What are My Startup Costs?
What it Costs when Starting a Smoothie Business
All figures in Item 7 are estimates only based upon the cost of our new generation store design. We rely on information provided to us by our franchisees in the states in which we operate.
|TYPE OF EXPENDITURE||AMOUNT (SEE NOTE 1)||METHOD OF PAYMENT||WHEN DUE||TO WHOM PAYMENT IS TO BE MADE|
|$25,000||$25,000||Lump Sum||Upon Signing the Franchise Agreement||Us.|
|Leasehold improvements||$90,000||$124,000||As Arranged||As Arranged||Third Party Suppliers. See Note 2.|
|Equipment||$62,000||$83,800||As Arranged||As Arranged||Third Party Suppliers. See Note 3.|
|Fixtures||$14,000||$23,000||As Arranged||As Arranged||Third Party Suppliers. See Note 4.|
|Signs||$5,000||$8,500||As Arranged, Lump Sum||As Arranged||Third Party Suppliers. See Note 5.|
|Computer system (includes POS system, networking and software) and retail radio||$7,500||$10,000||As Arranged||As Arranged||Third Party
|Professional Fees||$6,500||$13,000||As Arranged||As Arranged||Third parties, such as architects and lawyers. See Note 6.|
|Security Deposits, Utility Deposits and Business Licenses||$4,500||$8,500||As Arranged||As Arranged||Us, one of our affiliates or Landlord; Suppliers; Government Agencies; Utility Companies. See Note 7.|
|Real Estate Costs||$3,500||$7,000||As Arranged||As Arranged||Us, one of our affiliates or Landlord. See Note 8.|
|Opening Inventory||$6,000||$8,000||As Arranged||As Arranged||Third party suppliers approved by us. See Note 9.|
|$7,500||$7,500||As Arranged||As Arranged||Third party suppliers and us. See Note 10.|
|Travel for Training||$1,500||$3,500||As Arranged||As Arranged||Third Party
|Miscellaneous and Additional Funds (for first 3 months of operations)||$10,000||$15,000||As Arranged||As Arranged||Third Party Suppliers. See Note 11.|
(1) The number in the first sub-column under Column 2 shows the low end of the range of the estimated amount for the particular expenditure; the number in the second sub-column under Column 2 shows the high end of the range of the estimated amount of the expenditure. The low/high range for Store initial investment costs depends on the size of your Store, prior use and overall condition. Our expenses assume you locate in an outdoor strip shopping center. We base the low range on an 800 square foot store and the high range on a 1,200 square foot store. The low range assumes the condition of the store requires minimal improvements to renovate it to our requirements for a ROBEKS® Store. The low and high ranges assume that construction, labor and materials are competitively priced.
(2) Leasehold improvements include costs to conform the approved location to our comprehensive specifications for lighting, flooring, wall coverings, ceiling treatments, retail displays, store front design and build-out, building and health permits, general trade dress components and other improvements to prepare the store for opening. Actual costs will depend on the size and preexisting condition of the approved location. These estimates assume no structural, storefront or exterior renovations and a competitive environment where multiple contractors bid the leasehold improvements using the best available labor and material pricing in the local market. These estimates also assume that the leasehold premises are delivered in a “Vanilla Shell” condition, meaning that the landlord provides most base building interior improvements such as mechanical systems, utility lines and equipment, some ceiling and lighting improvements, electrical outlets, drywall finish, and restrooms, or a credit to tenant for the same. Actual costs may be lower if the landlord provides over-standard improvements or contributes any additional tenant improvement allowance.
(3) Equipment includes walk-in, reach-in and under-counter refrigeration and freezers as needed, smoothie-making equipment, juicing machines, shelving, sinks, small wares, and other items needed to operate a standard ROBEKS® Store. All equipment must be new, not used, unless otherwise approved by us in writing. Our chart assumes that you purchase, rather than lease, all equipment. However, your initial expenses may be lower if you lease or finance equipment.
(4) Fixtures include all custom-made millwork including retail displays, cabinetry, custom stainless steel fixtures, menu boards, wall graphics and interior or exterior seating or furnishings as allowed by the lease or municipality.
(5) The estimated cost of signs assumes one internally-lit building sign and one internally-lit medallion window sign per Store.
