What is the relationship between the pre-opening assistance provided by Crisp & Green in Item 11 and the estimated initial investment costs detailed in Item 7?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
INITIAL INVESTMENT
| Type of Expenditure | Amount (1) | Method of Payment | When Due | To Whom Payment Is to Be Made | |-----------------------------------------------------------------------------|---------------------------|-----------------------------------------|----------------------------------------------------------------------|----------------------------------------------------| | Initial Franchise Fee (2) | $64,500 | Lump sum | Upon signing the Franchise Agreement | Us | | Crisp & Go Location Fee | $0 to $5,000 | Lump sum | Upon approval to add a Crisp & Go Location | Us | | Site survey (3) | $3,000 to $8,000 | Lump sum | As arranged with vendor | Vendor | | Architectural Plans (4) | $17,000 to $25,000 | Lump sum | At least 30 days prior to commencement of construction or remodeling | Our architectural services provider | | Furniture, Fixtures and Supplies (5) | $64,000 to $85,000 | Lump sum | Upon receipt of invoice | Suppliers | | Travel and living expenses while training (6) | $2,500 to $7,500 | As incurred to vendors | As arranged with vendors | Vendors, such as airlines, hotels, and restaurants | | Signage (interior and exterior) | $13,000 to $30,000 | Lump sum or as incurred to suppliers | Upon receipt of invoice or as arranged with suppliers | Suppliers | | Purchase and installation of commercial kitchen (7) | $240,000 to $260,000 | As incurred to vendors and contractors | As arranged with vendors and contractors | Vendors and contractors | | Premises construction and improvements (7) | $350,000 to $665,000 | As incurred to vendors and contractors | As arranged with vendors and contractors | Vendors, contractors | | Real estate and utility security deposits and 3 months' rent (8) | $11,000 to $60,000 | As arranged with landlord and providers | As arranged with landlord and providers | Landlord and utility providers |
| Type of Expenditure | Amount (1) | Method of Payment | When Due | To Whom Payment Is to Be Made |
|---|---|---|---|---|
| Licenses and permits | $3,500 to $25,000 | As arranged with applicable authorities or contractors | As arranged with applicable authorities or contractors | Governmental agencies and contractors |
| Computer System (including installation of POS System and inventory technology systems) (9) | $13,000 to $25,000 | As arranged with providers | As arranged with providers | Our point of sale system provider |
| Insurance (10) | $1,000 to $10,000 | As arranged with insurance provider | As arranged with insurance provider | Insurance provider |
| Grand Opening | $25,000 | Lump sum | As arranged with suppliers | Suppliers |
| Marketing Spend (11) | ||||
| Miscellaneous opening costs (12) | $5,000 to $10,000 | As arranged with advisors, vendors, and service providers | As arranged with advisors, vendors, and service providers | Advisors, vendors, and service providers |
| Opening inventory (13) | $7,500 to $13,000 | As arranged with suppliers | As arranged with suppliers | Suppliers |
| Pre-opening payroll expenses | $16,028 to $51,038 | As incurred | As incurred | Employees |
| Additional funds for | $50,000 to $75,000 | As incurred | As incurred | Employees, suppliers, utilities |
| three months of | ||||
| operations (excluding | ||||
| labor costs) (14) | ||||
| TOTAL (15) | $886,028 - $1,444,038 |
Notes:
- (1) All payments are non-refundable, unless payments are made to a third party and such third party agrees otherwise. For example, your security deposit for the lease of the Franchised Restaurant site may be refundable in whole or in part, depending upon the terms of your lease with the landlord for the site. We and our affiliates do not finance any part of the initial investment.
- (2) The initial franchise fee for a single Franchised Restaurant (i.e., not in connection with an Area Development Agreement) is $64,500. If you sign an Area Development Agreement, you will pay a Development Fee equal to $54,900 multiplied by the number of Franchised Restaurants you agree to develop. You then will not pay an initial franchise fee for each Franchised Restaurant you develop under the Area Development Agreement. After you apply to become a franchisee (for a single Restaurant or for multiple Restaurants under an Area Development Agreement) and after the expiration of the 14-day waiting period following your receipt of this disclosure document, you will be required to sign a letter of intent (the "LOI") to evidence your intention to continue towards execution of one or more Franchise Agreements with us. In connection with the LOI you will be required to submit to a background check which includes a criminal/civil record search and a credit
check. We will not countersign a Franchise Agreement or Area Development Agreement until we have received results of the search and check. If we determine that you are unsuitable to run a franchised Restaurant as a result of background check and credit check results, we reserve the right to not accept you as a franchisee and to terminate any agreements between us and you. An example of the LOI for a single territory is attached as Exhibit D to this disclosure document.
- You must engage one of our approved vendors to complete a site survey of your Franchised Restaurant's location. Costs will vary depending on site conditions.
- (4) We have a required architectural vendor who you must use for the creation of the architectural plans for your Franchised Restaurant.
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, Item 11 outlines the pre-opening assistance that Crisp & Green Franchising LLC provides, while Item 7 details the estimated initial investment required to open a franchise. The pre-opening assistance described in Item 11 has direct cost implications that are reflected in the estimated initial investment costs in Item 7. For example, Crisp & Green will review and approve the site for the Franchised Restaurant. Item 7 includes a site survey cost of $3,000 to $8,000. Also, Crisp & Green provides sample floor plans and layouts for a Restaurant to assist in locating and developing an appropriate site. Item 7 includes architectural plans that cost $17,000 to $25,000.
Item 11 states that Crisp & Green will provide Opening Training consisting of seven days of onsite training immediately surrounding the grand opening. Item 7 does not include a separate fee payable to Crisp & Green in connection with Crisp Academy, their initial training program, for up to four people. However, the franchisee is responsible for making arrangements for travel, accommodations, and meals for personnel attending Crisp Academy. The estimate contemplates local accommodations and meals for four people during three weeks of Crisp Academy in Minnesota. The low end of the estimate assumes that you and the individuals attending training reside within driving distance of the training location, and the high end assumes travel will be needed, although expenses may vary significantly depending upon factors such as the distance traveled and mode of transportation. Item 7 includes travel and living expenses while training that range from $2,500 to $7,500.
Furthermore, Item 11 mentions the franchisee's responsibility for ensuring the restaurant's design and construction meet all legal requirements. This corresponds to expenses in Item 7 such as licenses and permits, which range from $3,500 to $25,000, and premises construction and improvements, which range from $350,000 to $665,000. Item 11 also states that in connection with the opening of the Franchised Restaurant you will execute a grand opening marketing plan prescribed by us and corresponding grand opening marketing spend (the "Opening Marketing Spend"). The Opening Marketing Spend will consist of a minimum of Twenty-Five Thousand Dollars ($25,000) and will vary based on factors we determine in our sole discretion. Item 7 includes a grand opening marketing spend of $25,000.
Therefore, the pre-opening assistance offered by Crisp & Green directly influences several line items within the estimated initial investment, highlighting the financial implications of the support and requirements set forth by the franchisor. A prospective franchisee should carefully consider both Item 7 and Item 11 to fully understand the costs associated with opening a Crisp & Green franchise and the assistance they will receive in return.