# Soft costs

Soft costs are the opening expenses that are not construction, equipment, or
the franchise fee: professional services, training travel, insurance, licenses,
and the miscellaneous lines filings use for everything else. They are small
next to leasehold improvements and still able to exhaust cash because they
come due together, often before a loan draw for hard costs.

This page is a grouping, not a new Item 7 bucket. The dataset codes
professional, training, insurance, licenses, and other as five leagues. Adding
them *inside* one filing is a way to see the cluster. Adding Shah's legal row
to GDK's training row is not.

## Worked example: add the named soft rows inside each filing

The table below adds, for each brand, every row this dataset codes as
professional, training, insurance, licenses, or other. Construction, equipment,
packages, signage, technology, inventory, grand opening, real estate,
franchise fee, and working capital stay out.

| Brand | Rows included | Low | High |
| --- | --- | ---: | ---: |
| German Doner Kebab | Professional Fees; Insurance; Initial Training; Business Licenses; Office Supplies & Misc. | $26,500 | $53,000 |
| Shah's Halal Food | Travel Expenses to Attend Training; Insurance; Licenses, Permits; Legal & Accounting; Marketing Supplies; Miscellaneous Opening Costs | $19,000 | $61,000 |
| The Great Greek | Travel and Living Expenses (while attending training); Insurance; Utility Deposits/Licenses; Opening Assistance | $13,500 | $31,000 |
| Mad for Chicken | Your Training Expenses; Business Licenses and Permits; Professional Fees; Insurance | $10,500 | $20,500 |
| 375° Chicken 'n Fries | Your Training Expenses; Business Licenses and Permits; Professional Fees; Insurance | $6,600 | $20,000 |

Those sums are additions of disclosed lines. They are not a standardized
“soft cost” product.

Shah's high of $61,000 is the largest cluster, and it is carried in part by
training travel of $2,000–$20,000 and miscellaneous opening costs of
$5,000–$15,000. GDK's high of $53,000 is next, carried by insurance of
$9,000–$18,000 and professional fees of $10,000–$15,000. Great Greek's cluster
is smaller because architecture sits in construction ($10,000 design fee) and
grand opening sits in the restaurant package. Mad for Chicken and 375° look
modest in this grouping because their large additional-funds rows
($51,375–$162,000 and $30,000–$60,000) are working capital, not soft costs.

## What each piece is for

[Professional fees](/professional-fees/) are counsel and accountants, with
architects often next door in construction. GDK $10,000–$15,000; Shah's legal
and accounting $3,000–$6,000; Mad for Chicken $2,500–$7,000; 375° $2,000–$5,000;
Great Greek silent as a professional row.

[Training costs](/training-costs/) in Item 7 are usually travel and living,
not tuition. GDK $5,000–$10,000; Shah's $2,000–$20,000; Great Greek
$10,000–$20,000; Mad for Chicken $3,000–$6,000; 375° $100–$5,000.

[Insurance](/insurance/) is the opening premium or deposit, not a lifetime
policy. GDK $9,000–$18,000; Shah's $6,000–$10,000; Great Greek $2,000–$6,000;
Mad for Chicken $2,500; 375° $2,500–$5,000.

[Licenses and permits](/licenses-and-permits/) may include utility deposits.
GDK $1,000–$5,000; Shah's $1,000–$3,000; Great Greek $1,000–$3,000 combined
with utility deposits; Mad for Chicken $2,500–$5,000; 375° $2,000–$5,000.

Other is the remainder. GDK **Office Supplies & Misc.** $1,500–$5,000. Shah's
**Marketing Supplies** $2,000–$7,000 plus **Miscellaneous Opening Costs**
$5,000–$15,000. Great Greek **Opening Assistance** $500–$2,000. Mad for
Chicken and 375° have no other-bucket row in Item 7.

