How To's
Einstein Bros Bagels Franchise Cost 101
Do you want to spread joy around your neighborhood, one fresh bagel at a time? If you’re interested in exploring a bagel-related business, then this Einstein Bros Bagels franchise is the article for you. Let’s go over all the things you need to know about owning the franchise.
Einstein Bros Bagels Franchise: Overview
Einstein Bros Bagels was founded in 1995 in Colorado. It started franchising in 2006 and successfully opened 720 units over the years. As a franchisee, you’ll be granted rights to operate the business and specialize in the sale of the following:
- Fresh-baked bagels
- Cream cheese and other spreads
- Specialty Coffees
- Teas
- Bakes sweets and snack
- Creative lunch items
Training Program
According to the Franchise Agreement, a franchisee must designate an operating partner. If the franchisees are a partnership, corporation, limited liability partnership, or limited liability company, they must select one person. Then, the designated person must be approved by the franchisor to act as a supervisor.
The designated person will be required to attend franchise training for eight-weeks at a training restaurant chosen by the franchisor. Typically, the franchisor will locate the initial training at the HQ. Meanwhile, the remaining weeks will be conducted at an approved training facility. The licensee training will go over an approximate six-day period at any store location decided by the franchisor.
Also, aside from the initial training program, the manager must obtain a food service safety certification. If the franchisee asks the franchisor for additional on-site training, they need to pay $350 per head along with other necessary costs.
What you Need To Know
As a potential Einstein Bros Bagels franchise owner, you need to know the following:
- As per the Franchise Agreement, the franchisor will not allow anyone else at any location within the protected territory.
- A specified radius around two miles will determine the protected territory. It will start from the front door of the restaurant as its center.
- It’s important to note that the franchisee can compete with an outlet that the franchisor owns.
- The Franchise Agreement and License Agreement does not require franchisees to participate in directing restaurant operations personally.
- Certified managers are required to have full-time supervision of the restaurant.
- The initial Einstein Bros Bagel franchise is a 10-year term.
- Renewal is applicable if the franchisee successfully complies with the requirement. The renewal for the Franchise Agreement is at least a 10-year term.
- The renewal for the License Agreement is two additional five-year terms.
- Unfortunately, there’s no financial assistance program provided by the franchisor.
Did You Know
Before we dive into the total cost breakdown, let’s learn some interesting facts about the Einstein Bros Bagel franchise.
- Einstein Bros is related to the fictional founding brothers of the restaurant named Melvin and Elmo. It’s not related to the founding father for the theory of relativity.
- The franchise is known for its gourmet bagels jam-packed with protein.
- Einstein Bros offers catering services, and it has a “fresh-baked” application for in-store and curbside pickup.
- It has a unique customer rewards program called the Schmear Society.
Your Investments
Here’s the total franchise cost that you need to know. Take note that the details below are compiled from the 2020 FDD of the bagel franchise.
| Name of Fee | Low | High |
|---|---|---|
| Construction Costs | $210,000 | $310,000 |
| Computer Equipment & Electronic | $26,000 | $54,000 |
| Furniture, Fixtures & Equipment | $175,000 | $261,000 |
| Signage & Graphics | $10,000 | $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 | $564,300 | $935,850 |
Other Costs
Are you interested in other franchise ventures aside from bagels? Explore Franchise How for more great finds.
| Type of Fee | Amount |
|---|---|
| Royalty | 5% of gross sales under the Franchise Agreement; 6.5% of gross sales under the License Agreement (reduced to 4% of gross sales for airport locations). |
| Marketing Contribution | 4% of gross sales under the Franchise Agreement. |
| Grand Opening Marketing Program | $10,000 under the Franchise Agreement. |
| Transfer Fee | 50% of the then-current initial fee. |
| Interest on Overdue Amounts | 1.5% per month on the underpayment. |
| Late Fee (License Agreement only) | 15% of amount due, plus any bank charges. |
| Costs and Attorneys’ Fees | Varies under circumstances. |
| Supplier Testing | Varies |
| 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 and Onsite Assistance | $350 per trainer per day, plus the franchisor’s per-diem charges and the franchisor’s out-of-pocket costs. |
| Additional and Replacement Highly Trained Personnel Training | $1,600 under the Franchise Agreement, and $850 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: 10% of the then-current initial franchise fee; License Agreement: 10% of the then-current initial license fee, or $1,250, whichever is more. |
| Lost Future Royalties | Will vary, but is calculated based on the average of the franchisee’s monthly Royalty Fees for the previous 12 months, multiplied by the lesser of 36 or the number of months remaining in the Franchise Agreement. |
| System Support Fees and Required Software Fees (Franchised Restaurants only) | $300-$500 per month. |