BEN & JERRY’S Franchise Start Up Costs
March 7, 2009 by Sean Kelly
Filed under Business
Ever daydream about owning a Ben & Jerry’s franchise Scoop Shop?
Or wonder what it would cost?
Well, here are the estimated start-up costs for a typical Ben & Jerry’s franchise (supplied by the company). Contrary to what many believe, the bulk of your investment as a new franchise owner is paid to vendors, suppliers, contractors, landlords, etc. and not to the franchisor company.
The chart below breaks out not only the items and costs, but also who is paid for each:
ESTIMATED EXPENDITURES FOR SCOOP SHOPS
TYPE A AND B (APPROXIMATELY 750-1500 SQ.FT)
| ITEM: | Estimated Cost | Paid to: |
| Preliminary Agreement Deposit | $16,000 | Ben & Jerry’s |
| Initial Franchise Fee | $32,000 ($16,000 will be credited from the Deposit) or $8,000 for a Satellite Shop | Ben & Jerry’s |
| Plans, Development & Permits | $3,500 to $12,000 | Architect, City & State Licensing Authority |
| Leasehold Improvements & Construction | $80,000 to $200,000 | Contractor |
| Furniture, Fixtures, Equipment, Casework, & Smallwares | $50,000 to $80,000 | Vendors |
| Signage | $5,000 to $15,000 | Vendors |
| Professional Fees | $3,000 to $6,000 | Attorney, Accountant, etc. |
| POS and Telephone | $8,100 to $8,400 | Vendors, Suppliers |
| Deposits | $3,000 to $8,000 | Landlord, Vendors, & Utility Providers |
| Initial Training | $1,000 to $3,000 | Vendors |
| Inventory | $8,000 to $14,000 | Vendors, Distributors; Suppliers |
| Insurance | $500 to $2,500 | Insurers |
| Grand Opening Advertising | $3,000 | Suppliers |
| Subtotal: | $197,100 to $383,900 |
ESTIMATED EXPENDITURES FOR:
INLINE SCOOP SHOPS (APPROXIMATELY 450-650 SQ.FT): $160,100 to $264,900
A SHOP-IN-SHOP SCOOP SHOP (APPROXIMATELY 450-650 SQ.FT): $143,600 to $217,900
KIOSK SCOOP SHOP (APPROXIMATELY 100-200 SQ.FT): $118,300 to $210,900
ADDITIONAL ESTIMATED EXPENDITURES:
3 months’ operating expenses: $55,000 (estimate)
According to Ben & Jerry’s, “You will need additional funds to support on-going expenses, such as payroll, rent and utilities, to the extent that these costs are not covered by sales revenue. New businesses often generate a negative cash flow. We estimate that the amount given will be sufficient to cover on-going expenses for the start-up phase of the business, which we calculate to be 3 months. This is only an estimate, however, and there is no assurance that additional working capital will not be necessary during the start-up phase or after. A more detailed description of the total investment required is available in our Franchise Disclosure Document.”
Source: Ben & Jerry’s Image: Ben & Jerry’s
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
Really an unrealistic “startup estimate” for someone North of the Mason-Dixon Line, who is starting up in the summer — but, of course, perfectly legal for Ben and Jerry, who aren’t held responsible for the estimates of startup costs, etc….
This is another saturated market and when the franchisor competes in the supermarkets against its franchisees, and the franchisees immediately have to pay royalties on the basis of their gross sales, the franchisee starts with a great handicap and may never achieve enough in gross sales to even pay for overhead.
From my viewpoint, it is almost criminal to regulate franchising and allow franchisors to get away with not disclosing the actual and known performance statistics of the units in their system before selling to inexperienced business prospects looking to replace a job and income.
Risk = REWARD!
Many franchises say they are interested in making money but what they are really interested in is not having to get a job, have a boss, etc. People who can afford $200,000-$500,000 in startup costs are likely to be (to some extent anyway) corporate executives who have been laid off or taken a package and don’t want to return to the grind. So they pick a new grind. They don’t think in terms of what it will take to make back not just the $500k, but the opportunity cost of investing it in ice cream (or whatever). If they are successful, maybe they’ll make $50k-$100k as owners’ income from a wildly successful store. Maybe that’s perfectly fine because they can write off many living expenses as a business owner rather than as a W2 employee. Bottom line is that most franchisees I know think about LIFESTYLE, not profits, and that is their greater concern.