INVESTOR INFORMATION
With venues in 75 countries, including 181 cafes, 25 hotels and 11 casinos, Hard Rock International (HRI) is one of the most globally recognized companies. Beginning with an Eric Clapton guitar, Hard Rock owns the world's greatest collection of music memorabilia, which is displayed at its locations around the globe.
FRANCHISE QUESTIONNAIRE FRANCHISING HOME
FRANCHISE COSTS
There are various costs and fees associated with the acquisition of a Hard Rock Cafe Franchise. An estimated initial investment range as well the different fees are outlined below:
Area Development Agreement
- An up-front fee is paid to secure the exclusive right to develop & operate Hard Rock Cafes within a certain geographic region.
- Fees vary depending upon the size of the territory, number of locations & length of the agreement.
Site Fee
- Potential markets are predetermined in the Franchise Agreement.
- The standard Hard Rock site fee is no less than $350,000.
- An individual site fee must be paid prior to developing each new Cafe.
- Fees must be paid within a pre-agreed time-frame.
Continuing Fees
- 5% of all Food & Beverage Gross Receipts paid monthly.
- 10% of all Merchandise Gross Receipts paid monthly.
- A memorabilia lease payment of 10% of the appraised memorabilia value.
Marketing
- 1% of total Gross Receipts paid monthly to a Global Marketing Fund.
Term
- The agreement is for a 10 year term with a 10 year renewable option.
REQUIRED ITEM
LOW ESTIMATE
HIGH ESTIMATE
ESTIMATE FACTOR
Franchise Site Fees
Franchise Site Fees
$350,000
$750,000
Based on a multiple of anticipated roddue
Design & Engineering
Design & Engineering
$150,000
$300,000
Varies by market & amount of work required
Project Management
Project Management
$30,000
$150,000
Varies by market & amount of oversight required
Permits, Licenses & Utilities
Permits, Licenses & Utilities
$5,000
$100,000
Varies by country and municipality
General Construction
General Construction
$1,500,000
$3,200,000
Assumes 7,500 sq ft unit. Varies by market & condition
Permanent Fixtures
Permanent Fixtures
$40,000
$100,000
Varies based on design and layout
Kitchen & Bar Package
Kitchen & Bar Package
$250,000
$400,000
Varies by number of floors, kitchens & bars selected
Audio & Video System
Audio & Video System
$150,000
$250,000
Standard package varies based on market needs
Signage
Signage
$40,000
$150,000
Varies to comply with local restrictions & controls
Fire & Security Systems
Fire & Security Systems
$30,000
$50,000
Varies according to local code requirements
Furniture
Furniture
$50,000
$150,000
Varies depending upon #of seats selected
Computers & POS System
Computers & POS System
$100,000
$120,000
Varies depending upon import duties
Legal Fees
Legal Fees
$25,000
$75,000
Varies by country and jurisdiction, licensing laws
Accounting Fees
Accounting Fees
$10,000
$15,000
Varies by country and jurisdiction
Real Estate Broker's Fees
Real Estate Broker's Fees
$15,000
$250,000
Varies by country and jurisdiction
Sales Marketing & PR
Sales Marketing & PR
$50,000
$100,000
Varies depending upon nature of opening campaign
Pre-Opening Costs
Pre-Opening Costs
$200,000
$300,000
Training costs will fluctuate depending upon location
TOTAL
TOTAL
$2,995,000
$4,910,000
Contingencies and working capital are not included
Hard Rock International is currently looking for experienced multi-unit operators with proven experience and success in the target market and a desire to grow the Hard Rock Cafe brand. Each candidate meeting the requirements will be evaluated on a combination of the required industry experience, operational and management experience, general business acumen and specific target market knowledge.
Requirements
The applicant must have demonstrative experience of 2 or more of the following criteria:
- Operating experience and good knowledge of target market
- Owned or operated your own restaurant business
- Owned or operated your own franchise business
- Owned or operated a multi-unit business
- Dealt with the supply chain in retail and F&B sectors
Financial Requirements
Hard Rock International is currently looking for experienced multi-unit operators who have a $ 2,000,000 net worth and liquidity of at least $ 1,000,000. You must be able to demonstrate this with personal and/or corporate financial statements.
Restaurant/ Food & Beverage related Industry Experience & requirements:
- Quick service
- Casual Dining
- Full service fine dining.
- Bar & Nightclub
- Retail sales
- Supply chain management
- Live Music
- Customer service
- Support infrastructure
- Hotel experience
Pre-Qualification (1-2 weeks)
- The prospective franchisee will submit the franchise questionnaire online Click Here.
- Hard Rock International will review the prospective franchisee's qualifications and experience in the restaurant and hospitality business as well as the availability of the proposed territory. Knowledge of the local market as well as a proven track record in the hospitality industry will be a key component in the decision making process. Based on the outcome of this process the prospective franchisee will be advised whether it is a viable candidate and will move onto the next stage.
Approval Process & Qualification (4 weeks)
- If the prospective franchisee's experience qualifies it to move onto the next phase, Hard Rock International will contact the prospective franchisee and a phone or in person introductory meeting may be arranged.
- This will be followed by a the execution of a Non-Disclosure Agreement ("NDA") that will permit the prospective franchisee to exchange sensitive and confidential information with Hard Rock International.
- A formal Franchise application will also be filled out that will require such information about prospective franchisee as full company makeup, proposed financing, group ownership structure and further information as may be required for our formal due diligence process. Click here for the Franchise Questionnaire.
- A Franchise disclosure document will also have to be filled in. Click here for the Franchise Disclosure document.
- A market study analysis template will be filled out by the prospective franchisee. This document will request financial information with regards to the project such as roddue projections, a business plan and investment and construction cost projections.
Letter of Intent (LOI) (4-12 weeks)
- The following step will be to sign a Letter of Intent or "LOI". This LOI will outline the principal terms and conditions contained within a Restaurant Franchise Agreement ("RFA") and or an Area Development Agreement ("ADA"). The LOI will address such issues as
- Contract term and unit development timelines
- Territory and or Restaurant Site Fees
- Ongoing royalties
- Marketing commitments
- Guarantee provisions and due diligence requirements
- The LOI will also contain a "No Shop" Period. This will be a predetermined time during which Hard Rock International will undertake not to engage in any discussions, negotiations or agreement with another party in regards to the Hard Rock Cafe rights in the proposed territory. This is generally set for a period of no more than ninety (90) calendar days.
- The "No Shop" period entails the payment of a "No Shop Fee". This is a non refundable fee no less than $20,000 USD that is paid by the prospective franchisee to guarantee exclusivity of the territory under negotiation. If the parties execute a mutually acceptable RFA or ADA prior to the expiration of the No Shop Period, then the No Shop Fee will be credited against the Site Fee or Territory Fee.
- Background checks and formal due diligence of all the proposed franchisee's owners and/or Directors will also be undertaken at this stage.
Formal Franchise Agreements (4-8 weeks)
- Once the background checks have been undertaken and the prospective franchisee has successfully qualified, the relevant final legal Franchise Agreements will be prepared.
- This will be an ADA and/or a RFA or both, depending on the particular deal structure.
- A Memorabilia Lease Document outlining the terms and conditions surrounding the lease of items from Hard Rock's memorabilia collection for display in the Hard Rock Cafe will also be prepared and an individual memorabilia lease agreement will accompany each and every individual RFA.
