BIG BOY - FDD UFOC ITEM 7 Detail

Item 7

YOUR ESTIMATED INITIAL INVESTMENT

(1)      
For the estimated range of costs, Big Boy relied on its management''s experience in the restaurant business, as discussed in Item 2 of this Franchise Disclosure Document. You should carefully review these figures with your business advisor before making any decision to purchase a Big Boy Restaurant franchise.

(2)       Payments are not refundable unless otherwise noted. Big Boy does not offer direct or indirect financing.

(3)       You must purchase or lease the land for your Big Boy Restaurant and construct the restaurant premises. You must construct the restaurant in accordance with Big Boy''s then-current standard plans and specifications for a Big Boy Restaurant, except as modified by you to comply with local ordinances, building codes, permit requirements and market considerations. The modifications will be made at your expense and must be approved in advance by Big Boy. If Big Boy''s plans and specifications for the restaurant are modified by anyone other than Big Boy, you must submit final detailed plans and specifications for Big Boy''s review and written consent before commencing construction. Big Boy Restaurants are typically located in densely populated neighborhoods, small towns or on interstate freeway interchanges supported by strong trade areas. The prototypical Big Boy Restaurant building is 4,750 square feet. The cost to purchase or lease land and construct a Big Boy Restaurant may vary widely depending upon the location of the land, the demand for the site, the zoning, the assessed value of the parcel, the attributes of the parcel and related area, such as parking availability, accessibility and traffic flow, and the general economic conditions.

(4)      You can convert an existing building to a Big Boy Restaurant. The cost to do so will generally range from $300,000 to $800,000. If you lease the restaurant premises, under certain circumstances, the landlord may agree to pay the cost for the required remodeling and the cost will be reflected in monthly lease payments.

(5)      If you lease the premises for your Big Boy Restaurant, annual rental rates will typically be between $75,000 and $125,000. The annual rental for your Franchised Location may include common area maintenance fees and real estate taxes. The rental rates will vary greatly depending on the geographic location, the size of the market, market growth, per capita income, size of the building, the location, traffic count, customer demographics, anchor tenants, economic conditions in the area, competition for the space, and other business factors.

(6)      The estimated range of costs for the Architectural Fee is based on Big Boy''s approved architectural firm which has prior experience with the design of the restaurant. Costs may be higher if another architectural firm is engaged by you.

(7)      You must pay the salaries, benefits, Travel Expenses and other expenses of your Management Team while you and your Management Team attend the training program.

(8)      Big Boy offers, through Big Boy''s approved equipment package supplier, a specifically designed equipment package for installation into your Big Boy Restaurant. A typical contract calls for a down payment at the time of placing the package equipment order. The balance is payable upon delivery. Equipment alternatives or substitutions are not allowed without the written approval of Big Boy.

(9)        The approved POS System for Big Boy Restaurants is described in more detail in Item 11. A complete computer training program for the POS System typically will not exceed $5,000. These costs are included in the amount set forth above and are paid directly to the approved POS System supplier. In addition, the estimated range of cost includes an additional $15,000 that may be incurred if Big Boy mandates that franchisees implement a handheld POS System. As of the effective date of this Franchise Disclosure Document, such system is not required.

(10)     The cost of a liquor license will vary greatly by state.

(11)        You should check with the local agency that issues building permits to determine what impact, connection, or other site development fees might be required for the specific site for your Big Boy Restaurant. Environmental impact fees vary significantly for each location, and may range from 1/2% to 3% of the value of the land.

(12)        You must maintain general liability insurance with coverage of at least $1,000,000 per occurrence and $2,000,000 aggregate coverage, liquor liability insurance with coverage of at least $1,000,000 per occurrence, if your restaurant serves any alcoholic beverages, vehicle insurance with coverage of at least $500,000 per occurrence, property insurance with replacement cost coverage, business interruption insurance with coverage of at least $300,000 per occurrence, building insurance with coverage of at least replacement cost if you or any of the franchisee''s owners own the building or the business premises for the Franchised Location, umbrella liability insurance with coverage of at least $ 1,000,000 per occurrence, and all insurance required by law, such as workers'' compensation insurance. All coverage must be provided by an insurer that is AM Best rated A-/7 or better. All insurance policies must name Big Boy, its sole member and affiliates ("Additional Insureds") as an additional named insured, contain endorsement by the insurance companies waiving all rights of subrogation against the Additional Insureds, and will stipulate that Big Boy sill receive copies of all notices of cancellation, nonrenewal, or coverage reduction or elimination at least 30 days prior to the effective date. Expenditures for insurance may vary greatly depending upon workers'' compensation and payroll costs.

(13)       Big Boy Food Group is an approved supplier for the food and supplies used by Big Boy Restaurants (see Item 8).

(14)       Includes expenditures for your music/call system, telephone service, security, professional fees, and other miscellaneous opening costs.

(15)       This estimate does not include the salaries, taxes and benefits for you or your Management Team during training.

(16)������ During the first three months of operations, you will need additional funds to cover your
expenditures for additional supplies, food and beverage inventories, Royalty Fees, Advertising Fees,
utilities, and other operating costs. This estimate has not been offset by any revenues you may generate
from operations during this three month period. Your working capital requirements may increase or
decrease depending upon your geographic area, number of employees, labor rates, minimum wage laws,
operating revenues and other economic factors.

(17)��� These figures are estimates only and it is possible that you may have additional or greater expenses
during this period. Your costs will vary depending on the size of your Big Boy Restaurant, your
geographic area, economic and market conditions, competition, wage rates, sales levels attained, and
other economic factors.

(18)������ If you sign an Area Development Agreement, you must also pay Big Boy a nonrefundable
Development Fee equal to $5,000 multiplied by the number of Big Boy Restaurants that you agree to
develop under the Area Development Agreement. You must pay the Development Fee in full when you
sign the Area Development Agreement. You must sign a separate Franchise Agreement for each Big Boy
Restaurant you develop under the Area Development Agreement and pay a nonrefundable Initial Fee of
$35,000 for each Big Boy Restaurant you develop. You will pay the Initial Fee each time you sign a
Franchise Agreement for a Restaurant you develop according to the development schedule in the Area
Development Agreement. You must sign your first Franchise Agreement when you sign the Area
Development Agreement.