On what basis did Chocolate Fish Coffee formulate the amount required for additional funds?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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- This includes any other required expenses you will incur before operations begin and during the initial period of operations, such as payroll, additional inventory, rent, and other operating expenses in excess of income generated by the business. It does not include any salary or compensation for you. In formulating the amount required for additional funds, we relied on the following factors, basis, and experience: the development of a Chocolate Fish Coffee business by our affiliate, and our general knowledge of the industry.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 13–16)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the franchisor determined the amount needed for additional funds based on two main factors. These factors include the development of a Chocolate Fish Coffee business by their affiliate, and their general knowledge of the industry. These additional funds are estimated to be between $30,000 and $60,000 for the first 3 months of operation.
These funds are intended to cover required expenses incurred before operations begin and during the initial operating period. Examples of these expenses include payroll, additional inventory, rent, and other operating expenses that exceed the income generated by the business. It is important to note that these additional funds do not include any salary or compensation for the franchisee themselves.
Prospective franchisees should carefully consider these estimates and ensure they have sufficient capital to cover these initial operating expenses. It would be prudent to discuss these estimates in detail with Chocolate Fish Coffee to understand the specific assumptions and factors that contribute to the projected range. Understanding these factors will help a franchisee prepare a realistic financial plan for their new business.