How Much to Own a Char-Hut?

DescriptionLow InvestmentHigh Investment
Franchise Fee$30,000$30,000
Rent (1-3 Months)$4,167$16,667
Leasehold Improvements$200,000$250,000
Furniture, Fixtures & Equip.$200,000$250,000
Signage$7,500$40,000
Initial Inventory$10,000$15,000
POS System$18,000$25,000
Miscellaneous Costs*$26,600$50,000
Additional Funds$30,000$85,000
Total$466,267$762,167

Notes

Franchise Fee. The franchise fee and its refund policy are described in greater detail in ITEM 5. We do not finance any fee.

Real Estate/Rent. The franchised business needs to be operated in a free standing building or a strip center location. The franchised business requires approximately 2200 to 2800 square feet for a Char-Hut® Restaurant. It is difficult to estimate lease acquisition costs because of the wide variation in these costs between various locations. The low estimate is based on an assumption that you must lease a facility and will have to pay a security deposit equal to one month’s rent. The high estimate is based on an assumption that you will have to pay a security deposit equal to 2 months’ rent to lease the facility. Some lessors may refund the security deposit if you cancel the lease before you occupy the premises, but the amounts you pay are typically non-refundable. The estimated range of costs in this category only includes your costs to enter into a lease agreement for the facility. There are a wide range of rental expenses for the operation of the franchised business; these ranges have been taken from the experience of Char-Hut of America in opening Char-Hut® restaurants. Estimated rental costs for 3 months are included with the category “Additional Funds,” (see Note 16 below).

Utility Deposits. If you are a new customer of your local utilities, you will generally have to pay deposits to obtain services, including electric, telephone, high speed internet service, gas, trash and water. The amount of the deposit and whether the deposit is refundable will vary depending on the local utilities. You should contact your local utilities for more information.

Leasehold Improvements. You will need to make significant improvements to adapt your facility for operation of the franchised business. The cost of the leasehold improvements will vary depending on factors, including the size, condition and location of the facility, local wage rates and the cost of materials. The amounts you pay for leasehold improvements are typically non-refundable. You should inquire about the refund policy of the contractor at or before the time of hiring.

Insurance. You must purchase the following types and amounts of insurance:

  1. “all risk” property insurance coverage for assets of the franchised business;
  2. workers’ compensation insurance and employer liability coverage with a minimum limit of $100,000 or higher if your state law requires;
  3. comprehensive general liability insurance with a minimum liability coverage of $1,000,000 per occurrence, or higher if your state law requires;
  4. insurance coverage for contractual indemnity.

Factors that may affect your cost of insurance include the size and location of the franchised business, value of the leasehold improvements, equipment, supplies, vehicle model and make, number of employees and other factors. The amounts you pay for insurance are typically non-refundable. You should inquire about the cancellation and refund policy of the insurance carrier or agent at or before the time of purchase.

Office Equipment and Supplies. You must purchase general office supplies including stationary, business cards and typical office equipment to be used in the operation of the franchised business location. Factors that may affect your cost of office equipment and supplies include local market conditions, competition among suppliers and other factors. We do not know if the amounts you pay for office equipment and supplies are refundable. Factors determining whether office equipment and supplies are refundable typically include the condition of the items at time of return, level of use and length of time of possession. You should inquire about the return and refund policy of the supplier at or before the time of purchase.

Training. The cost of initial training of up to 3 people is included in the franchise fee, but you are responsible for transportation and expenses for meals and lodging while attending training. The total cost will vary depending on the number of people attending, how far you travel and the type of accommodations you choose. These expenses are typically non-refundable. Before making airline ticket, hotel, rental car or other reservations, you should inquire about the refund policy in the event you need to cancel any reservation.

Signage. This range includes the cost of signage used in the start-up of the franchised business. There could be a wide range of signage expenses, you should do your own research as to what the expenses associated with your particular location might be. This may incorporate additional outdoor signage that is required as part of a lease agreement or other elements which could increase your expense for signage. The amounts you pay for signage are typically non-refundable. You should inquire about the return and refund policy of the suppliers at or before the time of purchase.

Furniture, Fixtures & Equipment. You must purchase and/or lease and install furniture, fixtures and equipment necessary to operate your franchised business. The cost of the furniture, fixtures and equipment will vary according to local market conditions, the size of the facility, suppliers and other related factors. We do not know if the amounts you pay for furniture, fixtures or equipment are refundable. Factors determining whether furniture, fixtures and equipment are refundable typically include the condition of the items, level of use, length of time of possession and other variables. You should inquire about the return and refund policy of the suppliers at or before the time of purchasing or leasing.

Initial Inventory. You must purchase an initial inventory of food and beverage products for use in the operation of the franchised business. Costs vary based upon the size and location of the franchised business, suppliers and other related factors. We do not know if the amounts you pay for inventory items may be refundable. Factors determining whether inventory items are refundable typically include the condition of the items at time of return, level of use, and length of time of possession and other factors. You should inquire about the return and refund policy of the suppliers at or before the time of purchasing.

Computer Equipment & Software. You must purchase the computer hardware and software that is specified in ITEM 11 in addition to the approved POS Solution to operate the franchised business. You must have an automatic backup service for your computer equipment and software. The low estimate is based on an assumption that you already own a computer system that you can use in the operation of the franchised business and you only need to purchase the software that we require. We do not know if the amounts you pay for the computer equipment and software are refundable. The amounts you pay for computer equipment and software are typically non-refundable, or if refundable, you may be subject to a “re-stocking” fee. You should inquire about the return and refund policy of the supplier at or before the time of purchasing. Typically the amounts you pay for an automatic backup service are non-refundable. You should inquire about the refund policy of the supplier at or before the time of purchasing.

Licenses & Permits. State and local government agencies typically charge fees for occupancy permits, operating licenses and construction permits in addition to licensing which will allow you to serve food on premise. Your actual costs may vary from the estimates based on the requirements of state and local government agencies. These fees are typically non-refundable. You should inquire about the cancellation and refund policy of the agencies at or before the time of payment.

Legal & Accounting. You will need to employ an attorney, an accountant and other consultants to assist you in establishing your franchised business. These fees may vary from location to location depending on the prevailing rates of local attorneys, accountants and consultants. These fees are typically non-refundable. You should inquire about the refund policy of the attorney, accountant or consultant at or before the time of hiring.

Architect. You will need to employ the services of a qualified and licensed architect in your market. They will provide the building plans which will be submitted to the local municipality for acceptance to develop a commercial location in your area. These costs are typically non-refundable.

Grand Opening. We require that you spend a certain amount of money on marketing the business when you first open the restaurant. These costs are non-refundable.

Design Fees. You must pay to approved suppliers to plan for design, equipment, build out and equipment supply. These expenses are typically non-refundable.

Security Cameras. You must work with outside suppliers to purchase and install security cameras to monitor and manage the operation of your franchised business.

Additional Funds. We recommend that you have a minimum amount of money available to cover operating expenses, including rent (if applicable), utilities, and employees’ salaries for the first 3 months that the franchised business is open. We cannot guarantee that our recommendation will be sufficient. Additional working capital may be required if sales are low or operating costs are high. These expenses are typically non-refundable.

Total. In compiling this chart, we relied on our and Char-Hut of America’s industry knowledge and experience. The amounts shown are estimates only and may vary for many reasons, including the size and condition of your facility, the capabilities of your management team, where you locate your franchised business and your business experience and acumen. You should review these estimates carefully with an accountant or other business advisor before making any decision to buy a franchise. These figures are estimates only and we cannot guarantee that you will not have additional expenses in starting the franchised business.


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