How does the initial franchise fee for Crave (Item 5) relate to the initial investment costs (Item 7)?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 5: INITIAL FEES]
ITEM 5 INITIAL FEES
Franchise Agreement: You must pay us an initial franchise fee of $45,000 for the right to establish a single Crave Restaurant under a Franchise Agreement. If you are purchasing your second or third Restaurant, the initial franchise fee will be reduced to $40,000. If you are purchasing your fourth or later Restaurant, the initial franchise fee will be reduced to $35,000.
You must pay us an initial franchise fee of $30,000 for the right to establish a single Crave Food Truck business under a Franchise Agreement. If you already own and operate a Crave Restaurant and desire to own and operate a Food Truck business, the initial franchise fee for the Food Truck will be reduced to $20,000.
From time to time, we may offer special incentive programs as part of our franchise development activities. We currently offer an incentive program where we will discount the initial franchise fee by $5,000 to veterans and active-duty military personnel for the first Franchised Business purchased. We have the right to offer, modify or withdraw any incentive program without notice to you. The initial franchise fee is imposed uniformly on all franchisees and is not refundable under any circumstances.
Grand Opening Marketing: You must pay us $5,000 if you are opening a Restaurant or $2,500 if you are starting a Food Truck business, for a grand opening marketing campaign that we will conduct on your behalf around the opening of your Franchised Business. This money is not refundable.
[Item 7: ESTIMATED INITIAL INVESTMENT]
| (1) Type of Expenditure | (2) Amount | (3) Method of Payment | (4) When Due | (5) To Whom Payment is to be Made |
|---|---|---|---|---|
| Initial Franchise Fee (1) | $45,000 | Lump Sum | When Franchise Agreement Signed | Us |
| Lease & Utility Security Deposit (3) | $5,000 | As arranged | As arranged | Crave WM Franchising LLC(Landlord) |
| Design & Architect | $5,000 to $35,000 | As arranged | As arranged | Designer or |
| Fees (4) | Architect | |||
| Leasehold | $50,000 to $250,000 | As arranged | As arranged | Contractor |
| Improvements (5)- | ||||
| dependent on site conditions | ||||
| Signage (6) | $3,000 to $30,000 | As arranged | As arranged | Suppliers |
| Equipment, | $100,000 to 150,000 | As arranged | As arranged | Suppliers |
| Furniture and | ||||
| Fixtures (7) | ||||
| Point-of-Sale & Computer Equipment (8) | $1,500 to $5,000 | As arranged | As arranged | Suppliers |
| Business Licenses & Permits (Not Including Beer/Wine (9) License) | $500 to $2500 | As arranged | As arranged | Government Agencies |
| Professional Fees | $1,000 to $3,500 | As arranged | As arranged | Attorney, |
| (10) | Accountant |
[Item 7: ESTIMATED INITIAL INVESTMENT]
| (1) Type of Expenditure | (2) Amount | (3) Method of Payment | (4) When Due | (5) To Whom Payment is to be Made |
|---|---|---|---|---|
| Initial Franchise Fee (1) | $45,000 | Lump Sum | When Franchise Agreement Signed | Us |
| 1 Month (2) | $5,000 to $15,000 | As arranged | As arranged | Landlord |
| Rent – | ||||
| Lease & Utility (3) Security Deposit | $4,000 to $15,000 | As arranged | As arranged | Landlord, Utility Companies |
| Design & Architect (4) Fees | $1,000 to $35,000 | As arranged | As arranged | Designer or Architect |
| Leasehold | $100,000 to $700,000 | As arranged | As arranged | Contractor |
| Improvements (5) | ||||
| dependent on site conditions | ||||
| Signage (6) | $3,000 to $30,000 | As arranged | As arranged | Suppliers |
| Equipment, | $70,000 to $160,000 | As arranged | As arranged | Suppliers |
| Furniture and | ||||
| Fixtures (7) | ||||
| Point-of-Sale & Computer (8) Equipment | $1,500 to $5,500 | As arranged | As arranged | Suppliers |
| Business Licenses & Permits (Not Including Beer/Wine (9) License) | $500 to $4,000 | As arranged | As arranged | Government Agencies |
| Professional Fees | $1,000 to $3,500 | As arranged | As arranged | Attorney, |
| (10) | Accountant | |||
| Insurance – 1 (11) Month | $1,000 to $3,000 | As arranged | As arranged | Insurance Companies |
| Initial Inventory | $8,000 to $15,000 | As arranged | As arranged | Suppliers |
| Food & Other | ||||
| (12) | ||||
| Items | ||||
| Initial Inventory | $100 to $1,000 | As arranged | As arranged | Suppliers |
| (12) | ||||
| Alcohol |
Multi-Unit Development Agreement: If you qualify to develop and operate multiple Crave Franchised Businesses, then you will pay to us a development fee equal to 100% of the initial franchise fee for the first Franchised Business you commit to develop under the Multi-Unit Development Agreement plus 50% of the initial franchise fee for each additional Franchised Business you commit to develop under the Multi-Unit Development Agreement. You may commit to develop any combination of Restaurants, Food Trucks, and Express Restaurants under a Multi-Unit Development Agreement. For example, if you commit to develop three Food Trucks, the development fee is calculated as $30,000 + (2 x $15,000 = $30,000) = $60,000. If you commit to develop three Restaurants, the development fee is calculated as $45,000 + (2 x $20,000 = $40,000) = $85,000. If you commit to develop a minimum of three units in some other combination of Food Trucks and Restaurants, the development fee will be an amount between $60,000 and $85,000. The development fee is fully earned by us when received and is not refundable or credited against any future fees payable by you under any Franchise Agreement or otherwise.
