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Bonehead’s Franchise Cost & Fees

Date of Incorporation: 2009

Franchising Since: 2010

Headquarters: Atlanta, Georgia

 

Business Description: The franchisor is BH Acquisition, LLC (BHA). BHA offers franchises to individuals and entities for restaurants which offer fresh seafood dishes, other food products, beverages and related services. In connection with the Restaurant concept, the franchisor has developed various specialty food products (e.g., piri piri chicken, piri piri shrimp, wings piri piri, etc.), which it may sell under the Boneheads brand and also under other brands it may create and develop.

Franchise Offer: The Boneheads franchise system includes the common use and promotion of the name “BONEHEADS” and other service marks, trademarks, trade names, logos, emblems, signs, slogans, insignia and commercial symbols the franchisor may designate; distinctive food products and the formula and quality standards therefore; procedures for inventory and management control; training; advertising and promotional programs; and ongoing assistance. A typical Restaurant occupies approximately 2,500 to 2,800 square feet of space that may be either owned by the franchisee or leased from a third party.

Financial Assistance: BHA does not offer direct or indirect financing, nor does it guarantee a franchisee’s note, lease or obligation.

Training and Assistance: Franchisees must send a minimum of two Managers to become certified through the training program for each Restaurant that they operate. Unless the franchisee will be a Manager for the Restaurant, he/she does not have to attend initial training. The initial training program will last a minimum of 17 days and will be comprised of a three-day management training program known as The Boneheads School (“TBS”), which will be held in a classroom setting, and in-Restaurant training at a Boneheads approved facility. BHA may hold periodic conferences, conventions, management meetings, or teleconferences that the franchisee and/or managers may be required to attend to discuss sales techniques, personnel training, bookkeeping, accounting, inventory control, and the like.

Territory: The franchisee will receive the right to operate a Restaurant only at a site BHA accepts, in its sole discretion. The site will be designated in the Franchise Agreement. In negotiating the Franchise Territory, BHA may examine population, traffic flow, presence of businesses, location of competitors (including other Boneheads franchisees), demographic and other market conditions. There is no minimum Franchise Territory and the size of the Franchise Territory will range from being the approved site designated for the Restaurant to an area 1.5 miles around the Restaurant. Restaurants located at sites viewed as non-traditional locations (e.g. airports, malls, high-rise buildings, business and industrial complexes) will have a Franchise Territory limited to the site of the Restaurant and, thus, will have no exclusivity. If the franchisee is in compliance with the Franchise Agreement, BHA will not operate a Restaurant within the Franchise Territory, and will not authorize anyone else to do so.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If the franchisee meets the requirements, he/she can renew for one additional consecutive 10-year term; after that the franchisee will have no right to renew the Franchise Agreement.

Obligations and Restrictions: The franchisee must maintain direct responsibility over the Restaurant; however, BHA does not require that the franchisee personally supervise the day-to-day operations of the Restaurant. During operations hours, a Manager who has successfully completed the initial training program must at all times be at the Restaurant. The franchisee must offer and sell only those products and services approved by BHA. Further, the franchisee must offer all goods and services that BHA designates as required for all franchisees.

Estimated Number of franchises Units: 5

Investment Tables:

Initial Investment:

Name of Fee Low High
Initial Franchise Fee (for first Restaurant) $35,000
Rent $3,000 $12,000
Security Deposit $3,000 $10,000
Architectural Design $7,500 $15,000
Real Estate and Improvements $150,000 $320,000
Travel and Living Expenses while Training $5,000 $10,000
Furnishings, Fixtures, Equipment and Decorating $125,000 $135,000
Signage $4,000 $12,000
Opening Inventory $9,000 $14,000
Computer Hardware/Software $20,000 $21,000
Grand Opening $15,000 $18,000
Professional Fees $2,000 $5,000
Insurance $10,000 $24,000
Miscellaneous Opening Costs $10,000 $25,000
Additional Funds - Initial 3 months $20,000 $50,000
Estimated Total $418,500 $706,000

 

Ongoing fees:

Type of Fee Amount
Royalty Fee 6% of Gross Sales
Advertising Fund Fee 1% of Gross Sales
Advertising Cooperatives If BHA establishes cooperatives, the franchisee must contribute a percentage of Gross Sales to the cooperative, which may not exceed 2% of Gross Sales.
Local Advertising A minimum of 2% of Gross Sales
Advertising Deficiency Amount of Local Advertising Deficiency
Transfer/Assignment Fee under Franchise Agreement One-half the amount of the then-current initial franchise fee.
Successor Fee One-half the amount of the then-current initial franchise fee.
Interest and Late Payment Fees Up to the highest rate permitted by law but no more than 18% per annum plus $100 per occurrence.
Insufficient Funds Fee $100 per occurrence
Late Report Fee $100 per occurrence
Audit Expenses Will vary under the circumstances
Additional On-Site Training and Assistance Reasonable fee under the circumstances (e.g. $300 per day) plus the reimbursement of travel and living expenses and other related expenses.
Counseling and Advisory Services Will vary under the circumstances
Indemnification Will vary under the circumstances
Insurance Premiums Will vary under the circumstances
Conferences Reasonable fee under the circumstances sufficient to cover costs and expenses.
Costs and Attorneys' Fees Will vary under the circumstances
Product/Supplier Approval Costs BHA’s reasonable cost of inspecting the proposed supplier and testing the proposed item or evaluating the proposed service provider and proposed service offerings, including personnel or travel costs.
Management Fee 10% of Gross Sales plus our reasonable costs and expenses
Liquidated Damages Will vary under the circumstances
Maintenance, Service, and Support Contract Fees To be determined

The above information has been compiled from the FDD of Boneheads.
Year of FDD: 2012

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