Franchise Costs: Detailed Estimates of The Human Bean Franchise Costs (2020 FDD)

Updated January 18, 2021.

Detailed Estimates of The Human Bean Franchise Costs Based on Item 7 (Estimated Initial Investment) of The Human Bean’s 2020 Franchise Disclosure Document

1.  Site Evaluation Fee:  $5,000

• The Site Evaluation Fee is nonrefundable.

• If The Human Bean approves a site and you sign the Franchise Agreement with The Human Bean, the Site Evaluation Fee will be applied to the Initial Franchise Fee.

2.  Initial Franchise Fee:  $30,000

• If your Franchise Agreement is terminated for your failure to open a drive-thru within one year of signing, the Initial Franchise Fee is refundable with the exception of the $10,000 nonrefundable deposit.

3.  Development Fee (optional):  $10,000 per additional location

• Upon signing of an Area Development Agreement, you must pay The Human Bean $10,000 for each proposed outlet to be opened within the area. This payment will applied to the Initial Franchise Fee that will become due upon signing the Franchise Agreement for each of those outlets.

• Except for the $10,000 development fee for the second and each additional The Human Bean outlet you must develop and certain working capital funds you might need under the Development Agreement, no additional initial investment is required to become an area developer beyond that required to become a single-unit franchisee.

4.  Training Expenses:  $7,300 to $14,300

• One hundred twenty hours of initial training for new franchisees is included in the Initial Franchise Fee (transferees will pay the separate training fee of $3,000, unless it is waived by The Human Bean due to the transferee’s experience). Any additional training, whether required by The Human Bean or requested by you, will result in a charge to you of $40 per hour.

• You must pay your own costs for travel to and from the training location, local transport, and lodgings. The training expense estimates above include approximately $1,500 to $3,500 for these travel and living expenses.

• The training expense estimates above also include $5,800 to $10,800 for employee training costs. This estimate is based on training for 10 employees trained for 10 days, 8 hours per day, at applicable minimum wage ranging from $7.25 to $13.50 per hour.

• You may have to pay employees at a higher rate, depending on your local labor market and possible state or local minimum wage laws, which are subject to change over time. Payment of wages will depend on the payroll period you establish.

5.  Real Property (purchased or leased):  $2,500 to $9,000 (lease payment)

• The Human Bean drive-thrus are generally located upon leased or purchased property. The rental rate and other terms of your leases or purchases will vary, depending upon negotiations with your landlord or the property owners, and area land costs.

• The Human Bean does not estimate your costs for purchasing the site for your The Human Bean outlet as opposed to leasing.

6.  Equipment, Fixtures, Other Fixed Assets, Construction, Remodeling, Leasehold Improvements, and Decorating Costs, Whether Purchased or Leased:  $255,000 to $675,000

• The low-end estimate of $255,000 for this category is for the conversion or improvement of an existing structure into a The Human Bean outlet. It includes approximately $188,000 for remodeling and upgrades to the existing structure, site improvements, signage, furniture, and fixtures, all to be provided by either The Human Bean’s approved suppliers or an approved local general contractor.

• Most sizes will range from 1,000 square feet to 2,500 square feet. Remodeling or improving larger structures will usually cost more.

• For new construction the estimated range is from $375,000 to $675,000. This includes $297,000 to $597,000 for a new building, site improvements, awnings, signage, furniture, fixtures, etc., provided by The Human Bean’s approved suppliers or an approved local general contractor.

• The new drive-thru structure can be either site-built or pre-fabricated modular. Its width ranges from 14’ to 16’ feet and its length ranges from 40’ to 50’.

• Costs will include building or building materials, site preparation, cut and fill, paving, landscaping, utilities, area lighting, trash enclosures, building permits and related costs, and engineering. These costs will vary depending upon your choice of building and several site-specific factors, including local costs for building materials and labor.

• If you choose a pre-fabricated modular building, you will also pay shipping costs that vary depending on your location.

• Regardless of the building type, the estimate includes at least $78,000 for equipment and small wares, of which approximately $61,000 is for equipment to be purchased directly from The Human Bean.

• The low-end estimate in this category includes approximately $12,000, and the high-end estimate includes approximately $25,000, for signs. The amount required depends on the number, type, and size of signs needed. Signs may be acquired from The Human Bean’s approved vendor or any supplier, but must meet The Human Bean’s specifications.

• Most of the durable items in this category (including the structure, certain equipment, and the signage) can be leased from third parties or financed, but The Human Bean does not itself provide any financing.

7.  Inventory:  $15,000 to $20,000

• Initial inventory costs between $12,000 and $15,000, depending on the size of your outlet. These costs are not refundable.

8.  POS Software:  $325 to $425

9.  Security Deposits, Utility Deposits, Business Licenses, and Other Prepaid Expenses:  $4,300 to $9,000

• These estimates include approximately $3,000 to $5,000 for miscellaneous expenses, including utilities, security deposits, and license fees.

• Deposits for utility services are typically required when the service is applied for and may not be refundable. You must confirm all of the specific deposits required.

• The licensing and permit requirements for espresso drive-thru establishments vary by location. Licenses and permits may be required at the municipal, county, and state level. Types of licenses and permits include restaurant, business, occupational, and food products.

• These estimates also include approximately $1,000 to $4,000 for insurance premiums during the first year of operations.

• You must purchase and maintain, at your sole expense, comprehensive general liability insurance in an aggregate amount of not less than $2,000,000 combined single limit. Combined single limit means that all of the $2,000,000 coverage is available for any covered loss, regardless of the type of loss.

• In addition to liability insurance, you also must purchase and maintain any other insurance required by any agreement related to the franchise or by law. Examples include workers compensation, fire, and extended coverage insurance.

10.  Working Capital:  $1,000 to $5,000

11.  Advertising and Promotion:  $5,000 to $10,000

12.  Additional Funds for Initial 90-Day Period:  $15,000 to $50,000

• Additional funds are provided only as estimates and apply only to your initial three months of operations. The Human Bean believes that these figures provide an accurate minimum estimate of the additional funds necessary for the initial three-month phase of operations. However, ongoing costs of operations beyond the initial phase, or abnormally high costs during the initial phase, may require you to invest more than estimated.

13.  Total Initial Investment (not including Area Development):  $340,425 to $827,725+

• The figures in the table above are merely estimates and The Human Bean cannot guarantee that your costs will be within the limits specified or that you will not have additional expenses starting the business.

• To compile these estimates, The Human Bean relied on its experience with the existing drive-thrus.