432000.00 annual rental could be in line ( 36,000.00 times 12 months) if the restaurant generated 4 mil in cash register sales. I have no idea what this franchise projects..thats why I want TB to sit down with as many franchisees as possible. And TB to answer your question, they will be more then happy to sit with you because somebody sat with them before they got started. This is one of the advantages of a franchise..you help each other through talk. You have an annual convention where all the franchise holders get together and hash out grievances with the parent company. By the way..the very first thing you should be doing while you are even considering this is call the corporate office and ask them to send you a copy of the Franchise agreement, and the sublease agreement ( if there is one) so you can go over it with your attorney. jif
Tailback, $ 30 per square foot is calculated as follows: $ 30 times the square footage (1200) = $ 36,000 per year Divided by 12 months = $ 3,000 per month If it is a triple net lease, you will get charged with taxes, insurance on a pro rata basis. $ 30 may be a little steep . There a brand new strip mall down the street and the rent is $ 20 per Sq ft triple net lease for 1500 sq feet but that is all relative. 1200 sq feet is not very large for a restaurant. Make sure it meets your needs. If it includes a basement then maybe it's OK.
AJ..are you using the standard 10 to 12 % for rent? 36000.00 a year rental could be a steal. ( my figure could be high) jif
I'm on a state highway and am paying $9.80 / sq ft. for 6000 feet of combination office and warehouse space. Now I've got a great deal because I've been here since 1983 and my landlord rarely raises my lease. But this would not be considered a prime spot for a restaurant. I don't require walk in traffic in my business. With that said, $30/sq ft. sound pretty rich to me in Georgia if I'm paying what I'm paying in New Jersey. Is this in Atlanta? Location is everything in the food business but that sounds a little steep. can you tell us more about the location?
Reason I asked about wheter he was clear that it was sq/ft per month or per year is that, in Houston at least, when I was looking for new office space I was always quoted sq ft/year. I currently pay 16$/ft in a Class A (the best) office building right on a major freeway. Terry
Thanks for clarifying this guys. You all have to be right about it being by the year. 36K seems about right to me. The location is in a brand new square block that has everything from an Outback to CheeseBurger in Paradise ( must be a new chain). Above the stores are high dollar Condo's. There's a high end Mall across the street. It's in the most upscale area Georgia has. With in this square, Raving Brands has all it's different franchises there. Like I've said, my property is paid for. I can try to take a loan out for it to do this. I don't know if a bank will consider loaning the amount of money I will need on my property? I do have family member who is Vice President of a bank in the town where the property is. She's told me that a loan on that property to open a business wouldn't be a problem, but maybe I'm needing too much? If I were to sale the property it wouldn't be a problem. I've spoken with a friend who develops land and he's advised me to wait 5 to 7 years to get the most out of the property. So for that reason I don't want to sale it now. The business may not be able to make the payments for the amount I need to borrow? I'm not hurting now, I would be quite foolish to bankrupt myself. If I am to do something like this, I want to be assured it's going to pay off big, atleast have the odds in my favor. No reason for me to buy a 60K dollar a year job. I already have one of those.
Terry, I don't think I've ever mentioned to you that my wife manages a Dentist Practice. They turned 5 Million last year. Pretty impressive, huh?
5 million for a dental practice ? Wow !!! That's pretty damn good. Must have several dentists . The numbers George and Terry gave you is normal for the type of property they are renting. I'm in the process of moving as my landlord jacked up my rent to $ 35 a sq ft. Took an office down the street for $ 16 a sq ft. In Georges situation a warehouse/office will rent for less on a sq footage basis, but will always be much larger. I've seen some prime office space @ $ 11-12 per sq ft, but what am I going to do with a 3000 sq ft office?
