USTAD BANNE NAWAB - ETHNIC HYDERABADI FOOD & RESTAURANT

Elements of a Unit Franchise Module in India

In this module, The Unit Franchisee owns “Ustad Banne Nawab’s Ethnic Hyderabadi Restaurant – Dining & Takeaway” in a particular Locality / suburb of a city anywhere in India. The one time, Franchise Fee for all Unit Franchises is Rs 5 Lakhs and the Royalty Fee will be 5% of gross sales payable every month. 50% of Franchise Fee is refundable upon closing down the business due to any reason.

Investment required by the Unit Franchisee:

The Unit Franchisee bears the total cost of approximately Rs 25 to 40 Lakhs for opening up and running a single restaurant. Costs involved are as follows:

Unit Franchisee Fee of Rs 5 Lakhs.
Owning / Leasing a Ground floor facility of between 1500 to 4000 square feet in a mix of commercial / residential locality on a main road with ample parking space and service entrance. The ideal space utilization will be 600 to 1200 square feet of dining area to accommodate 50 to 100 people, 300 square feet for cash counter and Takeaway area, 300 to 600 square feet for kitchen, 600 to 1200 square feet for store room / office / washroom. The cost involved here will be variable depending upon the location and needs to be added to the below totals.
Franchisor approved furniture and décor – Rs 3 to 6 Lakhs.
Electrical fittings – Rs 3 to 5 Lakhs.
Civil works – Rs 1 to 3 Lakhs
Kitchen equipment including crockery and cutlery – Rs 3 to 5 Lakhs.
Licenses, Permits and Miscellaneous expenses – Rs 1 to 2 Lakhs.
Working capital for the first year – Rs 6 to 12 Lakhs.
Advertising Budget for First Year – Rs 5 to 7 Lakhs.

PLEASE NOTE THAT ALL COSTS MENTIONED ABOVE ARE APPROXIMATIONS AND MAY CHANGE ACCORDING TO VARIOUS FACTORS. THE ABOVE FIGURES ARE MEANT TO GIVE THE UNIT FRANCHISEE AN IDEA OF THE COST INVOLVED.

Projected Profitability Statement of Unit Restaurant:

Insha-Allah average sales will be about of Rs 15000/- per day in the first year of operation resulting in a turnover of approximately Rs 54 Lakhs for the first 12 months of operation and Rs 25000 to 35000 per day for second year and Rs 35000 to Rs 50000 from third year onwards resulting in a turnover of Rs 1.28 to 1.83 Crores per annum, resulting in a profit of between Rs.27.6 to 49.35 Lakhs per annum. (Third year is not plotted on the table below). Our current facility at Toli Chowki with only 300 square feet of dining area for 20 people and 300 square feet of kitchen / storeroom / toilet is realizing average sales of about Rs 10000/- per day within seven month of its operation.

Summary of Projected Profitability Statement (INSHA – ALLAH):

Summary of Projected Profitability Statement
Figures are in INR (Lakhs)
	Particulars	1st Year	2nd Year

A	Revenue from Sales	54.00	91.00 to 128.00

	Total Revenue	54.00	91.00 to 128.00

B	Expenses
	Raw Material Cost – Approximately 50% of Sales	27.00	45.00 to 64.00
	Annual Overhead Expenses - Approximately	24.00	27.00 to 30.00
	Annual Royalty Fee - 5% of Gross Sales	2.70	4.55 to 6.40

	Total Expenses	53.70	76.55 to 100.40

C	Net Profit	0.30	14.45 to 27.60

Please note that The Unit restaurant achieves the break even point at the end of the first year itself and starts making healthy profits from the second year onwards based on conservative sales projections.

PRELIMINARY DRAFT OF FRANCHISING OFFER:

IMPORTANT: PLEASE NOTE THIS IS JUST AN PRELIMINARY OFFER AND ALL POINTS MENTIONED BELOW WILL BE SUBJECT TO THE TERMS AND CONDITIONS LAID DOWN IN THE FINAL FRANCHISE AGREEMENT.

Ustad Banne Nawab’s, an ethnic Hyderabadi restaurant, specializing in traditional gourmet Hyderabadi cuisine is a division of Charminar Foods & Exports (P) Ltd, a company registered as per the Indian companies act 1956, located in Hyderabad, India and hereto referred as the Franchisor, is ready to appoint XYZ as its Unit Franchisee for XYZ Locality / Suburb in XYZ city and hereto referred as the Unit Franchisee on the following terms and conditions and after signing a contract called the Franchise agreement. The Franchise agreement will be a legal document and will be drawn up after this Memorandum of Understanding (MOU) is signed by the Franchisor and the Unit Franchisee. Following are some of the points of the MOU.

The Unit Franchisee agrees to pay the Franchisor an initial, up-front fee, called the Franchise fee of Rs 5 Lakhs upon signing this MOU for setting up a single restaurant unit. 50% of Franchise fee is refundable upon closing down the business due to any reason.
All costs incurred for establishing the Unit Franchise / restaurant like buying / leasing property, kitchen equipment, hiring staff, all construction costs, décor, etc will be borne by the Unit Franchisee.
In addition to the above costs the Unit Franchisee should proof to the satisfaction of the Franchisor, the Unit Franchisee’s financial ability and must have sufficient working capital to run the Franchise for a reasonable period of time before the business gets profitable.
The Unit Franchisee agrees to follow as per the book all rules and regulations laid down by the Franchisor for running the Franchise / Restaurant.
The Unit Franchisee will buy formula based packets from the Franchisor to make all preparations and will strictly follow the guidelines laid down by the Franchisor on the mode of preparations, etc.
The Unit Franchisee agrees to put only Franchisor approved items on the Menu.
The Franchisor will not be responsible for any losses incurred by the Unit Franchisee in the course of running the Franchise / Restaurant.
The Unit Franchisee should also buy some special customized equipment approved by the Franchisor for preparation of items of sale.
The Franchisor will provide all training, detailed operating manuals and know-how to the Unit Franchisee for running the Franchise / Restaurant at the Franchisor’s place upon signing the MOU and after receipt of the Franchise fee.
The final Franchise agreement should be drawn as soon as possible after signing the MOU.
The term of the contract would be for 15 years, renewable by the consent of both the parties.

TOP

Back to Franchising Home

I) Elements of a Unit Franchise Module in India

II) Elements of a Master Franchise Module in India

III) Elements of an International Franchise Module