Ziggi’s Coffee Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)
- There are two types of Ziggi’s Coffee Shop that you may purchase: a Drive Thru or a Café with Drive Thru, which may be either in a freestanding building or as an end-cap in a strip mall or other suitable facility. Your initial investment will vary depending on which type of Coffee Shop you acquire.
For Endcap Café With Drive Thru
1. Initial Franchise Fee: $40,000
2. Launch Fee: $10,000
- The Initial Franchise Fee for one Ziggi’s Coffee Shop franchise is $40,000.
- If you acquire a 3-Pak to develop three Coffee Shops, the Initial Franchise Fee is $30,000 per franchise for a total of $90,000, or an additional $50,000, which is due when you sign the Franchise Agreements.
- You also will pay a Launch Fee of $10,000 for each franchise you acquire.
3. Tenant Improvements: $0 to $300,000
4. Architecture/Engineering: $12,000 to $60,000
5. Fees/Permits (Including Water): $0 to $15,000
- You must construct or renovate the Shop Location for your Coffee Shop to meet Ziggi’s standards and specifications.
- If you acquire a Drive Thru Coffee Shop or a freestanding Café with Drive Thru, you will need to conduct site work and construct your Shop Location on an open lot.
- If you acquire an endcap Café with Drive Thru, you will most likely lease your Shop Location in a strip mall, outdoor walking mall, or other similar shopping area location, and will need to do lease improvements for your Shop Location.
- In all situations, there will be architecture and engineering design work, and permitting fees.
- Your actual costs may vary under or over the estimates, depending on the square footage of your space and construction costs in your area.
- Your costs to improve the Shop Location will depend in large part on whether your space is completely constructed or is the remodel of an existing space.
- The buildout or leasehold improvements that you will typically make include exterior construction (for a Drive Thru Building), interior remodeling, floor covering, painting, wall covering, HVAC, electrical, plumbing, design, millwork, and various other improvements. These costs may vary significantly from market to market.
- The lower end of these fees contemplates a build-to-suit lease situation where the landlord will pay for these costs and factor them into the lease rate.
6. Security Deposit and Rent: $5,000 to $15,000
- You must purchase or lease retail space that meets Ziggi’s standards and specifications.
- For an endcap Café with Drive Thru, in most cases, franchisees rent rather than purchase property. In most cases, the landlord will require a security and last month’s rent. Rental rates or deposits on an unknown location cannot be predicted in advance, but generally will depend on the market in the area and the size of the facility.
- Typically, franchisees receive three or more months of free rent at the beginning of the lease.
- Ziggi’s is unable to exactly estimate these costs due to the significant variances based on location and market conditions.
- These estimates for Café with Drive Thru are based on one month’s rent for a security deposit and the last month’s rent in a 1,700 square foot space in and around Denver, Colorado.
- The higher number in the table contemplates a build-to-suit lease where the landlord pays the Drive Thru buildout costs, site work, leasehold improvements, architecture and engineering costs, and fees and permits, and factors those costs into the rent payments, but also gives you three or more free months’ rent.
- This table assumes you will rent. If you purchase the property, your initial expenses will dramatically increase.
7. Initial Equipment Package (Including POS System): $172,842
8. Miscellaneous, Smallwares, Etc.: $2,000 to $3,000
- You must purchase an initial equipment package from Ziggi’s designated suppliers containing certain materials necessary to operate your Ziggi’s Coffee Shop. In addition, you must purchase furnishings, which will include brand mural and other interior décor items, additional equipment, computer equipment, fixtures, smallwares, and uniforms from third-party approved suppliers.
- These items include the estimated costs to purchase the computerized POS System that Ziggi’s requires loaded with software customized for Ziggi’s Coffee Shops and other required back office equipment, including telephone system, photocopier, and fax machine.
9. Sign Package: $20,000 to $25,000
- This estimate includes costs to purchase both exterior and interior signs for your Coffee Shop, including drive-thru signage.
10. Initial Inventory: $12,000
11. Initial Supply of Apparel, Gift Cards, and Loyalty Cards: $2,000 to $3,000
- You must pay Ziggi’s between $2,000 and $3,000 to purchase an initial opening supply of shirts, aprons, caps, gift cards, loyalty cards, and other apparel and items.
- You will also need to purchase an initial inventory of coffee, espresso, tea, smoothie mix, branded items, milk, sandwiches, and wraps from third-party suppliers.
12. Grand Opening Marketing: $10,000
- You will spend $10,000 on the grand opening marketing for your Coffee Shop before the opening and during the first three months of operation.
- Ziggi’s assists you in developing your grand opening program. This item includes marketing pieces and advertising related to the grand opening including print ads, door hangers, and giveaways, including the costs directly associated with free giveaways.
13. Utility Deposits, Business Licenses, Etc.: $500 to $1,000
- You must pay any utility deposits, and obtain any business licenses and other permits, licenses, and deposits in order to operate from your Shop Location.
14. Training Expenses: $3,500 to $5,000
- Ziggi’s does not charge for its initial classroom owner training program for up to two persons, or for its initial on-the-job manager training for two persons. However, you will be required to pay for transportation for your representatives to and from Ziggi’s training site and pay for their living arrangements, food, and other miscellaneous expenses during the time of training for each person attending your training.
- This estimate includes those expenses, as well as the anticipated salary for your Designated Manager during the initial training program.
- Further, you will have expenses involved in training your own employees, including the wages you will be required to pay your employees during your training. This estimate also includes those expenses.
15. Professional Fees: $1,000 to $3,000
- It is advised that you consult with an accountant and attorney of your choosing regarding acquiring and operating your Ziggi’s Coffee Shop.
16. Insurance: $2,000 to $4,000
- You must carry, at a minimum, general liability, product liability, automotive insurance, personal property insurance, and worker’s compensation insurance. Ziggi’s recommends that a franchisee maintain employee theft insurance as well.
17. Additional Funds for 3 Months: $20,000 to $30,000
- This estimates your pre-operational expenses, which Ziggi’s has not listed above, as well as additional funds necessary for the first three months of your Coffee Shop operations. These figures are estimates and Ziggi’s cannot guarantee that you will not have additional expenses starting the business.
- This item includes a variety of expenses and working capital items during your start-up phase such as: advertising and promotional expenses and materials; employee salaries; and other miscellaneous costs. However, this item excludes your salary or other amounts payable to you.
18. Total Estimated Initial Investment: $312,842 to $708,842
- Ziggi’s relied on its principals’ more than 44 years of combined experience in the coffee industry and over 16 years of experience in operating similar businesses when preparing these figures.
For Drive Thru
- Total Estimated Initial Investment: $268,527 to $1,040,027
For Freestanding Café With Drive Thru
- Total Estimated Initial Investment: $307,842 to $1,248,842