Does the lack of financing from Burros Fries impact the initial investment required?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchisee's initial investment will vary depending upon the size of the facility's built out expenses, if Franchisee chooses to install certain kitchen equipment and inventory Franchisee purchases, number of employees Franchisee hires, time of year when Franchisee starts business, implementation of a marketing plan, Franchisee's management skills, economic conditions, competition in the surrounding area and other factors.
Franchisee hereby certifies that he or she has reviewed the estimated initial investment and startup costs as detailed in the Franchise Disclosure Document, and has sufficient cash resources available to meet said expenses. These start-up costs include the Initial Franchise Fee.
9. FRANCHISEE'S INITIAL FRANCHISE FEE
A. Initial Franchise Fee and Payment
By executing this Franchise Agreement, the applicant agrees to become a Franchisee and pay an Initial Franchise Fee in the amount of Thirty-Five Thousand dollars ($35,000) for a Burros & Fries Business. This Initial Franchise Fee includes a license to operate a single Burros & Fries Business in a Territory that is up to three (3) miles driven in any direction from the Business determined by boundaries as described in Section 6 of this Agreement. The Initial Franchise Fee includes a regional web page housed within our national website, the complete training program at our corporate headquarters and manuals. We choose to allocate some of that time to pre-opening or grand opening assistance.
S. Site Selection
Franchisee assumes all costs, liability, expense, and responsibility for locating, obtaining and developing a site for the Franchise Business to be established under the Franchise Agreement and for equipping the Business at such premises. A typical Burros & Fries Business has approximately 2,500- 3,000 square feet of space. The space must be enclosed and separate from other businesses with its own locking door. Franchisee may buy or lease the required real property and improvements from any source and on terms approved by us in writing. Franchisee may not sign a lease (or a contract to purchase the premises, if applicable) for the Business until Franchisee has obtained our written approval. Franchisee must not invest any monies for a site in which Franchisee wishes to open a Business until Franchisee has obtained our written approval for the site which will be made by email or any other form of written communication. On the execution of any lease for the Franchise Business, Franchisee will deliver to us a copy of the executed lease and an option to assume the lease executed by the lessor in favor of us in a form acceptable to us. All improvements to the Business must be approved by us.
FRANCHISEE ACKNOWLEDGES THAT OUR ACCEPTANCE OF A PROSPECTIVE SITE AND THE RENDERING OF ASSISTANCE IN THE SELECTION OF A SITE DOES NOT CONSTITUTE A REPRESENTATION, PROMISE, WARRANTY, OR GUARANTEE BY US THAT A BURROS & FRIES FRANCHISE OPERATED AT THAT SITE WILL BE PROFITABLE OR OTHERWISE SUCCESSFUL.
Your own efforts, skills and experience are necessary, but not a guarantee, for you to succeed. There can be no guarantee of your success, as there exist both typical and special business risk factors. These include changing market conditions, competition, cost of food and supplies, equipment, real estate market, capital, labor, your own health, continuity of your management, continuation of sources of supply, availability of financing, recession or depression locally or nationally, wars, strikes, acts of terrorism, emergencies whether natural or manmade, litigation, liability and casualty losses.
Other risks that may affect your Business include but are not limited to industry developments, changes in consumer taste, pricing policies of your competitors, state licensing, supply and demand. Another risk to mentionis your dependence on key personnel, the loss of whom could have an adverse effect on your Business. The purchase of a franchise is a speculative, and a significant investment beyond that outlined in this Disclosure Document may be required to succeed. There are no guarantees for success and the most important factors in the success of any franchise, including yours, are your personal business, marketing, management, judgment, other skills and your willingness and commitment to work hard and diligently in your Business and incorporating our System.
Source: Item 10 — FINANCING (FDD page 27)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the availability of financing can significantly impact the initial investment required to open a franchise. Item 6 notes that the franchisee must have sufficient cash resources available to meet the expenses detailed in the Franchise Disclosure Document, including the initial franchise fee of $35,000. The document also states that the franchisee assumes all costs, liability, expense, and responsibility for locating, obtaining, and developing a site for the franchise business and for equipping the business at such premises.
Since Burros Fries does not offer direct financing to franchisees, the franchisee is responsible for securing their own funding through external sources such as banks, credit unions, or private investors. The franchisee's ability to obtain financing will directly affect their capacity to cover the various costs associated with starting the business, such as leasehold improvements, equipment purchases, inventory, and the initial franchise fee. If a franchisee has difficulty securing financing, they may need to reduce the scope of their initial investment, delay the opening of their business, or seek alternative funding options.
Furthermore, the FDD highlights several factors that can influence the franchisee's initial investment, including the size of the facility, build-out expenses, kitchen equipment choices, inventory purchases, the number of employees hired, the time of year the business starts, and the implementation of a marketing plan. These factors, combined with economic conditions and competition in the surrounding area, can further strain a franchisee's financial resources, making the availability of financing even more critical. The success of the franchise depends on the franchisee's business, marketing, and management skills, as well as their commitment to work hard and diligently in their business and incorporating Burros Fries's system.