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How Much Does A Charleys Philly Steaks Franchise Cost?
Do you find yourself craving for thinly-sliced beefsteak and melted cheese in a soft hoagie roll every now and then? You’re surely not alone! No wonder Charleys Philly Steaks is a sought-after franchise nationwide.In this article, we’ll discuss Charleys Philly Steaks franchise cost as well as the duties that come with opening your own store. So pull up a chair and get ready to learn about what could possibly be your next investment.
Franchise Description
Before we dive into Philly Steaks franchise cost, let’s get to know the company a bit more. The business started in 1986 when founder Charley Shin opened the first location near The Ohio State University in Columbus. It was called Charleys Steakery back then. The business flourished, and by 1991, they were ready to franchise the system.
Gosh Enterprises, Inc. franchises the business and now has over 620 locations throughout the United States. Aside from Philadelphia-style cheesesteaks, they also offer a range of grilled subs, fries, and drinks. They’ve also added chicken wings to their traditional sandwich menu.
Today, the business prides itself on being “the world’s largest Philly cheesesteak franchise” and is rapidly expanding further. It’s easy to find CPS restaurants not just in freestanding locations but also in airports, mall food courts, military bases, and others. But Charley Shin’s team is far from being complacent; they aim to reach 3,000 locations in the years to come.
Before we discuss the Charleys Philly Steaks franchise cost, know other information about the franchise before getting started.
Training Overview
Aside from the Philly Steaks franchise cost, it’s also crucial to invest time and effort to make the business work. The franchisor holds the pre-opening training in the head office in Columbus, Ohio. The franchisee needs to attend the training themselves or an operating partner.
The initial training lasts for three weeks, including hands-on training. Some areas covered are business operations, food safety and preparations, cost control, equipment maintenance, and management techniques. The attendees must complete the course, or the franchise agreement will be forfeited.
Aside from the initial training, the franchisor may also organize additional courses for continuous business development.
Obligations and Restrictions
In the case of a business corporation, partnership, or other legal entity, there must be an operating partner. This partner should exert full time and effort to develop and operate the restaurant in the best way possible. In addition to that, they may not engage in other business or activity that conflicts with their duties at the CPS franchise.
Every franchise must offer all food, drinks, and products sold by the franchisor. In the same vein, locations may not sell products and services not authorized by the head office. This rule also applies to promo items offered in every site.
The initial franchise term lasts a period of ten years. But if the franchise owner’s lease has a shorter term, the head office may reduce the initial franchise term to unify the business arrangement. Franchise owners may renew the franchise if they meet the requirements set by the head office.
The franchise agreement grants franchise owners the right to own a restaurant at a location. However, it doesn’t grant an exclusive territory.
In terms of financing, the franchisor doesn’t offer any assistance directly or indirectly. They also don’t guarantee a franchisee’s note, lease, or obligation.
The Actual Charleys Philly Steaks Franchise Cost
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $24,500 | $24,500 |
| Leasehold Improvements | $250,000 | $334,840 |
| Equipment/Furniture/Fixtures | $126,527 | $115,500 |
| POS System | $9,720 | $10,700 |
| Signage | $9,249 | $16,000 |
| Architect | $10,500 | $15,000 |
| Travel and Living Expenses Associated with Initial Training | $4,000 | $6,000 |
| Insurance | $3,500 | $10,000 |
| Deposits and Professional Fees | $1,000 | $8,000 |
| Additional Funds (3 month period) | $20,000 | $30,000 |
| ESTIMATED TOTAL (does not include real estate purchase costs) | $458,996 | $570,540 |
Other Costs
| Type of Fee | Amount |
|---|---|
| Royalty | The greater of (a) $300 or (b) 6% of gross sales. |
| Advertising and Promotion Obligation (APO) | For CPS Restaurants: Currently 3% of gross sales (0.25% to the marketing fund and 2.75% for local store marketing).For CPSC Restaurants: Currently 4% of gross sales (0.25% to the marketing fund and 3.75% for local store marketing). |
| Marketing, Advertising and Promotional Materials | $500 – $2,000 |
| Transfer Fee | The greater of $10,000 or the franchisor’s costs incurred in connection with the transfer. |
| Renewal Fee | Currently, $10,000 |
| Failed Inspection or Non-Compliance Fees | $500 – $1,500 |
| Miscellaneous Administrative Fees | The franchisor’s reasonable fees (including recovery of its direct costs) which range between $500 to $1,500. |
| Ongoing Training | Currently, $1,500 – $3,500 per program. |
| Late Charge and Interest on Late Payments | The late charge is currently $50; the interest charge is the lesser of 12% per annum, or the maximum rate permitted by law. |
| Service Payments | Currently $50 |
| Site Selection Extension | $2,500 |
| Special Assistance | Currently, only out-of-pocket expenses |
| Fees to Evaluate and Approve Alternative Suppliers | The franchisor’s out-of-pocket expenses (estimated at $1,500 to $2,000). |
| Audit | Cost of audit. |
| Insurance | Will vary under circumstances. |
| Maintenance Costs | Will vary under circumstances. |
| Attorneys’ Fees and Other Costs | Will vary under circumstances. |
| Indemnification | Will vary under circumstances. |
| POS Support Contract | $150 per month for up to two POS terminals and two kitchen video displays; and $190 per month for three POS terminals and three kitchen video displays. |
| Liquidated Damages | Three times the amount of royalties owed for the one year period prior to termination. |
Did You Know?
Here are a few fun things to know about Charleys Philly Steaks:
- The fast-food chain’s founder and CEO first got to taste Philly Cheesesteak in 1985. He was attending Ohio State University then, and he knew he wanted to do business out of the sandwich. And to do just that, he experimented with ingredients to come up with a recipe all his own.
- The first restaurant that Charley opened in 1986 was called Charley’s Steakery. It was a 450-square foot diner space not far from the campus. Thanks to his mother’s support, Charley was able to start what would be a franchise chain. Not long after they opened the steakery, students flocked to the restaurant not just for Philly Cheesesteaks but also for loaded Gourmet Fries and refreshing Lemonades.
- Quality is at the forefront of Charleys from the get-go. In fact, they only choose premium ingredients for their products, including 100 percent USDA choice steak, 100 percent all-white meat chicken, all-natural cheeses, and hand-cut veggies. All sandwiches are grilled-fresh-to-order.
- The business isn’t all about making money. In fact, they’ve established Charleys Kids Foundation, which partners with non-profit organizations. It aims to deliver programs that offer at-risk children with educational resources, food, and mentorship. They have in-store donation boxes, and 20¢ of every combo meal sold benefits Charleys Kids Foundation in participating locations.
If the Philly Steaks franchise cost is within your investment budget and you’re fine with the duties that come with it, it surely is worth the money and effort.
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