Professional fees

Professional fees are the lawyers, accountants, and sometimes the consultants paid to form the entity, read the FDD, close the lease, and set up the books. Architecture and project management can sit in this bucket or in construction, depending on the filing. Comparing only the rows labelled “professional” will miss the design fees that another brand put next to leasehold improvements.

The league table at the end of this chapter includes only professional-bucket rows. Great Greek will not be in it. GDK, Shah’s, Mad for Chicken, and 375° will.

The disclosed professional-fee rows

Brand	Filing label	Low	High
German Doner Kebab	Professional Fees	$10,000	$15,000
Shah’s Halal Food	Legal & Accounting	$3,000	$6,000
Mad for Chicken	Professional Fees	$2,500	$7,000
375° Chicken ‘n Fries	Professional Fees	$2,000	$5,000

GDK’s $10,000–$15,000 is the highest band. Shah’s names the professions: legal and accounting, $3,000–$6,000. Mad for Chicken and 375° use the generic label at different amounts. None of these rows is the architect.

Design fees live next door

Architecture and project management in the same filings:

Brand	Filing label	Bucket	Low	High
German Doner Kebab	Architects and Project Manager Fees	construction	$30,000	$50,000
The Great Greek	Design and Project Management Fee	construction	$10,000	$10,000
Mad for Chicken	Architectural Plans	construction	$10,000	$20,000
375° Chicken ‘n Fries	Architectural Plans	construction	$8,000	$12,000

Adding GDK’s professional fees to its architect row produces $40,000–$65,000 of named professional-looking costs. That addition is fair inside the filing because both rows exist. Calling the sum “professional fees” for comparison with Shah’s $3,000–$6,000 is not: Shah’s build-out of $80,000–$160,000 may include design, or design may be extra. Minnesota’s public Shah’s Halal filing is the document that either says so in a footnote or does not.

Great Greek’s design fee is a flat $10,000 in construction. There is no separate legal-and-accounting line. Entity formation, FDD review, and lease negotiation are still cash events. They may sit in Opening Assistance ($500–$2,000), in additional funds ($35,000–$75,000), or outside the table. A filed Great Greek disclosure does not invent a $6,000 legal row to match Shah’s label.

What the row has to cover in a real closing

A usable professional-fee budget is a list of engagements, not a single cell:

1. Franchise counsel to review the FDD and the franchise agreement, including development-schedule terms. GDK’s table is per outlet inside a five-outlet minimum; that structure is a legal-review item, not an Item 7 curiosity.
2. Entity formation and, where relevant, a review of the franchisor’s required entity structure.
3. Lease counsel, which is a different job from franchise counsel. The City of Seattle’s commercial lease tool is a question list, not a substitute for that engagement.
4. Accountant for entity elections, sales-tax registration, and the chart of accounts the franchisor’s reporting will require.
5. Architect and, if required, a branded design firm — already a separate construction row in four of the five itemised filings.
6. Consultants the buyer actually hires (site, immigration, liquor, if any) that Item 7 did not name.

Shah’s $3,000 low will not pay for franchise counsel, lease counsel, and an accountant in most markets if all three are used. The $6,000 high may not either. That is not a finding that Shah’s under-discloses; it is a finding that the row is an estimate of a class of cost, and the buyer’s engagement letters are the bid. The FTC’s consumer guide treats independent professional advice as part of buying a franchise, not as optional garnish on Item 7.

Worked example: do not treat the fee as optional because it is small

375°’s professional fees of $2,000–$5,000 are 1 percent of a $521,500 high total. GDK’s $15,000 high is 1 percent of $1,123,000. The shares match; the dollars do not, and neither share measures the cost of a bad lease. A tenant-improvement allowance clause that reimburses after opening, or a rent-commencement date that starts on delivery of a shell, will move more money than any professional-fee row in this dataset. Paying counsel to read those clauses is the point of the row.

Mad for Chicken’s professional fees of $2,500–$7,000 sit next to architectural plans of $10,000–$20,000 and additional funds of $51,375–$162,000. The wide operating reserve is not a substitute for a lease review completed before the reserve is needed.

Professional-fees checklist

1. Copy the professional-bucket label, and separately copy any architect or design row from construction.
2. List franchise counsel, lease counsel, accountant, and architect as four engagements.
3. For Great Greek, note the $10,000 design fee and the absence of a legal row, then budget counsel anyway.
4. Keep licenses and permits on their own line; expediters are not always inside professional fees.
5. Put the engagement letters next to the Item 7 range and explain the difference, as the worksheet requires for every other row.

Formation, tax elections, and the franchisor’s reporting pack

Entity formation is cheap relative to GDK’s $10,000–$15,000 professional-fee band and expensive relative to 375°’s $2,000 low if it includes an operating agreement, an EIN, state foreign qualification, and a registered-agent year. S-corporation or partnership elections, where they are used, have deadlines that do not care about the construction schedule. The franchisor’s required chart of accounts and royalty-reporting pack may need a bookkeeper from month one, which is an operating cost that Item 7 professional fees only sometimes include.

Sales-tax registration, employer accounts, and — where relevant — local business-tax accounts are licenses as well as professional work. The licenses and permits row may already estimate the filing fees. The accountant’s time to complete them is this row. Shah’s Legal & Accounting of $3,000–$6,000 is the only itemised label that names both professions. Budget both anyway.

Site-selection or broker work is easy to park here and often belongs in real estate. GDK’s Property Agent row is $0–$0. Great Greek’s Real Estate Service Charge is $0–$3,500. Those are the filings that already made a place for brokerage. Putting a $15,000 tenant-rep fee into professional fees because GDK’s property-agent cell is zero would misread a disclosed zero.

Immigration, liquor, and environmental consultants are project-specific. None of the five itemised tables names them. If the site needs a Phase I or a traffic study, that invoice is extra. It is not Shah’s miscellaneous opening costs unless the footnote says so.

A franchise agreement that requires mediation or a designated venue is a counsel question before travel budgets are set, not after. That review is this row, even when 375° printed $2,000 as the low. Entity-formation invoices and lease-counsel retainers are usually due before the franchise fee itself, not after possession.

The injected comparison below sorts professional-bucket rows by high estimate. It will not include Great Greek’s design fee. That fee is in construction, where the filing put it.