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Franchise Costs: Detailed Estimates of Bruegger’s Bagels Franchise Costs (2016 FDD)

by Franchise Chatter on October 30, 2016

in Bagel Franchise, Franchise Costs

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Bruegger's Bagel Photo by Doogie51

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

1.  Initial Franchise Fee:  $30,000 less development fee credit, if applicable

  • This estimate reflects the franchise fee for your first Bakery.
  • The franchisor will credit $10,000 of the development fee toward the initial franchise fee for each of the first three Bakeries that you open under the terms of the Development Agreement. The franchisor will credit $5,000 of the development fee toward the initial franchisee fee of each Bakery in excess of three that you open under the terms of the Development Agreement.
  • The initial franchise fee is payable at the time you execute the Franchise Agreement, less the development fee credit noted above.

2.  Real Property:  Variable

  • A typical Bakery is a 2,100-2,700 square foot facility located in a suburban mall, strip center, or mixed use development, however the franchisor will consider on a case-by-case basis a franchisee’s request to build a non-traditional cafe or to convert an existing facility to a Bakery, as well as sites that may be larger or smaller than the prototype, provided that the site can be transformed to meet the standards and specifications of the System.
  • The cost of purchasing or leasing and developing a suitable site varies widely depending on the size, type, and location of the Bakery and the local real estate market.

3.  Design and Permitting Fees:  $36,000 to $79,000

  • This range is representative of architectural design fees and building permit cost only and is only an average estimate.
  • Additional construction fees, such as tap/pro-rata fees, the costs of which are distributed to participants based on the authority of each city for items such as water and sewer usage fees, meter fees, environmental impact fees, electrical service fees, utility deposit fees, etc., are not included. These costs vary too widely to provide an accurate range. You should contact your state and local governmental agencies to inquire as to the amount and requirements of these items.
  • This range applies only to the average locality; however, some areas operate under a quota system for permits and the costs associated with obtaining a license in these areas can be extremely expensive and time consuming.
  • Other permits may be required before you may open your Bakery.

4.  Building and Leasehold Improvements:  $278,000 to $508,000

  • The estimate is for a typical Bakery developed in a suburban shopping center with the premises delivered in “vanilla box” condition (that is, primed drywall ready to be painted, but without improvements).
  • Typical improvements required include floor covering, wall covering, electrical modifications, partitions, installation of heating and cooling systems, painting, and lighting and other components typical of the franchisor’s trade dress.
  • For your first two Bakeries, you must engage a qualified architect from the franchisor’s approved list to prepare preliminary and final architectural and engineering drawings and specifications for the Bakery consistent with the representative plans for a Bakery.
  • For your first two Bakeries, the franchisor also requires that you retain the services of a professional construction manager.
  • In addition, for your first two Bakeries, you must use a General Contractor, Equipment and Material Provider from the franchisor’s approved list, or receive written approval, in the case of your General Contractor, from the franchisor.
  • If the franchisee should wish to utilize the services of a vendor not on the approved list, a fee of $10,000 will be required for the review and approval process of the alternate vendor.
  • No changes to the Equipment or Material vendors will be permitted for your first two Bakeries. After your second Bakery is built and operational, you can choose your own Architect and General Contractor, but the franchisor must approve the floor plan layout and the final drawings and specifications before you begin the permitting process.
  • Your lessor may offer, or you may be able to negotiate, a tenant improvement allowance to reduce your cost of site improvements, but the estimate does not include any such allowance.
  • Costs are likely to vary and be much higher if you wish to establish your Bakery in an area or building where special requirements of any kind will apply (such as historical, architectural, or preservations). Costs are likely to vary and be much higher in urban settings or where the lessor provides a building in as-is condition.

5.  Signage:  $21,000 to $103,000

  • This estimate includes both exterior and interior signage. Also included in the signage estimate are the costs for exterior awnings. The cost varies depending on the size and location of the signs and awnings.

6.  Furniture, Fixtures, and Equipment:  $222,800 to $272,900

  • This estimate includes the equipment typically situated at a Bakery such as food service equipment, furniture, and smallwares. This estimate includes the costs for site preparation and site improvements.

7.  Site Work:  $0 to $10,000

  • This estimate includes the costs for site preparation and site improvements. These costs may vary greatly depending on the condition of the land, environmental factors, and whether or not you will buy or lease the site.

8.  BagelNet System Front of the House (POS Hardware, Software, and Installation) and Back Office Hardware, Software, and Installation:  $16,200 to $41,100

  • The estimate includes the equipment typically situated at a Bakery, and installation costs. You must use the BagelNet System in each Bakery including all electronic hardware and software.

9.  Start-Up Inventory and Supplies:  $10,000 to $14,000

  • This estimate is for inventory and supplies in quantities typically sufficient for your first week of operations. You will obtain your dough, cream cheese, and other products from an approved vendor.

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

  • You must conduct a Grand Opening within 180 days of opening, in accordance with the franchisor’s prescribed Grand Opening marketing plan. The franchisor reserves the right to require you to deposit with it the funds required for the Grand Opening, to distribute as necessary to conduct the Grand Opening marketing plan.
  • You may have additional expenses for promotional materials.
  • The required Grand Opening expenditure is currently $10,000 to $15,000 for new or developing markets. This expenditure is in addition to the local advertising requirement of 1.75% of Gross Sales.

11.  Insurance:  $3,000 to $5,000

  • This estimate is for the first year’s premiums for insurance meeting the franchisor’s current requirements.
  • Insurance costs will vary depending upon the size and location of the Bakery, your claims history, and other factors.
  • The franchisor currently requires general liability insurance with minimum limits of $2 million per claim and an umbrella policy with minimum limits of $5 million.

12.  Utility Deposits/Licenses:  $3,000 to $5,000

  • Some utility companies may require you to provide deposits or pay installation charges for utility services, including electrical, gas, water, sanitation, and telephones service. Local, municipal, county, and state regulation may require that you obtain licenses and permits to operate your Bakery.

13.  Training:  $6,000 to $12,000

  • You must designate a manager and at least one baker for the Bakery. Within 120 days before your first Bakery opens for business, you (or your approved Operator), your manager, and your baker must complete the training program at the franchisor’s training facilities.
  • The franchisor currently does not charge for training materials, although it may do so in the future. This is an estimate of the cost of your and your trainees’ lodging, meals, travel expenses, wages, and uniforms (white oxford shirt, dark or khaki pants).

14.  Additional Funds for 3 Months:  $15,000 to $45,000

  • This is an estimate of the additional funds you will need during the initial period of operation, which the franchisor defines as three months from the opening of the Bakery. The estimate does not include royalties, NMF (National Marketing Fund) contributions, or any compensation that you may choose to pay yourself.
  • The franchisor relied on the experience of Company-owned Bakeries in making the estimates in this category. These figures are estimates; the franchisor cannot guarantee that you will not have additional expenses starting the business.
  • You actual costs will depend on many factors, including how closely you follow the franchisor’s methods and procedures; your management skill, experience, and business acumen; local economic conditions; the local market for the company’s product; the prevailing wage rate; competition; and the sales level reached.

15.  Total (Excluding Real Estate):  $651,000 to $1,140,000

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