What it Takes

Unless specified otherwise, you will incur the expenses described in the chart above in establishing the Franchised Restaurant. Except for the real estate lease and utility deposits, which are imposed and collected by third parties, which may be refundable if permitted by the third party, no expenditure in the table above is refundable. The figures shown above are for existing building only, whereas the costs may vary substantially if you choose to construct a building for your Franchised Restaurant. However, you are not required to construct a building.

1. See Item 5 for more information about the initial franchise fee and available discounts.
2. Franchised Restaurants typically occupy 2,000 to 2,500 square feet in an end-cap strip center location with patio or drive thru/pick up window. You are responsible for renting or acquiring premises suitable for the Franchised Restaurant. The figures in the chart assume that you will occupy the premises according to a commercial lease, and that the rent commences on the date the Franchised Restaurant opens for business. The low figure assumes no security deposit, and the high figure assumes a security deposit equal to two months’ rent, however, you may incur higher security deposit expenses depending on your financial circumstances. Rent, taxes, and insurance vary greatly by market and other circumstances.
3. You may be required to pay deposits before the installation or start of service of telephone, gas, electric and other utilities, as required by any utility company.
4. Your build-out costs will depend upon the size and condition of the premises, the nature and extent of leasehold improvements required, the local cost of contract work, the location of the Franchised Restaurant and if the site can accommodate a second digital service line and or drive thru/pick up window at your Franchised Restaurant. The estimates assume a standard build-out of the premises performed by the lessor, including landlord-provided HVAC, supplemented by any amounts provided by you for additional leasehold improvements made to the premises according to System specifications. Leasehold improvements include plumbing, electrical wiring, carpentry and installation of furniture, fixtures, flooring and equipment, but do not include building shell costs, exterior work to the building that may be required, or any costs associated with exterior grease-trap, impact or hook-up fees. The high-end of the estimate includes a second digital service line and/or drive thru pick up window at your Franchised Restaurant. The figures in the chart represent your estimated costs, net of tenant improvement allowance, which typically ranges from $0 to $30 per square foot.
5. You must purchase various equipment and fixtures to operate the Franchised Restaurant, as specified in the Confidential Operations Manual. You may purchase or lease approved brands and models of fixtures from approved suppliers. The cost of furniture, fixtures and equipment will depend on financing terms available, the size of the facility, brands purchased and other factors. The high-end of the estimate assumes you have elected to offer the optional second digital service line at your Franchised Restaurant. If you are purchasing an operating restaurant from our affiliate, you may not incur any extra expense for these items. This estimate does not include vehicles for catering services because a new franchisee typically does not offer catering services. If you elect to offer self-delivered catering services, you must purchase or lease a vehicle.
6. Your requirements for initial inventory are designated in the Confidential Operations Manual. You must maintain an inventory of ingredients, food and beverage products and other products, materials, and supplies that will permit you to operate the Franchised Restaurant at maximum capacity.
7. You will obtain insurance coverage with the limits we require. The lower figure assumes 25% down on a yearly premium amount.
8. You are responsible for transportation and expenses of any persons attending the training program. This amount depends on the distance you must travel and the type of accommodation you choose. The estimate contemplates attendance by one person traveling to our headquarters or other location for approximately two days for an initial orientation session and two persons traveling to a location that we designate for approximately three weeks for on-the-job training.
9. You must spend at least $30,000 to $50,000 for an initial marketing campaign, which will be paid to our approved suppliers. You must obtain a white pages listing for the Franchised Restaurant, and register the business with online directories, such as Google, at our direction. (See Item 11.)
10. Signage includes exterior signs that bear the Marks. Signage costs may vary depending on the type, size and location of the signs and local restrictions
11. You must lease or purchase various office equipment and supplies.
12. This estimate includes food licenses but excludes any building permits you need to obtain. The high figure is the maximum suggested expenditure for the license.
13. This estimate includes architect and attorneys’ fees. Your fees will vary by market and your decisions regarding the advisory services you obtain.
14. This estimates the funds needed to cover your initial expenses for the first three months of operation (other than the items identified separately in the table). It includes payroll costs for a manager but not any draw or salary for you. However, this is only an estimate, and it is possible that you will need additional working capital during your first three months of operation. In compiling these estimates, we relied on our franchisees’ experience and our affiliate’s experience in operating PANCHEROS restaurants.
15. Royalty Fees, Advertising Fund contributions, amounts due for purchases by you from us and other amounts which you owe to us will be paid through an Electronic Depository Transfer Account (“Electronic Depository Transfer Account”) described in the Confidential Operations Manual. Immediately following the signing of the Franchise Agreement, you must set up an Electronic Depository Transfer Account, and we will have access to this account to receive payments. Every Wednesday, you must make deposits to the account sufficient to cover amounts owed to us as of the preceding Sunday for Royalty Fees, Advertising Fund contributions, and other funds owed to us for the preceding week. Deposits for all other owed amounts must be according to the procedures included in the Confidential Operations Manual.