Besides base rent, what other charges might I have to pay under a Baya Bar lease?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
fee is discussed in Item 5.
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- Rent. Our estimates assume that you will lease space for your Franchised Business. Your Shop must be in a shopping mall, strip shopping center, or in a downtown setting, and you will need approximately 750-1,200 square feet. Landlords may vary the base rental rate and charge rent based on a percentage of gross sales. In addition to base rent, your lease may require you to pay common area maintenance charges ("CAM Charges") for your pro rata share of the real estate taxes and insurance, and your pro rata share of other charges. The actual amount you pay under the lease will vary depending on the size of the space, the types of charges that are allocated to tenants under the lease, your ability to negotiate with landlords and the prevailing rental rates in the geographic region.
If you choose to purchase real property on which to build your Franchised Business, your initial investment will probably be higher than what we estimate above. If you purchase real property, we cannot estimate how this purchase will affect your total initial investment.
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- Utility Security Deposit. You may need to provide one to two months of security deposits for your utilities (such as gas, water and/or electric).
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- Design & Architect Fees. You must obtain construction plans for the build-out of your Shop according to our specifications. We have the right to designate and/or approve of the designer and/or architect you use.
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- Leasehold Improvements. The cost of leasehold improvements will vary depending on many factors, including: (a) the size and configuration of the premises; (b) pre-construction costs (including demolition of existing walls and removal of existing improvements and fixtures); and (c) cost of materials and labor, which may vary based on geography and location or whether you must use union labor for the build-out of your location. These figures are our principals' best estimate based on remodeling/finish-out rates in the metropolitan New York area. These amounts may vary substantially based on local conditions, including the availability and prices of labor and materials.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 16–20)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, in addition to base rent, franchisees may be required to pay common area maintenance charges, also known as CAM charges. These CAM charges cover a pro rata share of real estate taxes, insurance, and other charges associated with maintaining the common areas of the shopping center or building where the Baya Bar shop is located. The actual amount a franchisee pays under the lease will depend on factors such as the size of the space, the types of charges allocated to tenants, the franchisee's ability to negotiate with landlords, and the prevailing rental rates in the geographic region. For the first three months of rent, Baya Bar estimates this to be between $6,500 and $31,250. Also, a utility security deposit of $1,500 to $5,000 may be required to be paid to the landlord or utility companies.
Prospective Baya Bar franchisees should carefully review the lease agreement and negotiate terms to minimize these additional costs. Understanding the specific CAM charges and other lease-related expenses is crucial for accurate financial planning. Franchisees should also consider consulting with a real estate attorney or experienced lease negotiator to ensure they secure favorable lease terms.
The FDD also indicates that Baya Bar estimates additional funds for the first three months of operation to be between $20,425 and $45,166. These additional funds are meant to cover expenses such as payroll, utilities, rent, royalty fees, and marketing fund fees, if these costs are not covered by sales revenue. It is important to note that these are only estimates, and actual costs may vary based on factors such as rental prices and site-specific requirements or regulations.