What pre-opening obligations does Beggars Pizza have to the franchisee as described in Item 11, and how do these obligations relate to the franchisee's initial investment costs outlined in Item 7?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Before the Restaurant opens, we must provide the following to you:
-
- If you do not have an approved location before signing your Franchise Agreement, you will sign the site selection addendum (the "Site Selection Addendum") attached to the Franchise Agreement as Exhibit B, and we will provide you with such site selection guidelines and consultation as we deem advisable (Franchise Agreement, Exhibit B, Paragraph 5);
-
- If you do not have an approved location before signing your Franchise Agreement, you will sign a Site Selection Addendum, we will provide such on-site evaluations as we deem advisable as part of our evaluation of your request for site approval. We will not provide on-site evaluations for any proposed site before our receipt of the information or materials required by your Franchise Agreement. If an on-site evaluation is deemed necessary and appropriate by us, we will conduct up to two on-site evaluations at our expense. For each additional on-site evaluation, you must reimburse us for our related expenses, including the costs of travel, lodging, and meals (Franchise Agreement, Exhibit B, Paragraph 5);
-
- We will make available to you (a) a preliminary layout for the site for the Restaurant based on our standard plans for your adaptation including exterior and interior design and layout, and (b) specifications for furniture, fixtures, and signage. (Franchise Agreement, Section 3.1);
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, Item 11 outlines the limited pre-opening obligations that Beggars Pizza provides to its franchisees. Specifically, if a franchisee has not secured an approved location before signing the Franchise Agreement, they must sign a Site Selection Addendum. In this case, Beggars Pizza will offer site selection guidelines and consultation as they deem necessary. Beggars Pizza will also conduct on-site evaluations as part of the site approval process, but the franchisee must first provide all required information and materials. Beggars Pizza covers the expenses for up to two on-site evaluations; however, the franchisee must reimburse Beggars Pizza for any additional evaluations, including travel, lodging, and meals. Beggars Pizza will also provide a preliminary layout for the restaurant site based on their standard plans, including exterior and interior design, layout, and specifications for furniture, fixtures, and signage.
These pre-opening obligations relate to the franchisee's initial investment costs, as detailed in Item 7. The site selection assistance and preliminary layout plans can influence costs related to real estate, leasehold improvements, and professional fees. For example, Note 2 in Item 7 mentions estimated rent costs for the first month of operations, assuming an annual rent between $17.00 and $25.00 per square foot. The site selection guidance from Beggars Pizza could help a franchisee find a location that fits within their budget. Similarly, Note 3 in Item 7 discusses leasehold improvements, which include remodeling walls, ceilings, floors, electrical work, carpentry, and the installation of signage and HVAC systems. The preliminary layout provided by Beggars Pizza can help in adapting standard plans to the restaurant's layout, potentially affecting the overall cost of these improvements.
It is important to note that the initial franchise fee, which is $25,000 for a restaurant with 150 or fewer seats and $40,000 for a restaurant with more than 150 seats, is non-refundable and due upon signing the Franchise Agreement. This fee is separate from the costs associated with site selection, construction, and other pre-opening activities. Franchisees should carefully consider these obligations and associated costs when evaluating the franchise opportunity and developing a business plan. Consulting with real estate professionals, accountants, and financial advisors is highly recommended to ensure a comprehensive understanding of the financial implications and to prepare for the start-up phase of the restaurant.