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.

By Victoria CampisiStaff Writer

SPONSOREDUpdated 7:19PM • 02/24/23

LAST UPDATED: 02/2023

FRANCHISE WEBSITE:

NUMBER OF LOCATIONS: 17

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

GROSS SALES DATA (ITEM 19): $610,402–$1,107,385

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.

How Many Chip City Locations Are There?

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.

What Is the Business Model?

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.

How Much Can Chip City Franchise Owners Make?

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

How Much Does It Cost To Open a Chip City?

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

What Is the Franchise Fee for Chip City?

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?

What Helpful Articles Can I Read To Learn More?

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