A friend of mine is moving forward in the process to open a franchise in his hometown back east. Obviously this endeavor costs substantial investment, but exactly how much for specific brands.
I was happy to find Entrepreneur.com’s 2011 Franchise 500 list, which ranks, and gives approximate start up costs (it is not 100% accurate however, for example Subway is $94,300 – $222,800). Nonetheless, this is a great tool for anyone interested in these types of investments.
Most interesting is that someone in a small town could feasibly open their own 7-11 and be slinging slurpees for only 30K (I’m more of an AM/PM fan with their “too much good stuff” creepy voice commercials and all).
Entrepreneur.com mentions Hampton Hotels as the highest ranked franchise, which can be yours for a naturally hefty $3-13 million.
Below is a list of some popular franchises’ investment information, whose information I pulled from each company’s website(click hyperlink in company name for additional information):
SUBWAY – Everyone loves a 5 dollar footlong!
“The SUBWAY® chain has one of the lowest start-up costs for franchise chains in the restaurant industry. In the United States, including the initial franchise fee of $15,000, these costs range from $94,300 – $222,800. These numbers, of course, depend on many factors, such as location and size of establishment”
TOGOS – The Hot Pastrami Paradise
“What are the minimum Financial Requirements to qualify?
A. A minimum net worth of $300,000 with at least $150,000 liquid for a single restaurant development. For Area Development territories for 3 or more restaurants, a minimum net worth of $900,000 with at least $450,000 liquid.
Q. How much will it cost to build a Togo’s restaurant?
A. Costs vary greatly due to the store size, age of the building, & regional restrictions. Investment ranges are between $256,650 to $417,300.”
Jamba Juice ups the ante a little bit, asking for $1mill net worth.
Passionate about the Jamba brand
Local market knowledge
Minimum $350K in liquid assets / $1M in net worth
Commitment for minimum of 3-5 units
Retail or restaurant operations experience
Fees – Traditional Unit
Initial Franchise Fee1 $25K
Royalty Fee2 5.5% (4 or more stores) or 6% (3 or less stores)
Marketing Fee 2-4%
Fees – Nontraditional Unit Please see FDD for more information
Estimated Initial Investment3
Traditional Unit (~1,200 SF) $353,100 to $639,800
Nontraditional Unit $252,100 to $599,100
Nontraditional Kiosk $221,000 to $492,100
Franchise Term 10 years”
“Financial CapabilityMinimum Liquidity: $400,000 ($200,000 per store)
Minimum Net Worth: $800,000 ($400,000 per store)
Ability to develop multiple stores. What is your initial license fee?
$45,000 per location”
“Net Worth: 500,000 per restaurant
Liquid Assets: 200,000 per restaurant
Franchise Fee: 50k
Total Estimated Initial investment : 250k to 650k”
Last but not least, who could forget Del Taco!
“Financially, for the smallest development agreements (2 units), your group must have a minimum of $750,000 in net worth and $300,000 in unencumbered liquid cash assets. For larger deals, greater assets and liquidity are required.Operationally, we do require restaurant experience. If you are not intending to be an owner-operator, at least one member of your group must have acceptable recent restaurant management experience at the general manager level (for 2-3 unit deals) or at a multi-unit level (for larger deals). QSR restaurant management experience or experience operating a 24-hour restaurant concept is preferred.”