16,000
- You must procure, maintain, and display signs that are approved by the franchisor. Signage can include interior signs, exterior signs, drive thru menu board if applicable, and awnings that bear the Marks.
12. Opening Inventory: $5,000 to $8,000
13. Additional Funds – 3 Months: $6,000 to $9,000
- The franchisor projects that the additional funds estimate should be sufficient to cover a reasonable short-fall in operating expenses, including inventory purchases, payroll costs, rent and any applicable operating expenses and utility expenses, for the first three months of operation.
- These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses in starting the business.
14. Contingency/Other Soft Costs: $7,000 to $11,000
- This category includes miscellaneous costs that may be necessary to begin operation of the Restaurant. These may include, among others, cost of employee uniforms, miscellaneous office supplies, meter fees, utility deposits, security deposits, licensing fees, other prepaid expenses, and other non-budgeted expenses.
15. Total: $188,715 to $386,775