Are the expenses for kitchen equipment, furniture, and fixtures refundable for a Burros Fries franchise?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
12.H, 12.I and 20.I).
Note 2: This is an estimate for the items you will need for kitchen equipment, furnishing and fixtures. You must purchase various used or new pieces of kitchen equipment for the operation of your Business as specified in the Operations Manual. The kitchen equipment you will need to operate your Business includes, but is not limited to commercial grade refrigerators, commercial grade freezers, microwave, toaster ovens, beverage dispensers, and a three-compartment sink. The furnishings and fixtures necessary to operate your Business include but are not limited to tables, chairs, stools, counters, hostess stand, fabricated stainless steel worktables, filing systems, one beverage display refrigerator, shelving, cabinets, storage racks and one small safe for the operation of your Business. The low end of the estimate given is based on opening a 1,350 sq. foot facility and the high end of the estimate is based on opening a 2,800 sq. foot facility. Actual kitchen equipment, furniture and fixture costs may vary due to the square footage of your facility. Sales tax is charged separately by each state and is not included in these estimates. Sales tax may range from three percent (3%) to ten percent (10%) of the purchase price and are not included in these estimates. You are responsible for paying all applicable sales taxes. You must lease or purchase all kitchen equipment, furnishing and fixtures from us, our affiliates or our approved vendors and suppliers. In addition, you must lease or purchase all kitchen equipment, furnishings and fixtures that meet our specifications, which may change from time to time. The cost of all kitchen equipment, furnishing and fixtures will depend on financing terms available, the condition of the kitchen equipment, furnishing and fixtures and other factors. You may be able to take advantage of tax benefits for the lease or purchase of all your kitchen equipment, furnishing and fixtures as you are encouraged to talk with a tax professional. Expenses for the kitchen equipment, furniture and fixtures do not include shipping or delivery costs and may or may not be refundable depending on the terms of your invoice, lease agreement or purchase agreement.
Note 3: A typical Business is in a shopping center, mall or a free-standing building. Cost per square foot will depend on your geographic area and we estimate such costs to be approximately $3 per square foot on the low end and approximately $5 per square foot on the high end. These sums do not include common area maintenance fees, which if applicable, will vary depending on your location or any sums for the purchase of real property, as we do not expect that you will buy real property.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT YOUR ESTIMATED INITIAL INVESTMENT (FDD pages 16–21)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the refundability of expenses for kitchen equipment, furniture, and fixtures depends on the specific terms outlined in the invoice, lease agreement, or purchase agreement. The FDD indicates that franchisees must purchase or lease these items from Burros Fries, its affiliates, or approved vendors, and these items must meet the franchisor's specifications, which may change over time.
The estimated cost for kitchen equipment, furniture, and fixtures ranges from $120,000 to $160,000, depending on the facility's size. The lower end of this estimate is based on a 1,350 sq. ft. facility, while the higher end is based on a 2,800 sq. ft. facility. These costs do not include shipping or delivery expenses, and sales tax, which can range from 3% to 10% of the purchase price, is also excluded from these estimates.
Prospective franchisees should carefully review the terms of their agreements with suppliers and lessors to understand the conditions under which any portion of these expenses might be refundable. Given that the refundability is not guaranteed and depends on individual agreements, it is crucial to clarify these terms before making any purchases or leases. Franchisees are also encouraged to consult with a tax professional to explore potential tax benefits associated with leasing or purchasing these items.