What expenses are included in the 'Additional Funds 3 Months' estimate for an Auntie Annes franchise?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Additional Funds 3 Months. This estimates the additional funds you may need to cover expenses you will incur before your Shop opens and in its first three months of operation. These expenses may include, without limitation, employee salaries, wages, and benefits, payroll taxes (including payroll to cover the pre-opening training period for your staff), Royalty Fees, Advertising Contributions, ongoing fees due to the Co-Branded Franchisor (if you operate a Co-Branded Shop), additional advertising expenses, additional inventory, miscellaneous supplies and equipment, rent, bank charges, state tax and license fees, deposits, prepaid expenses, and other miscellaneous items. We have based these figures on our experience franchising Shops and our affiliate's experience opening and operating Shops. You may incur other categories of expenses or expenses in excess of this estimate.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 44–54)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, the 'Additional Funds 3 Months' estimate covers expenses incurred before the shop opens and during its first three months of operation. This estimate is designed to help franchisees sustain the business during the initial period when it may not be profitable.
The expenses included in this estimate are employee salaries, wages, and benefits, payroll taxes (including payroll to cover the pre-opening training period for staff), Royalty Fees, Advertising Contributions, ongoing fees due to the Co-Branded Franchisor (if applicable), additional advertising expenses, additional inventory, miscellaneous supplies and equipment, rent, bank charges, state tax and license fees, deposits, prepaid expenses, and other miscellaneous items.
The FDD indicates that Auntie Annes based these figures on their experience and their affiliate's experience in franchising and operating shops. However, the document also notes that franchisees may incur other categories of expenses or expenses exceeding this estimate. The estimated low range for these additional funds is $15,000 and the high estimate is $28,000 for a standard shop and $54,000 for a co-branded shop. This means that franchisees need to budget carefully and potentially secure additional capital to cover any unforeseen costs during the startup phase.