Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Hot Dog on a Stick Franchise Costs (2016 FDD)

by Franchise Chatter on January 23, 2016

in Franchise Costs, Hot Dog Franchise

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Hot Dog on a Stick 3

This post was updated on July 7, 2016 to reflect information from Hot Dog on a Stick’s 2016 FDD (Item 7).

Detailed Estimates of Hot Dog on a Stick Franchise Costs Based on Item 7 (Estimated Initial Investment) of Hot Dog on a Stick’s 2016 Franchise Disclosure Document

1.  Franchise Fee:  $15,000 to $30,000

2.  Grand Opening Marketing:  $3,000 to $6,000

  • You must spend the required grand opening marketing and promotion amounts in the 2 weeks before opening your Store and the 6 weeks after opening the Store. Your cost may be higher based on the length of time you wish to run opening promotions.
  • If the franchisor collects this fee (rather than having you spend this amount directly with third party suppliers), the franchisor will either 1.) reimburse you for your documented grand opening marketing expenditures that it has pre-approved, up to the $3,000; or 2.) directly pay your vendors for your grand opening marketing expenditures that it has pre-approved, up to the $3,000.

3.  Travel and Living Expenses While Training:  $2,000 to $8,000

  • This estimate is for the cost of attending initial training in Atlanta, Georgia or any other venue the franchisor designates.
  • The franchisor provides instructors, facilities, and materials for the initial training program at no charge. You must pay the travel and living expenses, wages, and other expenses your trainees incur during initial training.
  • The actual cost will depend on your point of origin, method of travel, class of accommodations, and dining choices.

4.  Initial Inventory (food items, including Party Batter):  $5,000 to $10,000

  • You must have a supply of flavorings, garnishments, food and beverage products, small kitchen wares, cleaning supplies, paper and packaging supplies, beverage cups and lids, report forms, gift cards, and marketing and point-of-sale materials during your operation of the Franchise.
  • You may buy these items from the franchisor, its affiliates, or various other vendors or suppliers.
  • The initial cost of the gift card program ranges from $100 to $300.

5.  Other Opening Inventory:  $1,200 to $2,500

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

  • You must employ and pay an architect or engineer to prepare a site plan and other construction documents. Although the franchisor provides you with prototypical plans and specifications at no additional cost to you, you must pay an architect or engineer to adapt these plans and specifications to city, state, and local building codes and to the specific site chosen for your Store.

7.  Equipment, Furniture, Fixtures, and Decor:  $110,000 to $175,000

  • These estimates include the estimated costs for necessary trade fixtures, such as display cases, counters and work tables, equipment such as ovens, refrigerators, beverage dispensers, coffee preparation and dispensing equipment, and small wares.

8.  Signs:  $5,000 to $7,000

9.  Prepaid Rent and Security Deposit:  $2,500 to $5,000

  • Typical locations are in enclosed shopping malls, but may also be located in other shopping centers, transportation centers, or entertainment venues.
  • A typical Traditional Store requires between 600 and 1,200 square feet of space. A typical modular, prefabricated Non-Traditional Store will use between 400 and 800 square feet of space.
  • You may be required to pay a security deposit under your real estate lease. Your lease also may require you to pay the last month’s rent in advance.
  • The estimate includes one month of rent, and is based on a combination of square footage and location.

10.  Leasehold Improvements:  $150,000 to $250,000

  • These estimates include construction costs (labor and material) for typical tenant improvements and remodeling necessary to prepare a site for operation of a Store. The estimates also include construction management costs, general conditions, builders’ risk/liability insurance, and financing costs.

11.  Utility Deposits:  $500 to $1,500

  • Deposits for utility services are typically required at the time the service is applied for, and may or may not be refundable.

12.  Professional Fees:  $1,000 to $5,000

  • The franchisor may require that you engage an attorney to review your lease or purchase agreement for the accepted site and supply the franchisor with reasonable documentation of this review, including a lease abstract.
  • The estimates in this chart are based on professional fees in the state of Georgia.
  • The franchisor also may require you to engage a professional accountant during the first 12 months of your Store’s operation.

13.  Computer System:  $2,500 to $5,000

  • This estimate includes the cost of purchasing the required computer hardware, software, inventory control system, and point of purchase system from approved suppliers. You also must provide the Internet connections that the franchisor specifies.

14.  Business Licenses, Permits, Etc. (for first 6 months):  $1,000 to $2,500

  • You must maintain all required licenses and permits necessary to build and operate your Store.

15.  Insurance (3 months):  $2,500 to $3,500

  • The franchisor requires you to obtain and keep in force certain insurance coverages on a primary non-contributory basis, with the franchisor and its affiliates named as additional insured on each policy.
  • The table contains the estimated cost of required insurance premiums for a 3-month start-up period; however, the cost of insurance varies.

16.  Additional Funds (3 months):  $30,000 to $40,000

  • This amount represents the range of your initial start-up expenses over the first 3 months of operation. These figures include estimated payroll costs. However, they do not include the salary for a Store manager on the assumption that you will manage the Store.
  • These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses starting your business.

17.  Total:  $338,200 to $561,000

  • The total amount is based on the franchisor’s and its predecessors’ market research and experience opening and operating similar stores.

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