What it costs to open, against your brand’s Item 7
Updated 16 October 2026
What Item 7 is
Item 7 of the Franchise Disclosure Document is the franchisor’s estimate of your initial investment. It lists each cost of opening with a low and a high figure: the initial franchise fee, build-out, equipment, signage, opening inventory, grand opening marketing, training travel, deposits, insurance, licenses and additional funds to carry the business through its first months. Each line also shows when it is paid and to whom.
Every brand page in the Averan Franchise library shows that brand’s Item 7 range. Start there, then open the full table in your FDD.
Build your budget on the same lines
Use the Item 7 lines as the categories in your opening budget. Then every quote and invoice can be set beside the franchisor’s range. The example below is illustrative, for a studio in a second-generation retail space.
| Item 7 line | Item 7 low | Item 7 high | Your budget | Note |
|---|---|---|---|---|
| Initial franchise fee | $50,000 | $50,000 | $50,000 | Fixed |
| Leasehold improvements | $180,000 | $320,000 | $265,000 | Contractor quote |
| Equipment and furniture | $90,000 | $130,000 | $118,000 | Vendor quote |
| Signage | $8,000 | $20,000 | $14,000 | Landlord rules apply |
| Opening inventory and supplies | $6,000 | $12,000 | $9,000 | |
| Grand opening marketing | $15,000 | $25,000 | $20,000 | Brand minimum |
| Training travel | $3,000 | $8,000 | $5,000 | |
| Deposits, insurance and licenses | $10,000 | $25,000 | $18,000 | Rent deposit included |
| Additional funds, first 3 months | $40,000 | $80,000 | $75,000 | New market for the brand |
| Contingency | $26,500 | 10% of build-out | ||
| Total | $402,000 | $670,000 | $600,500 |
Illustrative figures. Your brand’s Item 7 and your own quotes replace every number in this table.
Where opening costs run over
- Build-out. Older spaces hide plumbing, electrical and fire-code work. Get the contractor to walk the space before you sign the lease.
- Rent before opening. If construction runs late, rent starts before revenue. Negotiate a rent start date tied to opening, or a free-rent period.
- Payroll before the first sale. Hiring and training often start weeks before opening.
- Working capital. Item 7 lists a set number of months. A location in a market new to the brand often takes longer to reach steady sales.
- Marketing. The brand sets a minimum. Many owners spend more in the first quarter.
Financing and draws
Many owners finance the opening with an SBA 7(a) loan or a bank loan. Lenders usually release construction money in draws against invoices, and many ask for lien waivers from contractors before each draw. Record every pre-opening cost against its Item 7 line as it is paid, with the invoice attached. Each draw request then comes straight out of the books.
Track it after you open
Keep the opening budget beside the actual costs until the last invoice is paid. A CPA needs the same detail to set up depreciation on the build-out and equipment, and the final total is the starting figure for your return on the investment.
For a set of books built before the first sale, book a 30-minute call and bring your opening budget.
Tax treatment, sales tax and unclaimed property rules vary by state. Confirm them with a CPA before you change how you file.
Talk to Averan
Tell us how your business runs today, and we will walk you through what working together would look like.
Questions
Is the Item 7 high figure the most I will spend?
No. It is the franchisor’s estimate of a typical range, and actual costs can run above it.
Where can I see my brand’s Item 7?
In Item 7 of the FDD, and on your brand’s page in the Averan Franchise library.
How much contingency should I add?
Many owners start with 10% of the build-out and raise it for older spaces or markets new to the brand.