Construction costs are the biggest investments that restaurant franchisees make. They’re also the most difficult to estimate.

When it comes to opening a new restaurant franchise, the biggest price tag is construction, especially in today’s market. But new franchisees often learn that obtaining a realistic estimate for construction costs is usually impossible until late in the process, which in most cases is too late, because the upfront commitment to cost is already made. Even franchise disclosure documents (fdds) reference a broad potential range.

This uncertainty isn’t ideal for franchisees, many of whom entered franchising to mitigate their risk as much as possible. One of the benefits of franchising is buying into an established system with no surprises, but the largest cost involved is often the least known upfront.

“If you are in franchising, construction can make up 60–70 percent of the cost of your entire project,” says Slava Borisov, CEO of BidVita. “Like any large investment, you need data to be able to make an informed decision. Everything else in the franchise system is known with 10–15 percent deviation, but for construction, you’re given a range that in some cases is up to 10 times the lowest cost. That can be massively frustrating to franchisees.”

BidVita is a platform designed for franchises’ commercial construction that uses artificial intelligence (ai) to check construction costs, timelines, milestones, and qualifications in real time all over the U.S. and deliver more precise data without needing input from a contractor. Franchisors can use BidVita to increase royalties and decrease timelines to opening by an average of four months, and franchisees are happier knowing their costs, timelines, and milestones in the early phase of development and compare the construction costs for their location within minutes. Designed to be user-friendly with a straightforward setup process, the platform can create detailed estimates for projects within a few minutes, compared to the two weeks it may typically take to generate bids the traditional way.

“Pretty much everything is on-demand,” Borisov says. “But in construction, if a project comes in 15–20 percent over budget and it takes the contractor four weeks longer than anticipated, that’s very typical. This has become the norm in franchising, in fact, where projects are late. Franchisees aren’t happy about that.”

Since BidVita eases some of the most common frustrations that franchisees experience, the platform can also help maintain positive franchisee-franchisor relationships.

“The biggest issue in franchising is franchisee unhappiness,” Borisov says. “If franchisees are unhappy, the brand isn’t going to get referrals. Most of that friction happens during the franchise development process, when franchisees are in the market for real estate locations or making sure they sign a good lease. They need data points to work with their biggest investment. Even without construction plans, BidVita can tell them what a location is going to cost, how long it’s going to take to develop, what’s included and excluded, and the major milestones on that project. If they’re negotiating a lease, BidVita can tell them whether they have an appropriate tenant improvement allowance or if the landlord is not willing to upgrade the space. Franchisees or their real estate agents can learn all of this from their phone in less than six minutes.”

Time and foreknowledge can make a big difference. “We give our franchisees and franchisors a glimpse into the future with technology,” Borisov says. “The data our platform provides can help you see the finish line during all project phases.”

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By Kara Phelps

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