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Einstein Bros. Bagels Franchise Costs & Fees

Date of Incorporation: 1955
Franchising Since: 2006
Headquarters: Lakewood, Colorado

Business Description: Einstein Bros. Bagels Franchise Corporation is the franchisor. Franchisees operate a business that specializes in the sale of fresh-baked bagels, cream cheese and other spreads, specialty coffees and teas, baked sweets and snacks, and creative lunch items, among other things.

Franchise Offer: The franchisor offers to enter into Franchise Agreements with qualified individuals and companies that wish to establish and operate restaurants.

Financial Assistance: Neither the franchisor nor any agent or affiliate offers direct or indirect financing to franchisees, guarantees any note, lease or obligation of franchisees.

Training and Assistance: Under the Franchise Agreement, if franchisees are a corporation, partnership, limited liability company, or limited liability partnership, they must designate one of their principals with an ownership interest and who the franchisor has previously approved to supervise the operation of the Restaurant as an “Operating Partner”. Before franchisees open the Restaurant, one full-time general manager and one assistant general manager must attend and successfully complete, to the franchisor’s satisfaction, the initial training program it offers. Under the License Agreement, the franchisor will provide its Certified Manager in training program (which runs for seven days for two of the following individuals: the Operating Principal, “Store Manager” or “Manager-On-Duty.” The training program will focus on the franchisor’s System standards and the material aspects of operating a Licensed Restaurant. At the franchisee’s option, the franchisor will also provide its training program for additional Managers on-Duty or shift supervisors for a fee. Training will be conducted over an eight-week period at training restaurants of our choosing (typically, but not always, this includes 1 week at the franchisor’s headquarters in Lakewood, Colorado, and 8 weeks at one of its approved training facilities across the U.S.) (Session 1), plus a minimum of 10 days in the franchisee’s Restaurant before opening (Session 2). The franchisor may conduct additional training programs if it thinks the franchisee’s Restaurant will benefit from that.

Territory: During the term of the Franchise Agreement, so long as franchisees remain in compliance with the terms of the Franchise Agreement, the franchisor will not establish or franchise anyone else to establish, another Einstein Bros. Restaurant at any location within the “Protected Territory” that is designated in the Franchise Agreement. The Protected Territory will typically be a circle, the center of which will be the front door of the Restaurant, and that circle will have a radius that is specified in the Franchise Agreement (two miles, except in dense urban centers, where it could be less). Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that it controls. The franchisor does not grant franchisees a protected territory or similar rights under the License Agreement.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years under the Franchise Agreement, or 11 years from the effective date of the agreement. The term under the License Agreement is five years from the effective date of the agreement. If requirements are met, renewal of the Franchise Agreement is for one additional 10-year term; and two additional five-year terms for the License Agreement.

Obligations and Restrictions: The Franchise Agreement and License Agreement do not require franchisees to participate personally in the direct operation of the Restaurant, although the franchisor encourages and recommends active participation by franchisees. The franchisor does, however, require that franchisees or their Operating Partner (and under the License Agreement, a Certified Manager) devote full time, energy, and best efforts to the management of the Restaurant. Franchisees may sell and provide only products and services that conform to the franchisor’s standards and specifications.

Estimated Number of Units: 410

Investment Tables:
Initial Investment for a Franchised Restaurant
Name of Fee Low High
Construction Costs $210,000 $310,000
Computer Equipment & Electronic $26,000 $34,000
Furniture, Fixtures & Equipment $209,000 $261,000
Signage & Graphics $30,000 $50,000
Professional Fees (incl. architectural or engineering fees and permit and impact fees) $30,000 $35,000
Initial Franchise Fees $35,000 $35,000
Design Review Fee $2,000 $2,000
Real Estate Leasing $25,000 $56,250
Opening Inventory, Smallware and Supplies $15,000 $25,000
Initial Marketing and Promotion $10,000 $10,000
Insurance $7,500 $15,000
Training Expenses $1,000 $14,000
Miscellaneous Opening Costs $1,300 $3,600
Business Licenses $500 $5,000
Security Deposits $4,000 $10,000
Additional Funds (3 months) $12,000 $50,000
ESTIMATED TOTAL $618,300 $915,850
Initial Investment for a Licensed Restaurant
Name of Fee Low High
Construction Costs $25,000 $250,000
Furniture, Fixtures & Equipment $50,000 $200,000
Signage & Graphics $8,000 $15,000
Initial Franchise Fees $10,000 $12,500
Real Estate Leasing $8,750 $45,000
Opening Inventory, Smallware and Supplies $15,000 $25,000
Initial Marketing and Promotion $2,500 $2,500
Insurance $2,500 $3,500
Training Expenses $2,500 $6,000
Miscellaneous Opening Costs $2,000 $5,000
Business Licenses $500 $5,000
Security Deposits $800 $3,750
Additional Funds (3 months) $12,000 $50,000
ESTIMATED TOTAL $142,550 $620,250
Other Fees
Type of Fee Amount
Royalty 5% of Gross Sales under the Franchise Agreement; 7.5% of Gross Sales under the License Agreement.
Marketing Contribution 4% of Gross Sales under the Franchise Agreement.
Grand Opening Marketing Program $10,000 under the Franchise Agreement; A minimum of $2,500 under the License Agreement, unless prohibited by the facility in which the Licensed Restaurant operates.
Transfer Fee Franchise Agreement: the greater of $7,000 or 1/5 of our then-current initial franchise fee; License Agreement: 50% of the then-current initial license fee.
Interest on Overdue Amounts 1.5% per month on the underpayment.
Costs and Attorneys’ Fees Will vary under circumstances.
Supplier Testing Will vary.
Audit Costs All costs and expenses associated with the audit, reasonable accounting and legal costs.
Indemnity Will vary under the circumstances.
Reinspection Fee (License Agreement only) An amount not to exceed $1,500
Securities Offering Fee Under the Franchise Agreement, $7,500 or the franchisor’s actual expenses, whichever is more.
Additional Training The per-diem charges, plus the franchisor’s out-of-pocket costs.
Additional and Replacement Highly Trained Personnel Training $1,500 under the Franchise Agreement, and $779 under the License Agreement, for each additional individual to be trained; The franchisor’s personnel's wages, per diem charges, and travel, hotel, and living expenses under the License Agreement.
Renewal Fee Franchise Agreement: $5,000 or 1/7th of the then-current initial franchise fee, whichever is more; License Agreement: 10% of the then-current initial license fee, or $1,250, whichever is more.
System Support Fees and Required Software Fees (Franchised Restaurants only) $400-$600 per month.

The above information has been taken from the FDD of Einstein Bros. Bagels. Year of FDD: 2016

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