Detailed Estimates of Togo’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Togo’s 2019 Franchise Disclosure Document
1. Initial Franchise Fee: $15,000 to $30,000
- Togo’s standard initial franchise fee is $30,000.
2. Leasehold Improvements: $113,000 to $174,000
- Leasehold improvements costs vary considerably according to the size and condition of the premises, contractor costs, and the location of the Restaurant. The lower estimate assumes that you will be taking over the premises of a former sandwich restaurant. Your costs can be higher depending on the size of the site, competitive construction business climate, and jurisdictional building and code requirements.
- These estimates are based on Restaurants ranging in size from 1,200 square feet to 1,860 square feet.
- These estimates are based on Togo’s experience and information provided by construction managers and franchisees as a guide to budget costs.
3. Real Estate/Rental Deposit: $3,200 to $26,000
- Your rent expense will vary based on a number of factors including square footage, location, local real estate market values, terms under which other locations have been leased, how the costs to renovate or develop the land, building, and other site improvements are allocated between landlord and tenant, interest costs, and the negotiations of the parties, among others. Lease terms are individually negotiated and may vary materially from one location or transaction to another.
- A typical Togo’s Restaurant has approximately 1,200 to 1,800 square feet. The estimate given represents a security deposit equal to one month’s rent.
- Your initial investment may be significantly lower if Togo’s or your landlord develops the location, but in that case your annual rent will probably be higher.
- Commercial leases are typically “triple net” leases, requiring you to pay rent, all taxes, insurance, maintenance, repairs, common area maintenance costs, merchants association fees, and all other costs associated with the property. You may also have to pay percentage rent. You may also have to make an initial payment into an escrow fund to cover estimated real estate taxes.
- If you elect to buy land, rather than rent, the real estate costs will vary greatly depending on size, location, visibility, local real estate market values, and the type of ownership interest you are buying.
4. Equipment, Fixtures, and Furniture: $52,500 to $98,000
- This amount includes estimated costs of furniture, furnishings, installations, equipment, trade fixtures, smallwares, 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.
- Cost range includes tax and delivery estimated at 10%.
5. Signage: $2,600 to $11,000
- Signage includes both the interior and exterior signs. The cost of these signs will vary depending on the number, location, and size of the signs, and may also be impacted by any local city code restrictions.
6. Architectural Fees: $14,000 to $33,500
7. Point of Sale System: $8,500 to $15,000
- The price reflects the equipment configurations and solution costs for two point of sale systems.
8. Opening Inventory: $5,000 to $11,000
- Before opening a Togo’s Restaurant, you must purchase an initial inventory consisting of products from suppliers approved by Togo’s.
- The assortment and number of these items will be based upon the size and configuration of your Restaurant. The estimated cost for the opening inventory of these products varies for different locations, seasons, and the storage capacity of the Restaurant.
- Your initial inventory of merchandise and supplies needed for the operation of the Restaurant will include raw ingredients and products for resale, containers and other paper, plastic, or similar goods, maintenance and cleaning materials, office supplies, and miscellaneous materials and supplies.
9. Miscellaneous Opening Costs: $4,600 to $32,000
- Pre-Opening Employee Training Payroll: $1,500 $15,500
- Petty Cash (Including Cash Register “Opening Banks”): $400 to $1,200
- Computer, Printer, Router, Service Contract, Video Surveillance: $1,800 to $11,000
- Miscellaneous Expenses (e.g., Sanitation Books, Restaurant Sound System, Office Supplies, Licenses & Permits, POS Installation, Banking Pre-Opening Costs): $900 to $4,300
- Estimated Total: $4,600 to $32,000
10. Uniforms: $300 to $2,000
11. Insurance: $300 to $7,200
- You must provide commercial general liability insurance in minimum amounts of $3,000,000 aggregate single limit coverage (subject to increase) and maintain other insurance in accordance with state law requirements. Some property owners may require higher levels of commercial general liability insurance under their leases.
- Initial premiums for commercial general liability insurance are subject to change due to market forces beyond either Togo’s or your control, but usually range between $1,000 and $5,000 per year.
- Failure to maintain such insurance may result in loss of your franchise and additional financial obligations.
- The cost of other coverages, including workers’ compensation coverage and your discretionary purchases, varies widely, but may range from $3,500 to $5,000 per year.
- The lower estimate assumes that this is not your first Togo’s Restaurant. Your premium may be higher based upon your risk profile.
- You should discuss with your insurance carrier/agent whether or not these costs need to be paid in full before opening or whether they can be budgeted.
12. Travel and Living Expenses While Training: $0 to $8,000
- Togo’s provides the initial training program at no charge for two people for a new Restaurant and for one person if you are buying an existing Restaurant. However, you must pay for training materials, including the cost of the sanitation exam, uniforms, accommodations, and travel expenses, if any, for you and your employees.
- You must also pay $1,500 per person if you want additional people trained. You must also pay for later training programs that Togo’s may conduct.
- This reflects the estimated range of costs for two people to attend the Togo’s initial training program, including transportation, lodging, and uniforms. If you live close to the training facility, your costs will be on the lower end of the range.
- You must pass the training course before you can open your Restaurant. Any wages or salaries that you may pay trainees while they attend training are not included in these estimates.
- You must also maintain worker’s compensation insurance coverage for trainees in your employ.
13. Grand Opening Marketing Expenditures: $7,500 to $30,000
- You must spend the Grand Opening Marketing Expenditures to promote the opening (or re-opening) of your Restaurant. You must submit to Togo’s documentary evidence of having spent at least $7,500 on your grand opening of the Restaurant within the first 6 months of opening.
- Depending on your market, Togo’s may require you to make additional advertising expenditures during the first year of operations, up to a total of $30,000.
- If you are opening your Restaurant following a transfer or relocation of the Restaurant, you will only be required to spend at least $2,500 on advertising and marketing activities within the first six months of the transfer or relocation, as applicable.
14. Additional Funds for First 3 Months of Operation: $14,000 to $28,000
- Cash flow from your operations may not be adequate to cover operating and other costs during the initial phase of business. The range shown reflects your estimated expenses for the first 3 months of operations and includes the New Store Opening Kit that you purchase from an approved vendor. These expenses do not include the owner’s salary or draw.
15. Totals: $240,500 to $505,700