Franchise Costs: Detailed Estimates of Churroholic Franchise Costs (2018 FDD)

Detailed Estimates of Churroholic Franchise Costs Based on Item 7 (Estimated Initial Investment) of Churroholic’s 2018 Franchise Disclosure Document

1.  Initial Franchise Fee:  $40,000

• Churroholic will reduce the Initial Franchise Fee to $30,000 for your second Restaurant and to $20,000 for each subsequent Restaurant after the second one.

2.  Grand Opening Contribution:  $7,500

3.  Store Opening Fee:  $15,000

• Churroholic will reduce your Store Opening Fee to $10,000 for your second and each subsequent Restaurant.

4.  Rent (3 months):  $18,000 to $30,000

• The Restaurant’s location (the “Site”) typically will be located at a Site located within a regional or lifestyle mall or strip/shopping center that is close to retail or other commercial area. These estimates assume that the Restaurant is located in a retail shopping center or mall.

• The average size of a Restaurant is approximately 1,200 to 1,500 square feet. Churroholic estimates that the rental range would be approximately $5 to $12.50 per square foot plus Triple Net charges.

• The initial investment assumes you will rent. If you purchase the premises, your initial expenses will dramatically increase.

5.  Lease, Utility, and Security Deposits:  $15,000 to $25,000

• The amount of the rent and security deposit will depend on the size, condition, and location of the Site and the demand for the Site among prospective lessees.

• Churroholic estimates that the security deposit will equal one month’s rent.

• Some Restaurants may also have to pay government imposed impact and permit fees depending on the site. They vary considerably due to numerous factors and Churroholic is unable to estimate them.

6.  Leasehold Improvements:  $180,000 to $250,000

• Build-out or renovation of your Site to conform to Churroholic’s standards will include paint, tile work, lighting, salt walls, drywall partitions, counters, and the like.

• The low estimate assumes that your Restaurant will be located in an existing restaurant space with certain equipment and infrastructure that can be repurposed to suit your needs.

• If you lease your Site, you may be able to negotiate an allowance to cover a portion of these build-out and leasehold improvements. A landlord allowance would reduce the estimated cost that you could expect to incur for leasehold improvements.

7.  Signage:  $5,000 to $15,000

• The cost of signage varies depending on the size and type of signs, the size and location of the Restaurant, and any local and development requirements.

• If local law permits, you must display a curb or marquee sign that complies with Churroholic’s specifications and standards. If Churroholic deems the signage that local ordinances allow as inadequate for its brand, it reserves the right to require you to seek variances to those ordinances as necessary.

8.  Furniture, Fixtures, and Equipment:  $75,000 to $100,000

• This Item may include tables and booths, sinks, refrigerators, ovens, ventilation systems, display cases, stools, chairs, utensils, a phone system, a security system, a CCTV system, a desk, filing cabinets, and related office supplies for a Restaurant.

• The low estimate assumes that your Restaurant will be located in an existing restaurant space with certain equipment and infrastructure that can be repurposed to suit your needs.

9.  Point-of-Sale Equipment and Computer:  $10,000 to $15,000

• Churroholic currently requires you to purchase the Clover Station Bundle POS System (the “POS System”), a personal computer, and printer.

• This estimate does not include any monthly service fees, but they could range from $200 to $500 per month.

• Churroholic may periodically modify its standards and specifications for POS and other computer hardware and software. You must comply with such changes, at your expense.

10.  Office Equipment and Supplies:  $2,000 to $5,000

• Includes expenses incurred to obtain business licenses and building permits.

11.  Business License and Permits:  $10,000 to $20,000

12.  Professional Fees:  $5,000 to $15,000

• This estimate is for the cost to employ an attorney, an accountant, and other consultants to assist you in establishing your Restaurant and reviewing the franchise documentation.

• These fees may vary from location to location depending upon the prevailing rate of attorneys’, accountants’, and consultants’ fees.

13.  Initial Inventory:  $10,000 to $20,000

• You must purchase an opening inventory of supplies, which includes smallwares, paper goods, and in-store retail merchandise as described in the Manual. The initial inventory also includes those products that you must purchase from Churroholic ranging from $8,000 to $16,000.

14.  Insurance Annual Premiums:  $5,000 to $10,000

• Churroholic is establishing the minimums but it urges you to consult with your own insurance carrier for high amounts or additional coverage.

15.  Training Expenses:  $5,000 to $10,000

• You are responsible for all compensation, travel, lodging, and living expenses which you and your trainees incur in connection with the initial training.

16.  Additional Funds:  $75,000 to $150,000

• This Item estimates your initial start-up expenses. This estimate includes payroll costs for your Restaurant staff.

• These figures are estimates, and Churroholic cannot guarantee that you will not have additional expenses starting the business.

17.  Total Estimated Initial Investment:  $477,500 to $727,500

• Churroholic relied on its president’s experience in the restaurant business to compile these estimates.