This post was updated on November 1, 2017 to reflect information from Bruegger’s Bagels’ 2017 FDD (Item 7).
Detailed Estimates of Bruegger’s Bagels Franchise Costs Based on Item 7 (Estimated Initial Investment) of Bruegger’s Bagels’ 2017 Franchise Disclosure Document
- The estimated costs for a Franchised Bakery are based on open shop bidding practices with no premium built in for the cost of union labor.
1. Initial Franchise Fee: $30,000 less development fee credit, if applicable
2. Real Property: Variable
- The franchisor expects that you will lease a location for the Franchised Bakery, which will vary in size between 2,100 to 2,700 square feet, generally for a facility located in a suburban mall, strip center, or mixed use development. The franchisor will consider on a case-by-case basis a franchisee’s request 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 Franchised 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 or architectural preservation). 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 needed for a Franchised Bakery, including food service equipment and smallwares.
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: $24,000 to $42,000
- This estimate for the BagelNet System includes the technology solutions situated at a Bakery, solutions that are hosted remotely and accessed via Internet by a Bakery, and the installation and setup costs of the BagelNet System.
9. Start-Up Inventory and Supplies: $10,000 to $14,000
- This estimate is for inventory and supplies in quantities typically sufficient for the first week of operation of a Franchised Bakery.
10. Grand Opening Advertising: $10,000 to $15,000
- You must conduct a Grand Opening of your Bakery 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.
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.
12. Utility Deposits and 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. Legal and Accounting: $5,000 to $30,000
- The franchisor strongly recommends that you engage the services of an attorney and/or accountant to assist you in evaluating the franchise offering. You may also wish to use an attorney to assist you in lease negotiations and/or to form an entity to own the franchise. This is the estimated cost of basic legal and accounting services.
14. Training: $6,000 to $12,000
- Within 120 days before your first Bakery opens for business, you (or your approved Operator), your manager, and your baker must complete the franchisor’s management training program to its satisfaction.
- This is an estimate of the cost of your and your trainees’ lodging, meals, travel expenses, wages, and uniforms.
15. 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.
- 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 during the initial period.
- The franchisor relied on the experience of company-owned Bakeries in formulating the estimate of additional funds.
16. Total (Excluding Real Estate): $663,800 to $1,170,900