Franchise Costs: Detailed Estimates of Pokéworks Franchise Costs (2019 FDD)

Updated October 7, 2019.

Detailed Estimates of Pokéworks Franchise Costs Based on Item 7 (Estimated Initial Investment) of Pokéworks’ 2019 Franchise Disclosure Document

1.  Initial Franchise Fee:  $35,000

• You must pay the Initial Franchise Fee when the Franchise Agreement is signed. The Initial Franchise Fee is deemed fully earned by Pokéworks upon receipt and is not refundable under any circumstances.

2.  Architectural Designs and Permits:  $25,000 to $35,000

• These estimated expenses include engineering drawings and architectural design layout drawings that may be purchased from an engineering firm, your landlord, or an architect. You must pay a fee for these services.

3.  Construction and Remodeling:  $80,000 to $310,000

• These estimated expenses are based on the cost to build out a Pokéworks Restaurant consisting of 500 to 2,000 square feet in an established metropolitan or suburban area within a street retail, shopping mall, plaza, or mixed use indoor or outdoor establishment.

• The costs to complete the construction and remodeling of the premises for your Pokéworks Restaurant will vary widely and may be significantly higher than projected in this table, depending on such factors as the city or town in which you propose to operate, property location, population density, economic climate, prevailing interest rates and other financing costs, the conditions of the property, current building code requirements, implementation and enforcement of the ADA in your jurisdiction, and the extent of alterations required for the property.

• You should investigate all of these costs in the area where you wish to establish your Pokéworks Restaurant. The estimates do not include exterior renovations to your Pokéworks Restaurant.

4.  Initial Lease Deposit:  $5,000 to $30,000

• You will typically be required to pay two to three months’ rent as a security deposit. Landlords who own real property in high traffic areas could potentially require you to pay six months’ rent as a security deposit.

• Pokéworks assumes that even a free standing building may be rented, possibly on a build-to-suit basis. The cost of construction for a free standing building is not estimated in this Item.

5.  Furnishings:  $10,000 to $30,000

• This estimated amount involves costs associated with various furnishings including, but not limited to, front of house tables, front of house chairs, 15’ counter, condiment cabinet, and stainless steel worktops.

6.  Fixtures:  $30,000 to $60,000

• This estimated amount involves costs associated with various fixtures including, but not limited to, ADA restroom fixtures, pendant light fixtures, track light fixtures, hot water boiler, grease trap, three-compartment sink, two-compartment sink, and a mop sink.

7.  Equipment:  $35,000 to $70,000

• This estimated amount involves costs associated with various pieces of equipment including, but not limited to, reach-in refrigeration (single or double door), rice cooker/warmer(s), ice maker, beverage dispenser, salad bar, cold wells, sushi maki machine, closed system counter top fryer, induction cooker, and miso soup dispenser.

8.  Business Licenses and Permits:  $1,000 to $4,000

• This estimated amount will vary depending on the municipality in which the project is located.

9.  Inventory:  $5,000 to $10,000

• This estimated amount involves the costs associated with establishing an opening inventory of fresh seafood; frozen seafood; fresh produce and fruits; Japanese specialty spices, oils, and seasoning; rice; grains; and paper and plastic packaging goods.

• Fresh foodstuffs must be rotated and discarded after their freshness period or when spoilage occurs.

10.  Signs:  $5,000 to $20,000

• This includes window graphics and design, and interior and exterior signage.

11.  Pre-Opening Marketing:  $7,500 to $10,000

• These costs are incurred for your grand opening marketing campaign.

• The promotional campaign will differ by location and may include printing and distribution of promotional coupons, newspaper advertisements, and charitable donations.

• The cost of promotional food items is not included in this estimate, and you will incur additional costs in the preparation and distribution of sample food items at your grand opening event.

12.  Insurance:  $500 to $3,000

• A 20% down payment of the annual premium for general business insurance and workers’ compensation insurance is included in the low-end estimate, while the expense of the full annual premium is included in the high estimate.

13.  Computer and POS System:  $3,000 to $5,000

• These costs relate to the purchase of specified computer hardware and software for your point-of-sale (“POS”) system and the personal computer you must use in the operation of your Pokéworks Restaurant.

• Technology standards and specifications are set forth in the Operations Manual.

14.  Employee Wages:  $3,000 to $10,000

• Employee wages comprise a significant component of the costs of operating a franchise outlet and are influenced by factors such as the amount of time invested in a franchise outlet by the franchisee, the level of sales at the Pokéworks Restaurant, the number of hours a franchised business is open, the average number of staff required, and market rates for labor in your area.

• Pokéworks has not included the cost of payroll and other taxes in this estimate.

15.  Legal and Accounting Fees:  $1,000 to $4,000

16.  Additional Funds (First Three Months):  $25,000 to $70,000

• This is the amount of additional funding that Pokéworks estimates you may need at and after store opening to cover various expenses during your first three months of operation.

• The amount you will need varies depending upon your circumstances and financing requirements imposed by your bank.

• The range is based on anticipated working capital required for the first three months including such items as food and beverage costs, supplies, utilities, ordinary maintenance, and other operating expenses.

• Because this range is only an estimate, you should consult with your independent advisors to develop your own business plan that includes a cash flow chart in order to ensure that you have the amount necessary to cover any cash short fall in the initial months of operation.

• In compiling these estimates, Pokéworks relied on the experience of certain officers of Pokéworks in the restaurant industry, which includes experience with other concepts and the development of its parent’s company-owned restaurants.

17.  Training Expenses:  $2,000 to $5,000

• Up to 2 individuals including the Designated Manager are eligible to participate in Pokéworks’ initial training program without paying any tuition or fee.

• You will be responsible for any and all travel and living expenses incurred in connection with attending the training program as well as compensation, benefits, insurance, and other payroll related expenses of the person(s) receiving or undergoing training.

• If any additional personnel are to be trained, a fee of $500 per additional week, per individual will be payable at the start of training.

18.  Total:  $273,000 to $711,000