Franchise Costs: Detailed Estimates of Great Steak Franchise Costs (2016 FDD)

This post was updated on September 20, 2016 to reflect information from Great Steak’s 2016 FDD (Item 7).

Detailed Estimates of Great Steak Franchise Costs Based on Item 7 (Estimated Initial Investment) of Great Steak’s 2016 Franchise Disclosure Document

For a Traditional Restaurant (located within a shopping mall, strip center, or similar venue)

1.  Initial Franchise Fee:  $14,000 to $30,000

• The Initial Franchise Fee for your first traditional Great Steak restaurant is $30,000. The Initial Franchise Fee is reduced for your second and each subsequent traditional restaurant is $17,500.

• If you are currently an active or active reserve member of the U.S. Armed Forces, have been honorably discharged from the U.S. Armed Forces, or are a 501(c)(3) organization, you will receive a 20% discount on the Initial Franchise Fee.

• The Initial Franchise Fee includes the training fee for two individuals.

2.  Lease Review Fee:  $0 to $1,250

• A $1,250 Lease Review Fee shall be paid by you to Kahala Franchising (the franchisor) upon your request to Kahala Management’s real estate department to review your lease and provide suggested changes to you. This is an optional service, with the determination of whether to utilize Kahala Management’s real estate department to be made in your sole discretion.

3.  Rent/Security Deposit (for 3 months):  $12,000 to $30,000

• If you decide to lease the premises, the landlord will generally require a security deposit, the amount of which generally ranges from one month of monthly rent to six months of monthly rent.

4.  Travel and Living Expenses (2 persons) while training, not including salaries, if any, for you and your employees:  $2,500 to $5,000

5.  Real Estate:  Amount Not Specified

• The minimum square footage needed to establish your Great Steak restaurant is 800 square feet for a traditional restaurant.

6.  Architectural Fees:  $5,000 to $12,000

• You must at your own cost and expense, use the franchisor’s designated and approved third-party design architect to prepare the initial design drawings for your Franchised Business.

7.  Leasehold Improvements:  $40,000 to $210,000

• The landlord may provide some leasehold improvements, but if not, they will be at your expense. The total amount of leasehold improvements for your Great Steak restaurant will vary greatly, depending on the type of premises for your restaurant (pad site with drive-thru on the high end versus modular kiosk or retrofitted existing restaurant on the low end), condition of the premises, and what improvements you require.

8.  Restaurant Equipment, Furniture, Small Wares, Interior Signage, and Menu Panels:  $40,000 to $140,000

• This amount includes estimated costs of furniture, furnishings, installations, equipment, trade fixtures, and certain other items on the restaurant premises, the amount and specific items of which will vary depending upon the location, size, and condition of a particular restaurant.

9.  Exterior Signage:  $9,000 to $12,000

10.  Computer Hardware, Software (POS System):  $2,700 to $12,000

11.  PCI Compliance Costs:  $150 to $1,300

12.  Opening Inventory (food and paper):  $2,500 to $7,000

• As with any retail business, you will purchase inventory continuously as long as you operate your Great Steak restaurant.

13.  Business Insurance:  $1,000 to $5,000

• Initial premiums for commercial general liability insurance are subject to change due to market forces beyond the franchisor’s or franchisee’s control. The cost of other coverages, including workers’ compensation and employer liability coverage and your discretionary purchases, varies widely.

14.  Miscellaneous Opening Costs:  $4,750 to $17,500

15.  Grand Opening:  $5,000 to $10,000

• You may be required, depending on the location of your Great Steak restaurant, to conduct a grand opening advertising campaign with the opening of your restaurant. You must pay all costs of the grand opening, including publicity costs and promotional costs, plus the full cost of any price reductions or other customer inducements.

16.  Depository Account:  $3,000

• At the time you sign the Franchise Agreement, you will set up a depository account of $3,000 with your local banking institution. You are required to maintain a balance of $3,000 in this account at all times.

17.  Additional Funds – 3 month initial period:  $5,000 to $15,000

• The range shown estimates your expenses during the first three months of operation. These expenses include payroll costs (excluding any wage or salary paid to you), other miscellaneous expenses, and working capital.

18.  Total:  $146,600 to $511,050

• These estimated ranges are based on the franchisor’s experience and information provided by franchisees.