Jersey Mike’s Subs Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

1.  Initial Franchise Fee:  $18,500

• This is the initial fee, unless you sign an Area Development Agreement.

• Item 5 of the Disclosure Document describes the range of development fees and initial franchise fees you must pay if you sign an Area Development Agreement. In that case, development fees will range between $50,000 and $120,000, and the initial franchise fee, which is due when you sign each Franchise Agreement, will range between $0 and $6,000. The amount varies, based upon the number of Restaurants you commit to develop.

• Jersey Mike’s Subs may reduce the initial franchise fee under the terms of the Experienced Franchisee Program Addendum.

2.  Real Estate and Construction Fee:  $5,000

• When you sign a lease for your Restaurant, you must pay Jersey Mike’s Subs $5,000 in exchange for its assistance with the real estate and construction processes as you develop your Franchised Restaurant.

• Jersey Mike’s Subs may waive this fee under the terms of the Experienced Franchisee Program Addendum.

3.  Rent/Lease CAM/Property Taxes/Lease and Utility Security Deposits:  $0 to $38,250

• Rent expense to operate the Franchised Restaurant will vary, based on location, square footage, age, and condition of the structure, lease arrangements, and other factors.

• It is anticipated that the typical Jersey Mike’s Subs Restaurant will operate from a retail shopping center of approximately 1,000 to 2,000 square feet. The figure given represents an estimate of the rental expense for the first three months of operation, including lease and utility security deposits.

• Landlords and utility companies may require that you place a deposit before occupation of the Premises and before installing telephone, gas, electricity, water, sewer, and related utility services. These deposits may be refundable in accordance with the agreements made with the landlord and utility companies.

• The low end of the estimate accounts for situations where franchisees have received periods of free rent and no required security deposits, because landlords have been unable to provide a tenant improvement allowance.

4.  Architectural Fees:  $4,876 to $16,000

5.  Leasehold Improvements:  $62,299 to $349,838

• The cost of construction and leasehold improvements depends upon the size and condition of the Premises, the local cost of contract work, and the location of the Restaurant.

• The range of figures described for a Restaurant is the cost of reasonable renovation or leasehold improvements, and may be less if the Landlord provides a construction allowance to you, or more if additional HVAC, hood exhaust systems, or grease interceptors/traps are required.

6.  Equipment/Furniture/Small Wares:  $11,255 to $101,677

• The equipment, furniture, and small wares necessary for the operation of a Jersey Mike’s Subs Restaurant are listed in the Manual, and include items such as refrigerators, freezers, meat cases, slicers, grills, ovens, hoods, sinks, small wares, tables, and chairs.

• You may purchase or lease approved brands and models only from suppliers that Jersey Mike’s Subs designates or approves. Jersey Mike’s Subs’ affiliates may be designated or approved suppliers of certain items.

• The cost of these items will depend on financing terms available, the size of the Restaurant, brands purchased, and other factors.

7.  Initial Inventory:  $966 to $29,044

• Your initial inventory may be purchased from any supplier Jersey Mike’s Subs approves or designates in accordance with the Franchise Agreement, the Disclosure Document, and the Manual.

• Initial inventory includes food and beverage products, paper and plastic products, containers, accessories, merchandise, and other products utilized in the operation of the Restaurant.

• The initial inventory expenditure will vary according to anticipated sales volume and current market prices for supplies.

8.  Insurance:  $2,000 to $12,000

• You must procure and maintain the required insurance coverage as required by Jersey Mike’s Subs in the Manual.

• The cost of insurance will vary based on types and limits of insurance purchased, location of the Premises, payment terms available, and other related factors.

• The figures do not include the cost of workers’ compensation insurance.

9.  Training:  $2,500 to $56,850

• You are responsible for arranging transportation and paying the expenses for meals and lodging (as well as salary and benefits) for any persons attending the five-day Phase 2 training program in New Jersey.

• The amount expended will depend on the distance you must travel and the type of accommodation you choose.

• In addition, you are responsible for the salaries of your staff as they go through the in-store training program the week before the Restaurant opens.

10.  Grand Opening Advertising:  $12,500

• When you sign the lease for your Franchised Restaurant, you must pay Jersey Mike’s Subs $12,500, which it will use to conduct a Grand Opening Advertising program to promote your Restaurant.

• Jersey Mike’s Subs will consult with you about the development and implementation of the program, but has sole discretion as to how the amount will be spent.

11.  Exterior Signage:  $2,188 to $46,516

• Exterior signage bears the service marks granted for your use by Jersey Mike’s Subs.

• The cost of signage may vary depending on the type, size, and location of the signs, and may also be affected by applicable city code restrictions.

• If your Restaurant is located near a highway, you will be required to engage local advertising agencies and/or applicable departments of transportation to purchase and maintain highway signage to advertise for your Restaurant. If that requirement applies to you, Jersey Mike’s Subs estimates that the cost for such signage will be between $500 and $7,500. The high range of the cost estimate above includes this amount.

12.  Interior Branding/Graphics:  $2,689 to $16,000

• The interior graphics package includes the menu boards, the interior oval illuminated Jersey Mike’s window sign, the murals, and other artwork.

13.  Uniforms, Office Equipment, Supplies, TVs/Stereo System/Security System:  $2,260 to $25,361

• You will purchase employee uniforms from a designated supplier and the cost will vary with the number of employees you hire and the items you purchase. You will also purchase an assortment of office equipment and supplies, including stationery, a safe, forms, miscellaneous supplies, and related items.

• You may purchase these items meeting Jersey Mike’s Subs’ System Standards from any source.

14.  POS System:  $85 to $13,305

15.  POS System Connection to Private Network:  $2,000

• You must procure and install the POS system from required suppliers that Jersey Mike’s Subs designates and approves as listed in the Manual.

• The costs of the POS system will vary depending on the number of registers you install (usually 1 or 2, sometimes 3 registers) and the costs of the installation of the Internet connection.

16.  Professional Fees (Lawyer, Accountant, etc.):  $525 to $12,642

17.  Business Licenses and Permits:  $25 to $15,750

18.  Additional Funds for 3 Months:  $15,000

• This amount is Jersey Mike’s Subs’ estimate of what you will need to cover the gap between your revenues and your operating expenses, including employees’ salaries during your first 3 months of operation. These estimates do not include costs you may incur for debt service, living expenses, or your own salary, if you manage the Restaurant.

• Jersey Mike’s Subs cannot guarantee that this amount will be sufficient; Jersey Mike’s Subs recommends that you have access to additional resources in case you need them.

19.  Total:  $144,668 to $786,233

• In preparing these figures, Jersey Mike’s Subs has relied upon its and its affiliates’ 30-plus years of experience in operating Jersey Mike’s Subs Restaurants.

• These numbers do not include any international, non-traditional, or drive-thru locations.

• Your initial investment may vary depending on numerous factors, including the condition and square footage of the Premises, the amount of construction performed by the landlord, impact fees, geographic areas, and your capabilities.