You will sign the Franchise Agreement for the first Franchised Business at the same time you sign the Multi-Unit Development Agreement, and we will apply a portion of the development fee to pay the initial franchise fee for the first Franchised Business in full. For each additional Franchised Business you will develop under the Multi-Unit Development Agreement, we will apply a credit of 50% of the amount of the initial franchise fee for that Franchised Business, and the balance of the initial franchise fee due for that Franchised Business is payable in a lump sum when you sign the Franchise Agreement for that Franchised Business. The development fee is imposed uniformly on all multi-unit developers and is not refundable under any circumstances.
There are no other purchases from or payments to us or any affiliate of ours that you must make before your Franchised Business opens for business.
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the initial franchise fee is a component of the total estimated initial investment. Item 5 details the initial franchise fees, while Item 7 outlines the broader estimated initial investment required to start a Crave franchise. The initial franchise fee varies depending on the type of franchise (Restaurant or Food Truck) and whether the franchisee is developing multiple units.
For a single Crave Restaurant, the initial franchise fee is $45,000, but it can be reduced to $40,000 for a second or third Restaurant and $35,000 for a fourth or later Restaurant. For a Crave Food Truck, the initial franchise fee is $30,000, which can be reduced to $20,000 if the franchisee already owns and operates a Crave Restaurant. Veterans and active-duty military personnel may receive a $5,000 discount on the initial franchise fee for their first Franchised Business. Item 7 includes this initial franchise fee as part of the total estimated initial investment, with a line item specifically for the initial franchise fee, noting it is paid in a lump sum when the Franchise Agreement is signed.
Item 7 provides a table that lists various expenditures that make up the initial investment, including the initial franchise fee. For example, the initial investment for a Restaurant includes the $45,000 initial franchise fee, rent, security deposits, design and architect fees ($5,000 to $35,000), leasehold improvements ($50,000 to $250,000), signage ($3,000 to $30,000), equipment, furniture and fixtures ($100,000 to $150,000), point-of-sale and computer equipment ($1,500 to $5,000), business licenses and permits ($500 to $2,500), and professional fees ($1,000 to $3,500). For a Food Truck, the initial investment includes a $30,000 initial franchise fee, rent, security deposits ($4,000 to $15,000), design and architect fees ($1,000 to $35,000), leasehold improvements ($100,000 to $700,000), signage ($3,000 to $30,000), equipment, furniture and fixtures ($70,000 to $160,000), point-of-sale and computer equipment ($1,500 to $5,500), business licenses and permits ($500 to $4,000), professional fees ($1,000 to $3,500), insurance ($1,000 to $3,000), and initial inventory ($8,000 to $15,000 for food and other items and $100 to $1,000 for alcohol).
For franchisees considering a Multi-Unit Development Agreement, the development fee covers the initial franchise fee for the first Franchised Business, with a credit of 50% of the initial franchise fee applied to each additional Franchised Business. The balance of the initial franchise fee is then due when signing the Franchise Agreement for each additional unit. Understanding how the initial franchise fee fits into the overall initial investment is crucial for prospective Crave franchisees to plan their finances effectively. The FDD clearly states that none of the expenses listed are refundable, except for security deposits, and that Crave does not finance any portion of the initial investment.