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RICHARDS - POST 1 Jersey Mike's Subs Jersey Mike's Subs was originally called Mike's Subs and first opened in 1956 out of New Jersey. They

RICHARDS - POST 1

Jersey Mike's Subs

  1. Jersey Mike's Subs was originally called Mike's Subs and first opened in 1956 out of New Jersey. They are known for their small menu but quality sub sandwiches. In 1971, an employee named Pete Cancro bought the business from the original owner and started opening more stores across the northeast. In 1987, he took it a step further and started franchising out the business.
  2. There are many things that the franchisor offers to help a franchisee be successful. Before you become a franchise owner, you must take a training program that requires 8-10 weeks of classroom work as well as ownership training. Once that is completed, they provide train the trainer programs as well as excellence initiatives that will get you up to speed of how the business operates. They also offer opportunities to connect with the managers of different locations to get the insight of what to expect. "Well trained owners and managers operate better stores and help us protect the Jersey Mike's brand." (Cancro,2023)
  3. The costs for becoming a franchisee at Jersey Mike's Subs is reasonably priced when compared to other food chains:
  • Initial franchise fee is $18,500. Lump Sum
  • Real estate and construction fee is $5,000. Lump Sum
  • Grand opening advertising is $12,500. Lump Sum
  • Business license and permits are $15,000. Lump Sum
  • Rent/Lease/Taxes/Utilities are $0-$38,250 monthly. Average $20,000 monthly
  • Architectural Fees range $4,876-$16,000 as needed. Average $8,500 as needed
  • Leasehold Improvements range $62,299-$349,838. Average $250,000 as arranged with contractor or landlord
  • Equipment/Furniture/Small Wares range $11,255-$101,677. Average $50,000 as arranged with designer
  • Initial inventory range $966-$29,044. Average $15,000 as arranged with approved suppliers
  • Insurance range $2,000-$12,000. Average $7,000 as arranged with insurance company
  • Training range $2,500-$56,850. Average $30,000 as incurred through travel and staff salaries
  • Exterior Signage range $2,188-$46,516. Average $25,000 as arranged with supplier
  • Uniforms/Office Supplies/Security System range $2,260-$25,361. Average $15,000 as incurred
  • Point-of-sale(POS) system range $85-$13,305. Average $5,000 as incurred
  • POS System Connection to private network $2,000 as incurred prior to opening
  • Professional Fees(lawyer/accountant) range $525 - $12,642. Average $5,000 as incurred
  • Reserve funds for 3 months $15,000 as incurred by approved suppliers and employee salaries

TOTAL STARTUP COST RANGE $144,668-$786,233. AVERAGE $498,500

  1. Assuming I would finance the cost of the total investment of starting up a Mike's Jersey Subs franchise, below are a 5 and 10 year cost comparison:
    1. 5 year loan at 5% interest rate per year
      1. Borrowed amount: $498,500
      2. Monthly payment: $9,407.31
      3. Total interest cost for the life of the loan: $65,938.64
      4. Total payments (not number of payments) for the life of the loan: $564,438.64
    2. 10-year loan at 6% interest rate per year
      1. Borrowed amount: $498,500
      2. Monthly payment: $5,534.37
      3. Total interest cost for the life of the loan: $165,624.73
      4. Total payments (not number of payments) for the life of the loan: $664,124.73
  2. Based on the information that I have compiled; I do believe that the franchise is a worthy investment. "A smaller staff and location size, the franchise can be reasonably straightforward to manage." (Entrepreneur, 2022) They have built a national reputation and are well known. They have a solid business model and seem to be a company that will continue to grow. Once upfront costs are paid off, there is not much overhead monthly costs. There is a low number of employees required as well as small amount of inventory needed to run the business.
  3. When comparing the loan types, my preferred option of choice is the 5 years at 5%. "Efficient cash management is particularly important to small firms since their access to capital is much more limited than larger businesses." (Nickels,2022, p.473) The 5-year loan would save right at $100,000 in interest alone. I know that the I would have to pay roughly $4,000 extra a month but it would be worth it in the long run. My initial plan to cover those the $4,000 a month would be to limit the number of employees that I would need for the first year. I would do by covering more shifts as a manager for the first 5 years to off-set an employee's salary. After the 5 years, the loan would be paid off and I would have an abundance of hands-on experience on how the business operates. I would then be able to hire additional employees with the saved costs and be able to step back to more of an oversight owner role.

WORKS CITED

Cancro, P. (2023). Jersey Mike's franchisees - sub sandwich opportunity. Jersey Mike's Franchisees - Sub Sandwich Opportunity. https://www.jerseymikes.com/franchise/franchisees

Entrepreneur Media. (2022). Start a Jersey Mike's subs franchise in 2023. Entrepreneur. https://www.entrepreneur.com/franchises/directory/jersey-mikes-subs/282476#overview

Nickels, W. G., McHugh, J. M., & McHugh, S. M. (2022). Chapter 18 . In Understanding business. essay, McGraw-Hill Education.

Briefly summarize your fellow student's selected franchise information and financing option selected in your response post and provide your opinion on the following:

  1. Do you agree or disagree with your fellow student's conclusion on the worthiness of the franchise investment they selected and the financing option preferred?
  2. Why or why not?

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