(6) Professional fees include fees for services of professionals such as architects and lawyers, and assume a single fee basis (as opposed to a per hour basis) with no extraordinary circumstances. You may use an architect of your choice to prepare the initial floor plan if the architect is approved by us in writing. Some of our franchisees have chosen not to use an attorney; thus, the low end of the range does not include attorney fees. We recommend that you use an attorney who specializes in retail real estate.
(7) Some vendors, utility companies, and the landlord of your premises may require you to pay a security deposit. Landlords vary in whether they require a security deposit and in the amount they charge. The lease security deposit assumes no more than 1 month of base rent. These amounts do not include common area maintenance, real estate taxes and insurance paid to landlord as triple-net costs.
(8) You will need to lease suitable retail space. In consenting to a site, we consider a variety of economic, demographic and geographic factors, including visibility, access and proximity to substantial daytime traffic, both pedestrian and vehicular. The real estate category is based on rent ranging from a low of $3,500/month to a high of $7,000/month, not including common area maintenance (CAM) charges or any other location-specific costs. Rent also excludes directly billed utility costs during this period, which we include under the miscellaneous category. Rental rates can vary widely depending on market conditions, the size and pre-existing condition of the premises, and your own credit rating. These estimates are for traditional sites and do not include captive-audience type locations such as malls, airports, college campuses, or free standing structures or spaces with drive-thru capabilities, etc.
(9) Opening inventory estimates include a sufficient supply of ROBEKS® Nutritional Boosts and other Proprietary Products, produce, beverages, ingredients, dry goods, food and nutritional items and other products sold in ROBEKS® stores for both in-store production and product sales to customers. The figures are estimates only and not a prediction of your likely sales results or selling experience.
(10) Within the period of time from 30 days before opening, through 60 days after opening your Store, you must spend at least $7,500 on grand opening advertising and promotion, but may choose to spend more. You must submit written evidence of such expenditures to us. We will collect by ACH the difference, if any, between the required amount to be spent and the amount verified by your documentation. We will begin collecting the difference 90 days after your Store opens in equal installments over a six month period. These funds will be deposited in the Marketing Fund. We may have different requirements for Non-Traditional Venues, Co-Branded Locations and Drive-Through Locations. If a Regional Director opens a ROBEKS store, the Regional Director must spend at least $7,500 for advertising, public relations and promotion in the Territory within the period of time from 60 days prior to, through 90 days after, the opening of the ROBEKS store.
(11) Miscellaneous covers initial expenses not covered elsewhere in the chart, such as for initial office supplies, business management software costs and other miscellaneous items. The amount covers a period of 3 months. The additional funds that we estimate you may need will vary considerably from one franchisee to the next based on a variety of factors, including the number of employees you choose to hire and the salary and other benefits you choose to pay; the extent to which you will be actively involved in organizational-level, or store-level, operations; your skill, experience, business acumen and credit-rating; local competition; local economic conditions, including rent and wage scales and the cost of supplies; and the actual sales levels that you reach during the initial 3 month period. The “Additional Funds” category is not the only source of cash, but is in addition to cash flow from operations. We cannot estimate your cash flow from operations and encourage you to visit operating ROBEKS® stores to evaluate this on your own. The Additional Funds category includes an allowance for payroll expenses for all opening employees, but does not include any allowance for a draw or salary to you or other owners of the franchise.
Area Development Initial Investment Chart
|TYPE OF EXPENDITURE||AMOUNT||METHOD OF PAYMENT||WHEN DUE||TO WHOM PAYMENT IS TO BE MADE|
|Development Fee*||$20,000 to $75,000||Lump Sum||Upon Signing the Area Development Agreement||Us|
|Initial Investment for First Store**||$233,000 to $326,800||See Chart Above||See Chart Above||See Chart Above|
*The lower end of the range assumes a development of two stores. The higher range assumes the development of ten stores.
**These numbers include the reduced Initial Franchise Fee of $15,000 for the first Store. All figures in Item 7 are estimates only based upon the cost of our new generation store design. We rely on information provided to us by our franchisees in the states in which we operate who have built stores of varying sizes, venues, and levels of landlord work and contribution to tenant’s improvement and modified the information for the changes based on the new generation store design. You should review these figures and notes carefully with a business advisor before making any decision to purchase the franchise.