5 Million is very impressive Tailback, as AJNJ said it's most likely multiple dentists, probably at least 5 guys (1 million dollar production per dentist would be extremely good, top 1%). As far as starting a business, the key to failure is being under capitalized at the begining. So when ever it is you start make sure you have enough capital to not only pay the business overhead but a living wage to you as well. Naturally if possible you want to insulate yourself from the business debits so that if it fails you can walk away. Sometimes that's not possible as a landlord might force you to sign for a long term lease personally as well as corporate. If you have a spouse or other income you can of course forgoe your salary till the business actually makes a profit. Many small businesses fail because the owner has no other source of income when the business is not making a profit and thus he gets behind on paying his taxes, his suppliers, his rent, etc and then fails, becasue the money that might have gone to that goes to his living expenses. Also another pitfall is dipping into the working capital to buy yourself stuff you don't need but always wanted. I had a friend who used his working capital to buy a new house, figured his business would be profitable very quickly and he wouldn't need it...he was wrong....he went belly up. Terry
TB...how old are you? Maybe wait till Buster Brown gives you a pension. Couple that with the million value of your land ( maybe 2 mil by then). At that time if you are in your early 40s...secure as you will be with a nice pension..I would say go for it. jif
Tailback, I don't have much to offer as far as a franchise but do want to ask a question and offer an oberservation. First the question, is that the beautiful property in North Georgia that belonged to your grandfather you were are so proud of? That is a beautiful place. Secondly, you do seem to be getting some great advice here and are obviously willing to work hard. But don't get yourself in a position where you could lose it all. That just wouldn't be worth it. Good luck, I'm waiting to hear if you do go into the resturant business and where. One of our trips through Georgia to North Carolina, we could be looking for a good place to eat. Good luck. Gator Bill
Yeah Gator Bill that's the property. I'm not in a hurry to sale it. I'm wanting to develop it with some nice homes. A developer has told me to hold for 5 years, his thinking is it will increase in value to 50K an acre. I worked for my Grand Father and the deal was my wages would pay that land off. You're right that I need to be careful. I do appreciate the info everyone here has provided me. I have a couple of ideas that will require some thought. One thing... If I open one, it won't be in the Mountains. That would be doomed for failure IMO.
You could be right Tailback, but if you open it on the route I take to the mountains then I could still stop by. Gator Bill
JIF?????? I drive through Atlanta and some other pretty good sized cities. I'm not really sure what you mean. Gator Bill
Bill, Jif means the only reason you will be my one customer is becuase you know me. That may be true if I choose to open a place in the Mountains.
Jif, AJNJ, <r>There may be a situation where I can pick up 2 Jimmy Johns sub shops. Now they're already open. It would be turn key. I don't have details on the stores as far as profits. Let's say they both profit 100K a year each after total cost. After the paid all his cost, his employees, his rent, etc... he has 200 grand in his pocket. How would I go about figuring out what it's worth to me to buy these 2 stores? Jif, I guess you could base this on your knowledge of Subway? What would you pay for 2 opened Subways? <br/> <br/> My guess is, Since it would be turn key, The store owner will want too much, considering I can get into a store for 150K or less.<br/> <br/> Here's some info on JJ's...<br/> <br/> <br/> The one-time franchise fee for a single unit is $35,000 for the first store and $30,000 for each store thereafter. For area development agreements, deposits of $25,000 per store are paid at time of signing. Area development agreements require a minimum of 4 stores.<br/> <br/> Individuals will need $80,000 in non-borrowed personal resources (liquid assets, e.g. cash, marketable securities, stocks, etc…) along with an overall net worth (total assets minus total liabilities) of $300,000 to qualify. Financing is to be secured through third-party lending sources. The total cost of each unit varies by size and location. <br/> <br/> Royalty and Continuing Services fees are 6% of gross sales. <br/> <br/> Average 2004 annual sales at 7 of the corporate-owned units were $838,244*. You are welcome to contact existing franchisees to find out what their sales are. Most franchisees are willing to discuss such information with you once it is determined that you are serious about investing in a Jimmy John's franchise.<br/> <br/> <URL url="http://www.jimmyjohns.com/">http://www.jimmyjohns.com/</URL></r>
Are you talking gross profit or net profit? That's 12% which is big in my industry. What's the norm in the restaurant business?
TB..If he had 100,000.00 after all expenses in each store..he would be looking for a sale pr1ce of between 250,000.00 and 300,000.00 ( excluding real estate) for each store. You are jumping the gun here a bit. Sit down with the seller and ask why he is selling, get his certified figures ( tax returns etc). Granted, if it is a proven highly profitable business, you will pay more then starting from scratch. This makes sense. How old are these two units? First things first though. Get figures. Keep at it...you sound determined! jif