Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Black Bear Diner Franchise Costs (2016 FDD)

by Franchise Chatter on January 19, 2016

in Breakfast Franchise, Diner Franchise, Franchise Costs, Lunch Restaurant Franchise

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Black Bear Diner Modesto

This post was updated on February 22, 2017 to reflect information from Black Bear Diner’s 2016 FDD (Item 7).

Detailed Estimates of Black Bear Diner Franchise Costs Based on Item 7 (Estimated Initial Investment) of Black Bear Diner’s 2016 Franchise Disclosure Document

1.  Franchise Fee:  $24,000 to $55,000

  • If you and the franchisor entered into an Option Agreement, the franchisor will credit the Option Fee you paid towards the Franchise Fee and it expects that your initial investment will be the same as stated below.

2.  First Month’s Rent:  $7,000 to $20,000

  • You must provide a suitable site from which to operate your Franchised Restaurant. Normally, a site is obtained on a leasehold basis. This is based on one month’s rent for a space of approximately 3,500 to 6,000 square feet.
  • There may be other lease acquisition costs such as prepaid rent and security deposits. It is extremely difficult to estimate lease costs because of the wide variation in costs between locations.

3.  Security Deposits:  $7,500 to $23,000

  • Security deposits generally are required by the utility companies, the landlord, and any equipment lessors you may elect to use. Amounts will vary depending on the requirements under the various leases, utilities’ policies, and your credit rating.
  • Included is one month’s rent for a security deposit in connection with your lease and utilities.

4.  Leasehold Improvements:  $200,000 to $400,000

  • The franchisor recommends that you convert an existing structure or former restaurant premises into use as a Black Bear Diner restaurant. The structure must be renovated according to the franchisor’s standards and specifications for furnishings and decor.
  • Your costs will most likely be significantly higher if you elect new construction.

5.  Furniture, Fixtures, and Equipment:  $50,000 to $350,000

  • You must buy or lease certain equipment and related services including serving equipment, a cash register/point-of-sale system, point-of-sale materials, a digital jukebox for use as a sound system, miscellaneous small wares, and signage.
  • The Franchised Restaurant’s equipment package will depend on the presence of existing food service facilities, square footage, and anticipated volumes.

6.  Kitchen Equipment:  $100,000 to $300,000

  • In addition to the equipment mentioned above, you must buy or lease certain kitchen equipment including an oven, fryer, refrigerator, and freezer. The franchisor will provide you with a detailed list of kitchen equipment for operating your Franchised Restaurant.

7.  Decor Package:  $10,000 to $15,000

  • In remodeling the site for your Franchised Restaurant, you will utilize a Decor Package, the cost of which will vary based on the square footage of the Franchised Restaurant and shipping costs.

8.  Carved Bear Package:  $10,000 to $15,000

  • In addition to the Decor Package as part of your remodeling of the site, you will purchase and utilize a Carved Bear Package, the cost of which will vary based on the square footage of the Franchised Restaurant and shipping distance.

9.  Initial Inventory – Food and Paper:  $14,000 to $20,000

  • You will need an initial inventory of food products, ingredients, and paper goods for the operation of the Franchised Restaurant. These costs will vary based upon the size and location of the Franchised Restaurant, suppliers, and anticipated volume.

10.  Initial Inventory – Gift Shop Products:  $2,000 to $5,000

  • You will be required to purchase the Gift Shop Products from approved suppliers. The cost will vary depending upon the size of your Franchised Restaurant, number of square feet devoted to the Bear Country Store, and anticipated sales volume.

11.  Insurance:  $5,000 to $15,000

  • The figures in the chart estimate your insurance costs during the first 3 months of operation. You might need to pay the entire annual premium in advance.
  • Also, costs may vary among underwriters depending on how long you have been in business, your financial condition, your risk history, and the Franchised Restaurant location.

12.  Signage:  $5,000 to $20,000

  • This range includes the cost of all signage used in identifying your Franchised Restaurant. The costs will vary based upon the overall size of the premises, the location of the Franchised Restaurant, and prevailing wage rates.

13.  Office Equipment and Supplies:  $1,800 to $2,200

  • You must purchase general office supplies including stationery and business cards along with typical office equipment. Factors that may affect this cost include local supplier charges and the specific items you select.

14.  Computer System:  $20,000 to $45,000

  • The franchisor requires you to utilize the Computer System which is described in greater detail in Item 11.

15.  Grand Opening Advertising:  $5,500 to $12,000

  • The franchisor recommends, but does not require, that you spend approximately $5,500 on grand opening advertising during the first 3 months of operation. You may choose to spend more or less.

16.  Training Expenses:  $20,000 to $35,000

  • The franchisor does not charge an additional fee for the initial training program. However, you are responsible for transportation and expenses for meals and lodging while attending training. The total cost will vary depending on the number of people attending, how far you travel, and the type of accommodations you choose.

17.  Licenses and Permits:  $1,000 to $5,000

  • These amounts will be incurred for costs such as pre-construction and operating licenses and permits. Your actual costs may vary from the estimates based on the requirements of local government agencies.

18.  Professional Fees:  $5,000 to $35,000

  • You may need to employ an architect, attorney, accountant, or other professionals to assist you in establishing your Franchised Restaurant.

19.  Additional Funds – 3 Months:  $40,000 to $100,000

  • The additional funds is an estimate to cover operating expenses, including employees’ salaries, for three months of operation.

20.  Total:  $527,800 to $1,457,200

  • In compiling this chart, the franchisor relied on its and its affiliates’ experience in operating other Black Bear Diner restaurants.

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