# From Item 7 to a site budget

There is a moment in every deal when the disclosure document stops governing
the numbers. It is the moment a specific room enters the picture: a lease
exhibit describing what the landlord will deliver, a contractor walking the
space, a permit counter with its own fee schedule. From then on the Item 7
table is historical evidence about what a franchisor estimated for a class of
sites, and the budget belongs to the site.

Making that handover deliberately is the whole exercise. Done badly, the filing
survives as a set of placeholder numbers nobody replaced, and the project
discovers in month three which of them were wrong. Done properly, every row in
the table ends up in one of three states: carried across at face value,
replaced by a document, or expanded into several lines the filing never had.

## The rows that carry across

Almost nothing does, and the one clear exception is the franchise fee. Five of
the six itemised filings state it as a single figure — $30,000 at German Doner
Kebab and Shah's Halal Food, $35,000 at Mad for Chicken, $40,000 at 375°
Chicken 'n Fries — and it is an amount owed under the franchise agreement rather
than an estimate of a market price. It belongs on the budget at the disclosed
number, on the date Item 5 says it is due.

Even that row needs its footnote read. Great Greek's 2023 band of
$35,550–$39,500 is not a range of possible prices for one buyer; the low is a
discount available to owners of affiliated brands and the high is the
first-time fee. A budget for a first-time buyer carries $39,500, and the
[franchise fee](/franchise-fee/) chapter is where that distinction lives.

Everything else in the table is an estimate of what a third party will charge in
a market the franchisor cannot see.

## Lease and landlord work become three cash flows, not one deposit row

The real-estate rows are opening cash held or prepaid, and they are the
smallest part of what the lease decides. German Doner Kebab discloses **Lease,
Utility & Security Deposits** of $25,000–$30,000 and a **Property Agent** row of
$0–$0. Shah's discloses **Real Property** of $3,000–$10,000. Great Greek
discloses **Real Estate Lease Deposits** of $5,000–$16,000 and a **Real Estate
Service Charge** of $0–$3,500. Mad for Chicken and 375° each disclose **Lease &
Utilities deposits**, at $15,500–$37,500 and $10,000–$30,000.

Replace those single cells with the lease's own terms, split three ways: what
the landlord performs, what the landlord contributes and on what mechanics, and
what the tenant pays and when. The
[tenant-improvement allowance](/tenant-improvement-allowance/) chapter treats
the contribution as a cash-timing problem rather than a deduction, which is the
error that empties a construction account fastest. The [rent](/rent/) chapter
separates the deposit from the occupancy cost, and
[deposits and prepaid amounts](/deposits-and-prepaid/) separates held cash from
spent cash. The City of Seattle's public [commercial lease
tool](https://www.seattle.gov/documents/departments/economicdevelopment/oisi/english%20final%20full%20lease%20tool.pdf)
is a workable checklist for extracting those terms, because it asks when rent
starts and who performs landlord work rather than what the space costs per foot.

Rent commencement is the single date that converts a construction schedule into
a cash requirement. Put it on the budget as a date, not a line item.

## Contractor scope replaces the construction row entirely

No construction cell in any filing survives the conversion. German Doner Kebab's
construction-bucket rows run $355,000–$680,000, Great Greek's $260,000–$660,000,
Mad for Chicken's $85,000–$255,000, 375°'s $108,000–$212,000, and Shah's single
**Build-Out/Construction** line $80,000–$160,000. Those bands describe different
label schemes over different assumed delivered conditions, as the
[construction](/construction/) chapter sets out.

What replaces them is a scope document: drawings, a schedule of values, named
allowances, unit prices for the work that cannot be drawn yet, and a written
list of exclusions. The exclusions matter more than the total, because the
exclusions are what arrives later as a change order. The
[change orders and overruns](/change-orders-and-overruns/) chapter is about
that gap, and [second-generation versus shell](/second-generation-vs-shell/) is
the survey that decides how large it is likely to be.

Architecture and project management move with the scope. German Doner Kebab
prices **Architects and Project Manager Fees** at $30,000–$50,000 inside
construction; Mad for Chicken and 375° carry **Architectural Plans** at
$10,000–$20,000 and $8,000–$12,000; Great Greek carries a fixed **Design and
Project Management Fee** of $10,000. Shah's has no architecture row at all.
Where a filing is silent, the budget still needs the line — a jurisdiction that
requires stamped drawings requires them regardless of which table you read.

