Does the Devon Creek additional operating capital estimate include compensation to the franchisee?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
16This is an estimate of the amount of additional operating capital that you may need to operate your Franchised Business during the first three (3) months after commencing operations. We cannot guarantee that you will not incur additional expenses in starting the business that may exceed this estimate. This estimate includes such items as initial payroll, taxes, bank charges, miscellaneous supplies and equipment, initial staff recruiting expenses, additional marketing costs and other miscellaneous items. These estimates do not include any compensation to you, nor do they include debt service. These items are by no means all-inclusive of the extent of possible expenses.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT – START UP FRANCHISEE (FDD pages 16–21)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, the estimate for additional operating capital does not include compensation for the franchisee. The FDD specifies that the operating capital estimate covers the first three months of operation and includes expenses such as initial payroll, taxes, bank charges, miscellaneous supplies and equipment, initial staff recruiting expenses, additional marketing costs, and other miscellaneous items.
This means that prospective Devon Creek franchisees should not expect the estimated $5,000 to $15,000 (or $10,000 to $30,000 depending on the table) for additional operating capital to cover their own salary or draw during the initial months of operation. Franchisees must secure separate funding or have sufficient personal savings to cover their living expenses during this startup phase. The FDD also clarifies that this estimate does not include debt service, meaning franchisees need to account for loan payments separately.
Devon Creek emphasizes that the provided estimates are not a guarantee, and franchisees may incur additional expenses. It is crucial for potential franchisees to carefully review these figures with a business advisor and prepare for potential additional costs beyond the initial estimates. The document advises that these estimates are not all-inclusive of possible expenses, so franchisees should conduct thorough financial planning to ensure they have adequate capital to sustain themselves and the business during the initial operating period.