Does the refundability of leasehold improvements for a Burros Fries Business depend on the lease agreement?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Whether or not any leasehold improvements or build-out expenses are refundable depends on the terms and conditions of your contracts you're your contractors, as well as your lease agreement (Franchise Agreement Sections 12.S and 12.T).
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. Real estate costs depend on location, size, visibility, economic conditions, accessibility and competitive market conditions. You may be able to reduce this expense if you are able to occupy a space in an existing location that compliments another business. The space must be enclosed and separate from other businesses with its own locking door. In the event you leave your leased premises before the termination of your lease, you may owe the landlord payment for the entire lease term depending on the terms and conditions of your lease.
| Cash or Acceptable Funds | ||||
|---|---|---|---|---|
| Leasehold | $300,000 | $450,000 | Before | Landlord |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT YOUR ESTIMATED INITIAL INVESTMENT (FDD pages 16–21)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, whether leasehold improvements or build-out expenses are refundable depends on the terms and conditions of contracts with contractors and the lease agreement. This means a prospective franchisee needs to carefully review all contracts, especially the lease, to understand if any portion of the leasehold improvements or build-out expenses can be recovered if the franchisee leaves the location before the lease expires.
The FDD indicates that a typical Burros Fries Business is located in a shopping center, mall, or free-standing building. The cost per square foot is estimated to be approximately $3 to $5, excluding common area maintenance fees. The document also advises finding a space needing minimal leasehold improvements. The cost of leasehold improvements can range from $300,000 to $450,000.
In the event a franchisee leaves the leased premises before the lease termination, they may owe the landlord payment for the entire lease term, depending on the lease terms. This highlights the importance of negotiating favorable lease terms and understanding the conditions under which leasehold improvements might be refundable. Prospective franchisees should seek legal counsel to review the lease agreement and contractor agreements to fully understand their rights and obligations.