Crust Gourmet Pizza Bars – Serving up: the Heart Foundation Tick of approval on a range of six healthier choice pizzas.
Facts and figures:
Franchise fee: $45,000
Working capital: about $20,000.
How much is invested in stock/supplies? Up to $5000 is usually invested in stock and supplies up front. Is this a turnkey operation? Yes
Royalty fee: 7.5 per cent, marketing levy: 3.5 per cent.
Term: five years.
Renewal fee: $1 for a further two to five years.
Lease: franchisee is the lease holder.
Operating hours: each state differs slightly but usually 5pm to 10.30pm Tuesday to Sunday.
Average customer spend: about $28 (two medium pizzas, or a large pizza with sides)
In exchange for the franchise fee the franchisee receives training, site selection, legal fees, shop layout and use of CrustÕs trademarks. All training costs are covered in the franchise fee: a four week training program, most conducted on-site in an existing store before they open their franchise. Then franchisees have training in their own store for two weeks after opening, and have ongoing access to the support team.
And for royalty and marketing levies? Royalty: use of the Crust name and branding, recipes, products and ongoing franchisee support while marketing is split between local area marketing — menus and brochures, and brand marketing including point of sale, maintenance of company website and brand PR.
Are there any supplier rebates passed onto the franchisees? Yes. Where possible rebates are negotiated with suppliers and passed on to franchises. Crust currently has 34 franchisees in the system with 20 stores in operation across Sydney, Melbourne and Brisbane, and a further 12 due to open by the end of the year. The remaining franchisees are awaiting suitable sites. The goal is 50 franchisees in operation by the end of June 2009.
Crust prides itself on the freshness and quality of ingredients, reflected in the food preparation model: about 90 per cent of food preparation is done on-site. The loyalty of customers has been one of the cornerstones of growth. Reward cards are used in most stores, although a formal points-based loyalty redemption system is currently under development and is likely to be rolled out next year.
Pizzacutters – serving up: thin crust gourmet pizza
Facts and figures:
Franchise fee: $35,000 including GST
Working capital: A NAB overdraft facility for amounts between $40,001 and $60,000 is recommended. Alternatively franchisees require working capital.
How much is invested in stock/supplies? Between $5000 and $8000.
Is this a turnkey operation? No. The total upfront investment is between $250,000 and $350,000 depending on location
Royalty fee: four per cent of total sales, marketing levy: two per cent of total sales.
Term: five years with one five year renewal option.
Renewal fee: a renewal option is part of the initial grant and the charge to execute it is $1.
Lease: franchisees hold site leases. A third party step in deed, i.e. a right to re-enter, upon termination of the Franchise Agreement, is instituted on a case by case basis
Operating hours: 5pm to 10pm, seven nights a week
Average customer spend: $40.
The franchise fee is a one-off payment for any transfer of intellectual property and the right to trade under the Pizzacutters brand and any associated costs in adding another franchisee; use of intellectual property and systems, initial training and induction program, the planning of an opening promotion program (which is to be implemented at your cost), initial support during the first weeks of establishment, assistance with store layout. The cost for drafting the Franchise Agreement and Disclosure Document is not included. P
ayment of royalties gives access to, and use of, the networkÕs business systems, centralised phone number, intellectual property (including menus, recipes and sauces), and ongoing management and supervision. The marketing levy is a specific contribution from franchisees to the national marketing program, which includes branding, network wide marketing, the production of marketing materials and certain local area marketing activities for your store. Fit-out contribution: to maintain a modern, up to date fit-out and to sustain future upgrades, one per cent of gross turnover will be contributed as a fit-out levy. These funds are held in escrow on the franchisees behalf until applicable and will only be used for future fit-out and branding upgrades.
Are there any supplier rebates passed on to the franchisee? Pizzacutters uses supplier rebates to fund marketing or network activities such as annual conferences. Initially training requirements include business, store specific and operational training for the franchisee and the costs are incorporated into the initial franchise fee. There are three stores and Pizzacutters has plans for five for 2009. Most ingredient preparation is carried out daily on site during opening hours. Some of the ingredients are prepared at a central kitchen and distributed to the stores on a weekly basis. The company runs an emailing loyalty program with members receiving special offers and information regarding the latest products via email.
Eagle Boys Pizza – serving up: 56 options of full-sized pizza
Facts and figures:
Franchise fee: $35,000 + GST
Working capital: $10,000
How much is invested in stock/supplies: up to $7000
Is this a turnkey operation? Yes
Royalty fee: six per cent, marketing levy: 6.5 per cent
Term: five years with an option to renew for another five years.
Renewal fee: $5000 for another five year term with a five year option Lease: tenant is the franchisee
Operating hours: typically from 11am to 11pm
Average customer spend: varies significantly between each of Eagle Boys four business models.
The initial fee, five weeks training and legal costs are included in the franchise fee but flights, accommodation and meals during training are not. The marketing fee covers comprehensive national marketing across media such as television and letterbox, regular in-store point-of-sale updates, online and digital marketing initiatives, new product development and intensive local store marketing support together with a range of administrative and agency costs.
Supplier rebates cover costs of Eagle Boys procurement division first and foremost and surplus funds are directed into the marketing fund to enable additional advertising for franchisees. Eagle Boys has more than 230 stores and a target for 2009 of more than 300. All pizzas are freshly made.