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Big Boy Franchise Cost & Fees

Date of Incorporation: 2000

Franchising Since: 2000

Headquarters: Michigan

Business and description: The Big Boy Franchise Management LLC is a wholly-owned subsidiary of Big Boy Restaurants International LLC. Traditional Big Boy restaurants are approximately 4,800 square feet. The Big Boy Franchise Management LLC offers a franchise to sell to the public speciality coffee and a wide selection of breakfast, lunch and dinner items.

Franchise Offer: The franchise offer is to develop, own and operate a “Café-style Big Boy Restaurant” that sell to the public Big Boy signature items, including the "Original Double Decker™" hamburger, specialty sandwiches baked in a hearth oven, specialty coffee, as well as a selection of breakfast, lunch and dinner items. The Initial Fee for a franchised Cafe-style Big Boy Restaurant is $30,000. The Initial Fee is payable in full when the franchisee signs the Franchise Agreement.

Financial Assistance: The Big Boy Franchise Management LLC does not offer any direct or indirect financing nor do they guarantee any note, lease or obligation.

Training: The General Manager, Assistant Managers and Kitchen Manager must satisfy in their entirety, all staffing and training requirements of Big Boy before the opening of the restaurant. The training programme consists of 8 – 12 weeks on the job and 1 week of managerial instruction courses, including orientation and management commencement classes. The training programme is entirely funded by The Big Boy Franchise Management LLC however the franchisees are responsible for all salaries, benefits, travel expenses and other costs that the franchisee and their employees incur during the training program. The training will cover management class, human resource and the law, labor and food cost training etc.

Territory: The franchisee will operate out of a “franchised area” within an “exclusive area”. This is usually a 2 mile radius of the franchise location. The Exclusive Area may not be altered or relocated during the term of the Franchise Agreement, except with the prior written approval of Big Boy. The franchisee is not restricted from soliciting or accepting orders outside their Exclusive Area, but they may not sell any products and services offered in connection with their restaurant on a wholesale basis, at any location other than their restaurant, or through the Internet, catalog, mail order, telemarketing or any other method of sales or distribution. The continuation of the Exclusive Area is not dependent upon achieving a certain sales volume, market penetration or meeting any other contingency.

Renewal and Termination: The franchise agreement is for 20 years. After this time the franchisee can not renew the agreement but must enter into a new agreement which may vary from the original. Both the franchisee and franchisor can terminate the agreement with cause. The Big Boy Franchise Management LLC can terminate the agreement if there is a breach of the agreement.

Obligations and Restrictions: The franchisee is obligated to buy or lease all products for services that meet The Big Boy Franchise Management LLC standards and specifications and only from designated and approved suppliers. Big Boy estimates that purchases of these items will be approximately 45-50% of your initial food purchases and approximately 45-50% of your total annual food purchases. The franchise must also personally participate in the actual operate of the franchise.

Total Number of Company Owned Units for 2007: 25
Total Number of Company Owned Units Closed for 2007: 3
Total Number of Company Owned Units Opened for2007: 0

Total Number of Franchised Units for 2007: 128
Total Number of Franchised Units Closed for 2007: 5
Total Number of Franchised Units Opened for 2007: 7

Investment Table:

Estimated Initial Investment for Single Unit Franchise:

Name of Fee Low High
Initial Investment $30,000 $30,000
Real Estate $400,000 $1,000,000
Restaurant Building $285,000 $350,000
Architectural Fee $16,000 $20,000
Engineering Fee $4,000 $8,000
Wages and Travel Expenses for franchisee and Management Team During Training $4,000 $40,000
Travel Expenses for New Store Opening Team $4,000 $30,000
Furniture, Millwork and Equipment $235,000 $250,000
POS System $17,000 $35,000
Big Boy Signs $7,000 $15,000
Liquor License Costs $300 $10,000
Security, Utility and License Deposits; Impact Fees $500 $5,000
Insurance -Three Months $3,000 $6,000
Grand Opening and VIP Night Costs, Other Advertising and Promotion - Three Months $12,000 $20,000
Opening Food Inventory $9,000 $12,000
Miscellaneous Opening Costs $16,000 $30,000
Small wares (uniforms, utensils, etc.) $13,000 $15,000
Employee Salaries -Three Months $110,000 $125,000
Additional Funds -Three Months [these figures have not been offset by operating revenues] $15,000 $20,000
Total $1,180,800 $2,021,000


Ongoing Costs for Single Unit Franchise:

Name of Fee Amount
Royalty Fees 4% of weekly Gross Revenues
Advertising Fees – Michigan 2% of weekly Gross Revenues
Local Advertising - Michigan 1% of weekly Gross Revenues
Advertising Fees - Other Regions 0.5% of weekly Gross Revenues
Local Advertising -Other Regions 1.5% of weekly Gross Revenues
Administrative Fees $150 for each delinquent payment
Audit Fees Amount incurred by Big Boy to audit your Big Boy Restaurant
Transfer Fee or Assignment Fee $10,000
Collection Costs Amount incurred by Big Boy to collect unpaid fees
Interest Charges The lesser of 18% per annum or the maximum legal rate allowable by applicable law
Training Fees    $200-$250 per person per day plus all travel related expenses
Relocation Fee $10,000
Opening Team Travel Expenses $4,000 - $30,000
Due Diligence Costs Big Boy's due diligence costs for public offering
Review of Unapproved
Supplier
The Franchisee must reimburse Big Boy for the expenses it incurs inspecting an unapproved supplier

 
The above information has been taken from the UFOC/FDD of the The Big Boy Franchise Management LLC.

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