## Equipment becomes a quoted matrix, and the package stays whole

The equipment rows convert into a function-by-function schedule. German Doner
Kebab splits **Restaurant Equipment** at $140,000–$175,000, **Furniture &
Fixtures** at $15,500–$20,000, and **Small Wares** at $11,000–$15,000. Mad for
Chicken and 375° each disclose one **Furniture, Fixtures and Equipment** line, at
$85,000–$110,000 and $100,000–$120,000. Shah's discloses a **Fixture Package** of
$30,000–$50,000.

Quote each required function separately — cook, hold, refrigerate, wash, prep,
serve, seat, store — and add freight, tax, rigging, connection, commissioning
and lead time as their own columns, because those are the costs a purchase
price omits. Check the result against Item 8 before treating any third-party
quote as available; a mandated supplier changes the number and the negotiation.
The [equipment](/equipment/) chapter works through that boundary, and
[equipment financing and leasing](/equipment-financing-and-leasing/) covers how
the funding structure interacts with it.

Great Greek's **Restaurant Package** of $225,964–$248,560 is the exception that
proves the rule. It cannot be converted into a matrix from public data, because
the filing does not say what is inside it. On a site budget it stays one line
until the franchisor or a franchisee documents the contents, exactly as the
[restaurant package](/restaurant-package/) chapter insists.

## Opening inventory becomes an order, and training becomes an itinerary

Two rows convert into documents that are easy to produce and often skipped.

Opening inventory is a product order priced from the approved distributor's
current list against the opening week's forecast. Disclosed estimates include
$15,000–$20,000 at German Doner Kebab, $10,000–$30,000 at Shah's, $7,000–$15,000
at Great Greek, $14,250–$28,200 at Mad for Chicken, $5,000–$10,000 at 375°, and
$10,000–$17,000 at Döner Haus.
Those are estimates for an assumed menu and volume; a real order is a list of
cases. The [opening inventory](/opening-inventory/) chapter keeps that row
separate from the reserve that replenishes it.

Training rows are travel, and travel is an itinerary. Item 11 gives the hours to
build it from: German Doner Kebab discloses 40 classroom and 120 on-the-job
hours, Shah's 19 and 85, Great Greek 60.25 and 180, Mad for Chicken 25 and 196,
375° 23 and 67, Döner Haus 24 and 56. Multiply the days by the number of people who must attend, price
the actual flights and lodging, and compare the result with the disclosed row —
$5,000–$10,000, $2,000–$20,000, $10,000–$20,000, $4,000–$10,000, $100–$5,000,
and a fixed $10,000 fee plus $0–$3,000 of travel
respectively. The [training costs](/training-costs/) chapter explains why the
row is usually not tuition.

## Cash through the stated period, and then past it

The last conversion is the additional-funds row, and it is the one that changes
shape rather than value. Five filings estimate three months and Great Greek up
to six. A budget needs a month-by-month cash forecast that runs past whichever
period the filing named, with occupancy, payroll, cost of goods, Item 6
royalties and funds, insurance, technology charges, debt service and an owner
draw as separate lines, and with card settlement timing shown as a delay rather
than assumed away.

The SBA's [startup-cost
worksheet](https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs)
separates one-time from monthly, which is the right frame; the
[working capital](/working-capital/) chapter builds the monthly half and the
[additional-funds line](/the-additional-funds-line/) chapter explains what the
disclosed cell was and was not describing.

## The sheet this produces

1. Filing label, filing low, filing high, exactly as printed.
2. Site evidence: the document that replaced the cell, named and dated.
3. Budget amount for this project.
4. Difference and reason, in a sentence a lender or partner can read.
5. Payment date, and to whom.
6. A named contingency line the filing does not have, sized from the scope's
   exclusions rather than from a rule of thumb.

The [worksheet](/item-7-worksheet/) is that sheet with the reading order
printed on it, and [how to read Item 7](/how-to-read-item-7/) is the sequence
that fills the first column. What comes out is not a corrected Item 7. It is a
project budget standing beside a disclosure, with every difference explained —
which is the only form in which the two documents can both stay true.

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