What is included in the occupancy costs for a Crisp & Green restaurant?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
e costs exclude occupancy costs and depreciation.
- (6) Occupancy costs include rent, percentage rent, common area maintenance, real estate taxes, and promotional and other miscellaneous lease expenses.
- (7) The expenses presented do not include the initial franchise fee described in Item 5 (or any initial startup or pre-opening costs/fees), or other fees that you will be responsible for pay to the franchisor if you purchase a franchise.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 57–62)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, occupancy costs include rent, percentage rent, common area maintenance, real estate taxes, and promotional and other miscellaneous lease expenses. This definition is important for prospective franchisees to understand because occupancy costs can be a significant expense for a restaurant. Understanding exactly what is included in this category allows franchisees to accurately budget and forecast their expenses.
Specifically, the inclusion of items like 'percentage rent' means that the franchisee's rent expense could increase as their sales increase, which is common in retail leasing. Common area maintenance (CAM) charges can also fluctuate, depending on the landlord's expenses for maintaining the property. Real estate taxes are another significant component that can vary by location.
By providing this detailed breakdown of occupancy costs, Crisp & Green gives potential franchisees a clearer picture of the financial obligations associated with operating a franchise. This transparency helps franchisees to better assess the profitability of a location and manage their finances effectively. It is important to note that these occupancy costs are separate from other operating costs such as supplies, utilities, repair and maintenance, and insurance.