Detailed Estimates of Paris Baguette Franchise Costs Based on Item 7 (Estimated Initial Investment) of Paris Baguette’s 2021 Franchise Disclosure Document

1.  Initial Franchise Fee:  $50,000

• Unless you are an Area Developer, the Initial Franchise Fee for the first Paris Baguette Store is $50,000. Each subsequent Paris Baguette Store will incur a franchise fee of $40,000.

• If you are an Area Developer, the Initial Franchise Fee for every Store will be $40,000.

• You cannot borrow more than 50% of your initial investment in a new Store or any portion of the Initial Franchise Fee for any Store.

2.  Real Estate or Advance Rent and Security Deposit and Other Prepaid Expenses and Costs:  $10,000 to $60,000

• You will need approximately 2,500 square feet or more to operate a Traditional Store (or approximately 1,000 square feet or more to operate a Non-Traditional Store). The estimates herein assume you rent your location (not purchase the real estate).

• The lower end of the range is typically only possible for a Non-Traditional Store, while the higher end of the range represents costs for a Traditional Store.

• Landlords typically require that a lessee pay the first month’s rent, the last month’s rent, and a security deposit equal to 1 month of rent upon execution of the lease, which Paris Baguette estimates could total between $10,000 and $60,000.

3.  Building Costs/Leasehold Improvements:  $150,000 to $1,000,000

• This amount includes labor and construction (including your architect and general contractor fees) costs and expenses for the improvement of a Traditional Store premises with the approximate amount of square footage described above.

• The lower end of the range is typically only possible for a Non-Traditional Store, while the higher end of the range represents costs for a Traditional Store.

• Paris Baguette has not estimated the costs to purchase and renovate an existing building, nor has it estimated the costs of new construction. These ranges do not include unusual costs to bring utilities to the property for hookup or government imposed “impact fees.”

• Additional development costs include, among others, architectural, engineering, and legal fees. These estimates do not include extraordinary costs due to extensive redesign, permitting, variances, environmental issues, legal obstacles, etc.

4.  Equipment and Fixtures:  $165,156 to $208,438

• This includes all kitchen and dining equipment (coolers, freezers, dough conditioner, oven and deck oven, sinks and dishwashing equipment, shelving, counters, lighting, seating) and interior signage and advertising (e.g., digital menu boards) and other decor in accordance with Paris Baguette’s standards, specifications, and requirements.

5.  Signs:  $9,505 to $29,886

• The cost of exterior signs depends on the size and location of your Store, the requirements of the landlord, and local and state ordinances and zoning requirements.

6.  Smallwares:  $15,500 $25,000

• This includes food prep equipment, mixers, kitchen utensils, dishes, glasses, flatware, pots/pans, food storage containers, trash receptacles, and related items.

7.  Point-of-Sale System, Software, and Surveillance Equipment:  $10,000 to $16,000

• This includes 2 to 3 point-of-sale systems as required for all stores (“POS System”), security surveillance system with closed-circuit television, telephone and high-speed internet access, sound system, software, desktop or laptop office computer, printer, and other required purchases of software and hardware described in Item 11.

• Toast, Paris Baguette’s current required vendor for the POS System, offers third-party financing through its financing partner.

8.  Opening Inventory:  $36,000 to $46,000

• Before opening a Store, you must purchase an initial inventory consisting of products from Paris Baguette or its affiliates or suppliers approved by it. The assortment and number of these items will be based upon the size and configuration of your Store.

• Your initial inventory of merchandise and supplies needed for the operation of the Store 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.  Grand Opening Promotion:  $10,000

• Grand opening expenditures may include marketing materials, radio broadcasts, giveaways, cable television advertising, tents, decorations, free food, in addition to a grand opening celebration.

10.  Licenses, Permits, Fees, and Deposits:  $4,510 to $18,710

• You must comply with federal, state, and local license, certificate, and permit requirements for the operation of your Store. The requirements of cities and states vary. You should determine what laws apply to you before acquiring a franchise. You must obtain and pay for these licenses and/or permits before opening your Store.

11.  Miscellaneous Opening Expenses:  $11,159 to $12,130

• Miscellaneous opening costs include pre-opening employment payroll costs, uniforms, utility deposits like gas, water, electricity and telephone, equipment maintenance costs, petty cash, a smartphone and vehicle for site selection and management of your Store or multiple Stores (if you are an Area Developer), and the cost of printing, which includes the cost of printing flyers, menus, training aid and job application forms, schedule forms, business card letterheads, envelopes, and other forms which must be purchased before or upon the opening of your Store.

12.  Insurance:  $3,405 to $4,890

• You must purchase and maintain at your sole expense the insurance coverage that Paris Baguette specifies in the Franchise Agreement and Manuals.

• Paris Baguette anticipates that you will be required to pay your insurance carrier or agent a full annual premium in advance. The figures above reflect the estimated annual premium for the required coverage. However, the cost will vary from state to state.

13.  Attorneys’ Fees and Business Consultants:  $3,035 to $7,500

• Paris Baguette recommends you hire attorneys to form a legal entity that will own the Store and/or the development rights and assist in providing legal advice related to the business. You may also want to hire other business consultants or accountants.

14.  Travel and Living Expenses While Training:  $20,000 $50,000

• Paris Baguette pays the cost of presenting the initial training program, including an examination and uniform. However, you must pay for accommodations and travel expenses, if any, for you and your designated employees.

• You must also pay for training programs conducted during the term of the Franchise Agreement if Paris Baguette believes such training is needed.

• The above estimated range of costs is for your Operating Principal and Store Manager and 6 food production personnel to attend the Paris Baguette initial training program. Any wages or salaries that you may pay trainees while they attend training are not included in these estimates.

15.  Additional Funds for First 3 Months of Operation:  $30,000 to $100,000

• This amount includes estimated cost of sales and operating expenses incurred during the initial 3 months of operation, not including owner’s salary/draw and non-Store management expenses. This estimate does not include your living expenses.

• Paris Baguette has prepared this estimate based on its affiliate’s experience developing and operating Company-owned stores.

16.  Total:  $378,270 to $1,638,554