What does the estimated cost for leasehold improvements for Azal Coffee assume about the landlord's contribution?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
The costs of these items may vary considerably depending on the size, physical condition and location of the premises and the amount of the costs, if any, a landlord may be willing to assume (however, if the landlord assumes costs, you will probably pay a higher rent for the location and you may have to personally guaranty the lease payments for a period of time to allow the landlord to amortize its costs).
The estimated cost assumes the landlord will provide you with a "white box," including utility hookups, etc. or will directly pay or reimburse you for a portion of the expenses.
If the landlord does not provide a "white box" or pay or reimburse you for a portion of the expenses, you may have to incur substantial additional expenses for leasehold improvements.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 19–22)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the estimated cost for leasehold improvements, which ranges from $120,000 to $190,000, assumes that the landlord will provide a "white box," including utility hookups. Alternatively, the estimate assumes the landlord will directly pay or reimburse the franchisee for a portion of these expenses. A "white box" typically includes basic interior finishes and essential infrastructure, making the space ready for customization.
If the landlord does not provide a "white box" or offer any reimbursement, the franchisee should anticipate incurring substantial additional expenses for leasehold improvements. These improvements encompass mechanical installations like HVAC systems, as well as the construction of walls, counters, flooring, ceilings, lighting, and electrical and plumbing systems. The cost also includes engaging a qualified architect to prepare a site plan and construction drawings for the franchise location.
It's important to note that even if the landlord contributes to these costs, the franchisee may face higher rent payments to allow the landlord to amortize their investment. Additionally, the landlord may require the franchisee to personally guarantee the lease payments for a certain period. The estimated range of $120,000 to $190,000 for leasehold improvements does not include fees and costs related to obtaining building and other permits and licenses, which are separate expenses that the franchisee must budget for.