Franchise Deep Dive: Chip City Franchise Costs, Fees, Profit and Data

The gourmet cookie brand is opening its doors in new markets as it prepares for its franchise rollout.

REPORTED COST TO GET IN: $293,000–$526,000

GROSS SALES DATA (ITEM 19):

Born in Astoria, Queens, in 2017, Chip City began as a hobby between childhood friends, Peter Phillips and Theodore Gailas, as the duo challenged each other on who could make the best cookie. A small storefront, some equipment, and a dream led the entrepreneurial team to listen to that feedback and open their first store.

The brand rotates more than fifty unique flavors every year, such as Peanut Butter & Jelly, the Everything Cookie, Oatmeal Apple Pie, Blueberry Cheesecake, S’Mores, Lemon Berry, the Cannoli Cookie and more. Each week, the menu changes to offer classic flavors and seasonal varieties.

Today, Chip City currently has 17 locations across Manhattan, Brooklyn, Queens, Long Island, an New Jersey, with plans to enter into new markets, including Massachusetts and Florida.

In 2022, Chip City received a $10 million investment from Enlightened Hospitality Investments (EHI), the growth equity fund associated with Danny Meyer’s Union Square Hospitality Group (USHG). The investment will be used to support the brand’s multi-state expansion and national shipping platform.

According to its 2022 FDD, Chip City offers individual franchises as well as area development franchises for the development of multiple shops within a designated territory–if approved. The total number of shops that franchisees will be required to develop and operate under a multi-unit development agreement will vary from three to 15 shops.

Per the brand’s Item 19, the following includes gross sales data for the 2019, 2020, and 2021 Reporting Company Outlets, respectively as to each particular calendar year.

2019 Calendar Year:

• Average: $896,394

• Median: $809,197

• High: $1,115,267

• Low: $764,718

2020 Calendar Year:

• Average: $873,667

• Median: $821,017

• High: $1,111,569

• Low: $741,063

2021 Calendar Year:

• Average: $787,789

• Median: $706,779

• High: $1,107,385

• Low: $610,402

The estimated total initial investment to open a Chip City is $293,000–$526,000. Costs include:

• Initial Franchise Fee: $40,000

• Construction and Leasehold Improvements: $150,000–$275,000

• Lease Deposits - 3 Months: $8,000–$24,000

• Furniture, Fixtures and Equipment: $22,000–$35,000

• Signage: $2,000–$8,000

• Computer Software and Point of Sales System: $500–$2,000

• Grand Opening Marketing: $5,000

• Initial Inventory: $30,000–$50,000

• Utility Deposits: $1,000–$2,000

• Insurance Deposits: $0–$500

• Travel for Initial Training: $1,000–$3,000

• Professional Fees: $3,000–$20,000

• Licenses and Permits: $500–$1,500

• Additional Funds - 3 Months: $30,000–$60,000

Other fees include:

• Royalty: 6% of gross sales

• Brand Development Fund: Up to 2% of gross sales, not currently assessed

• Local Marketing: 2% of gross sales

• POS System: Currently $30 per month, subject to increase

• Online Ordering, Customer Rewards and Gift Cards: Currently not implemented but may be implemented in the future

• Technology: Up to $500 per month

• Local and Regional Advertising Cooperatives: As established by cooperative members

• Annual Conference Attendance Fee: Then current conference fee, not greater than $1,500

• Additional Employee Initial Training: Then current training fee, currently $300 per person, per day

• Supplemental On-Site Training: Then current daily rate per trainer, plus expenses we incur. Current rate is $300 per day

• Interest: 18% per annum from due date

• Reporting Non-Compliance: $150 per occurrence

• Operations Non-Compliance: $450 to $1,000 per occurrence

• Payment Non-Compliance: $150 per occurrence

• Audit: Cost of Audit

• Quality Assurance Audit: Actual costs incurred by Chip City

• Collections: Actual fees, costs and expenses

• NSF Check Fee of Failed Electronic Fund Transfer: 5% of amount or $50 whichever is greater or max fee allowed by law

• Non-Compliance: Actual fees, costs and expenses

• Supplier Review: Actual fees, costs and expenses

• Management Service: Actual costs incurred by Chip City

• Transfer: $20,000

• Renewal: $10,000

When signing a Franchise Agreement, franchisees will pay Chip City a non-refundable initial franchise fee in the amount of $40,000.

Who Is the Leadership of Chip City?

• Peter Phillips, Chief Executive Officer and Co-Founder

• Theodore Gailas, Chief Brand Officer and Co-Founder

• Andrea Prunella, Chief Operating Officer

• Eddie Mamiye, Chief Strategy Officer

• Dionisios Vangelatos, Chief Financial Officer

• Nicholaos Moshopoulos, Chief Development Officer

Disclaimer: This content is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this site constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial advice, nor does any information in the email constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.