## What this grouping deliberately leaves out

Grand opening is a campaign, treated on its own page: GDK $10,000–$15,000;
Shah's $1,000–$5,000; Mad for Chicken $15,000; 375° $10,000; Great Greek
included in the package. Inventory is product: GDK $15,000–$20,000; Shah's
$10,000–$30,000; Great Greek $7,000–$15,000; Mad for Chicken $14,250–$28,200;
375° $5,000–$10,000. Deposits are held cash. Working capital is the initial-period
reserve. Folding those into “soft costs” would recreate Item 7 under a new
name.

The franchise fee is a right-to-open payment, not a professional service.
Great Greek's $35,550–$39,500 band, including the affiliated-brand discount,
stays on the [franchise fee](/franchise-fee/) page.

## Why the cluster still matters

Soft costs are due on a closing calendar: entity formation before the
franchise agreement, lease counsel before execution, deposits and licenses
before construction, insurance before the landlord will hand over keys,
training travel before opening week. Hard-cost loan draws often lag that
calendar. GDK's additional funds of $15,000–$20,000 for three months will not
pay $53,000 of clustered soft costs if those invoices land before opening.
They were never supposed to; they are different rows. The cash plan has to
see them on the same month.

The FTC's [startup discussion in the consumer
guide](https://search.ftc.gov/system/files/documents/plain-language/591a_buying_a_franchise_sept_2020.pdf)
puts professional advice and living expenses next to the opening estimate for
this reason. The SBA [startup-cost
worksheet](https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs)
separates one-time from monthly. Soft costs in Item 7 are one-time. Insurance
renewals, professional bookkeeping, and permit renewals after opening are
monthly, and they belong in [working capital](/working-capital/).

## Soft-cost checklist

1. List professional, training, insurance, licenses, and other rows from the
   filing you are actually buying, using the original labels.
2. Add them inside that filing only, as in the table above.
3. Pull architecture out of the sum if you are trying to compare “legal and
   accounting” across brands — or leave it in and say so.
4. Put each invoice on a pre-opening calendar with the deposit and fee dates.
5. Do not fund the cluster from the additional-funds line unless the footnote
   says those invoices are included.
6. Carry the same list onto the [printable worksheet](/item-7-worksheet/).

## A second pass: share of each brand's high total

Using the same clustered sums against each filing's printed high total:

| Brand | Soft-cost cluster high | Item 7 high | Cluster as share of high |
| --- | ---: | ---: | ---: |
| German Doner Kebab | $53,000 | $1,123,000 | 5% |
| Shah's Halal Food | $61,000 | $405,000 | 15% |
| The Great Greek | $31,000 | $1,088,560 | 3% |
| Mad for Chicken | $20,500 | $687,700 | 3% |
| 375° Chicken 'n Fries | $20,000 | $521,500 | 4% |

Shah's 15 percent is the outlier because the total is smaller and because
training travel and miscellaneous opening costs are wide. Great Greek's
3 percent is low because design and grand opening live in other buckets.
These shares are a way to see the cluster, not a ranking of professionalism
or compliance.

Miscellaneous is the row that most often absorbs a cost this grouping already
counted. Shah's **Miscellaneous Opening Costs** of $5,000–$15,000 is inside
the $61,000 high. Do not add a second miscellaneous line on the project
budget for “soft costs” on top of it. GDK's **Office Supplies & Misc.** of
$1,500–$5,000 is narrower. Great Greek's **Opening Assistance** of $500–$2,000
is narrower still. If a real invoice — a dumpster, a locksmith, a temporary
toilet — does not fit those labels, put it on the worksheet as a site quote
against the closest filing row, and explain the difference.

Pre-opening payroll for people who are not in the Item 11 training-attendee
list is the large cost this grouping still excludes. It is labor, it is
working capital or a separate pre-opening line, and it is not professional
fees. The [training costs](/training-costs/) chapter covers travel; the
[working capital](/working-capital/) chapter covers wages.

Print the cluster next to the hard-cost calendar so the invoices are visible
in the same months as contractor draws.

There is no injected league table on this page, because soft costs are five
buckets. The linked chapters each inject the comparison for one of them.

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HTML: https://donerhandbook.com/soft-costs/