For an Auntie Annes franchise, to whom are the payments for 'Additional Funds - 3 Months' made, and when are they due?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
| | | | | Exterior Signage 8 | $4,100 | $20,000 | Lump sum | Before opening | Vendors | | Computer System 9 | $7,400 | $27,400 | As incurred | Before opening | Vendors | | Smallwares 10 | $3,000 | $12,000 | As incurred | Before opening | Vendors |
| Type of Expenditure | Amount of E | Expenditure | Method of | When Payments Are | To Whom Payment Will |
|---|---|---|---|---|---|
| ,, , | Low | High | Payment | Due | Be Made |
| Architect/Engineer 11 | $8,500 | $27,000 | As incurred | Before opening | Architect |
| Rent 12 | $2,000 | $10,000 | Monthly | As arranged | Lessors |
| Grand Opening | $5,000 | $15,000 | As incurred | Before opening | Vendors or |
| Marketing 13 | Us | ||||
| Legal and Accounting | $7,000 | $12,000 | As incurred | Before opening | Lawyers and accountants |
| Fees 14 | |||||
| Insurance 15 | $1,575 | $8,200 | As incurred | Before opening | Insurance companies |
| Misc. Opening | $13,000 | $25,000 | As incurred | Before opening | Vendors |
| Costs/Office | |||||
| Supplies 16 | |||||
| Security Deposits 17 | $0 | $15,000 | As incurred | As incurred | Utility companies; lessors |
| Management Training | $0 | $4,000 | As incurred | Before opening | Us |
| Program Fee 18 | |||||
| Travel and Living | $4,600 | $6,900 | As incurred | Before opening | Airlines, |
| Expenses during | hotels and | ||||
| Training 18 | restaurants | ||||
| On-Site Training | $0 | $12,200 | As incurred | Before opening | Us |
| Fee 19</su |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 44–54)
What This Means (2024 FDD)
According to Auntie Anne's 2024 Franchise Disclosure Document, the 'Additional Funds - 3 Months' expenditure covers expenses incurred before the shop opens and during the first three months of operation. These expenses can include employee salaries, wages and benefits, payroll taxes, royalty fees, advertising contributions, ongoing fees to co-branded franchisors (if applicable), additional advertising, inventory, miscellaneous supplies and equipment, rent, bank charges, state tax and license fees, deposits, prepaid expenses, and other miscellaneous items.
The payments for these additional funds are made to 'Us, employees, vendors, etc.' meaning Auntie Anne's, the franchisee's employees, various vendors, and other relevant parties. The payments are due 'As incurred,' indicating that these expenses are paid as they arise during the pre-opening phase and the initial three months of operation.
For a standard Auntie Anne's store, the estimated range for these additional funds is between $15,000 and $78,000. For a smaller trailer/truck model, the range is $15,000 to $54,000. This wide range suggests that the actual amount needed can vary significantly based on factors like location, staffing needs, and unforeseen costs. It is important for prospective franchisees to carefully plan and budget for these expenses to ensure they have sufficient capital to cover the initial operating period.