What factors can cause the cost of leasehold improvements to increase for a Jersey Mikes restaurant?

According to Jersey Mikes's 2025 Franchise Disclosure Document, the cost of leasehold improvements can fluctuate based on several factors. The primary drivers are the size and condition of the premises a franchisee selects for their restaurant. Larger spaces or those requiring significant repairs or upgrades will naturally lead to higher expenses. Additionally, the local cost of contract work plays a crucial role; areas with higher labor rates will see increased construction and renovation costs. The location of the restaurant itself also influences these expenses.

Specifically, the FDD notes that the need for additional HVAC, hood exhaust systems, or grease interceptors/traps can increase leasehold improvement costs. These are often necessary to meet local regulations or to adapt the space for restaurant use. Furthermore, if a franchisee chooses to build out a freestanding building rather than occupying an existing retail space, this will also increase these costs.

Conversely, the document mentions that the cost of leasehold improvements may be reduced if the landlord provides a construction allowance. This is a common practice in commercial real estate, where the landlord contributes a certain amount towards the tenant's build-out costs. Therefore, prospective Jersey Mikes franchisees should carefully evaluate potential locations, considering the existing infrastructure, local labor costs, and the possibility of negotiating a construction allowance with the landlord to manage these expenses effectively.