Does the initial investment for a Crisp & Green franchise include the purchase of an initial inventory?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
- (13) You must purchase an initial inventory of certain items, primarily consisting of food items and ingredients.
You will need to replenish your initial inventory on an as-needed basis as such items and other supplies are used.
This estimate is based on inventory purchases from approved suppliers in connection with the opening of Corporate Restaurants.
The amount and cost of your initial and subsequent orders for all of these items will vary depending on various factors, including the size and anticipated volume of your Franchised Restaurant's sales and the frequency of your orders.
- (14) You will need additional capital to support on-going expenses, such as payroll, to the extent that these costs are not covered by sales revenue.
New businesses often generate negative cash flow.
We estimate that the amount shown in the chart above will be sufficient to cover on-going expenses for the start-up phase or initial period of the business, which we estimate to be three months.
This amount does not include the categories of expenses specifically set forth in the chart, like inventory or rent, nor does it include expenses relating to payment of hourly wages.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 22–26)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, the initial investment includes the purchase of an initial inventory. This inventory primarily consists of food items and ingredients that the franchisee must purchase from approved suppliers. The franchisee will need to replenish this initial inventory as needed.
The cost of the initial inventory will vary based on factors such as the size and anticipated sales volume of the Crisp & Green restaurant, as well as the frequency of orders. The FDD notes that the estimate for initial inventory is based on purchases made by corporate restaurants when opening.
Item 7 includes a table outlining the estimated initial investment, but it does not include a specific line item for the initial inventory purchase. Instead, it is included in the additional capital needed, which is estimated to cover on-going expenses for the start-up phase, estimated to be three months. This amount does not include the categories of expenses specifically set forth in the chart, like inventory or rent, nor does it include expenses relating to payment of hourly wages. The FDD indicates that new businesses often generate negative cash flow, so this additional capital is crucial for covering expenses not immediately met by sales revenue.