Franchise Agreement

Financial Requirements

The setup costs are specifically determined by the store size, location and layout. Indicative investment costs for an average store (based on a 80-100 m² store) are R 600 000 – R 850 000 (excluding VAT). Only major equipment costs are eligible for lease finance – therefore the minimum cash in hand investment required is R 400 000. The balance should be financed by the franchisee self. All set up costs are the responsibility of the Franchisee.

We undertake, at the Franchisee’s costs, the registration of a private company to act as your trading vehicle and our licensed Franchisee.

The Franchisor will not be a Shareholder in your Franchise store and profits belongs to the Franchisee.

The total ongoing obligatory Franchise Fee will be 5% of total sales (inclusive of VAT) calculated and paid weekly to the Franchisor. The weekly fee covers all Franchise Fees, Royalties, Regional and Corporate administration costs and CHICKEN CITY brand marketing investments.

Financial Obligations

Franchise Fee – A Franchise Fee of R 50 000 (excluding VAT) is payable in full prior to the opening of a Chicken City outlet. A deposit of 50% is payble once a specific area and location has been allocated. The balance is due once development commence.

The Initial Franchise Fee is in respect of the following expenses:

Transport
Accommodation
Training
Legal and Financial
Weekly Franchise Fee – A Franchise Fee of 5% of turnover (inclusive of VAT) is payable on a weekly basis. This fee is payble in arrear the Monday following the trading week.
Investment Requirements – A prospective Franchisee will require a minimum of R 400 000 or 50% of a store’s set-up cost. We suggest that such funding should be in the form of unemcumbered capital.
Turnover and Return Investment – Existing WorChicken City outlets are currently achieving gross margins of 50% or more. There is no guarantee that similar results will be achieved by the Franchisee.
Working Capital – Running expenses for a period of 3 months should be included in the financial planning as a guarentee for success. The cost of stock on hand is included in the initial setup expenses.
Insurance and the Extend of Cover – This aspect should be handled by an expert with the necessary financial background and insight in the financial world of assurance and insurance.

Investing a vast sum of money is a serious undertaking and we recommend that you should obtain the service of a attorney that specialises in commercial contracts and seek accounting and financial advice on this Franchise proposition

Profitability

Existing Chicken City stores are currently achieving gross margins of 50% or more