How To's
The Real Five Guys Franchise Cost
The founder of Five Guys Burgers and Fries said that if you can sell good hamburgers, you can always make money in America. The story behind one of America’s oldest-running fast-casual restaurant chains goes beyond serving hungry consumers with hamburgers and fries. It’s the bond between a mother, father, and their four sons who want to live a better life in America. Hamburger chains are always a good idea for a franchise. So if you want to know the Five Guys franchise cost, read on.
Company Overview
The franchisor Five Guys Franchisor, LLC is a fast-casual dining restaurant that sells hamburgers, french fries, and other relevant items. Most Five Guys chains are located in shopping centers and urban areas that the franchisor approves.
However, the franchisor may also approve other areas such as sports arenas, airports, train stations, university campuses, and other sites on a case-by-case basis. The restaurant size should be around 2,000 to 3,000 square feet and all items on the menu will adhere to specified cooking methods and recipes.
Franchise Training Details
Here is the training overview for Five Guys franchisees:
- An operating principal, one assistant manager, and a general manager must complete the initial training program satisfactorily.
- The initial training is about two weeks and may extend up to six weeks.
- The franchisees may also let additional staff attend the training program at $1,500 per person
- The franchisor will let one of its trained representatives supervise during the opening of the franchisee’s first Five Guys restaurant. The representative will provide pre-opening and opening training and management for 10 days
- The franchisee may also request additional trained representatives who can offer on-site remedial training if deemed necessary by the franchisor and depending on the availability of the personnel
- The franchisor may also require the franchisee’s appointed general manager, one assistant manager, and the franchisee
Franchise Territory
While the Franchise Agreement is in effect, these franchise territory details must apply:
- The franchisor gives the right to the franchisee to select and open a Five Guys restaurant within the primary area of responsibility. This is approved by the franchisor based on market penetration, growth trends, market demographics, and more.
- If the franchisee complies with the rules stipulated in the Franchise Agreement, the franchisor will not grant another franchisee to establish a Five Guys restaurant within the area.
Franchise Obligations and Conditions
- Individual franchisees must carry all obligations of the operating principal. For corporation franchises and others, the operating principal must be one of the principals to control and continue to hold an ownership interest
- A general manager and other personnel must supervise and operate the restaurant at all times
- The general manager must adhere to the franchisor’s rules in the manuals or other written instructions approved by the franchisor
- Franchisees must only sell products and operated based on the written standards and specifications regarding food products, beverages, supplies, materials, furnishings, ingredients, utensils, and more.
- They must also only sell products and offer services as approved by the franchisor
Franchise Term and Renewal
The initial franchise term is 10 years and can be renewed for another 10 years if franchisees are in good standing and adhere to the Franchise Agreement.
Financial Assistance
The franchisor doesn’t offer financing either directly or indirectly, and also doesn’t guarantee franchisees’ notes, leases, and obligations.
Did You Know?
Here are some fun facts about Five Guys:
- Five Guys was founded by Janie and Jerry Murrell in 1986, along with their four sons Ben, Chad, Matt, and Jim. It was originally named Fives Guys because of the four sons, including Jerry. Today, the fifth son Typer comprises the fifth guy in place of Jerry.
- Five Guys fries are cooked in pure peanut oil.
- The restaurants don’t have freezers, only coolers.
Five Guys Franchise Cost
Your Investment
Here’s the breakdown of the Five Guys franchise cost:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $25,000 | $25,000 |
| Development Fee | $50,000 | $125,000 ( in Alaska, Hawaii & Puerto Rico) |
| Leasehold Improvements | $100,000 | $300,000 |
| Lease Payments and other rental expenses | $7,500 | $20,000 |
| Equipment | $55,000 | $105,000 |
| Signage | $6,500 | $20,000 |
| Initial Inventory | $10,000 | $15,000 |
| Architectural/Engineering | $7,000 | $25,000 |
| Electronic Cash Register System with Modem | $15,000 | $25,000 |
| Facsimile Machine | $350 | $500 |
| Travel, lodging and meals for initial training | $100 | $5,000 |
| Business Supplies (stationery, business cards, menus, gift cards, paper and other materials) | $4,000 | $8,500 |
| Business licenses, permits, utility deposits, etc. (for first year) | $5,000 | $15,000 |
| Delivery and catering expenses | $0 | $1,000 |
| Insurance deposits and premiums | $750 | $1,250 |
| Additional Funds for first 3 months | $20,000 | $25,000 |
| ESTIMATED TOTAL | $306,200 | $641,250 |
| ESTIMATED TOTAL for Alaska, Hawaii & Puerto Rico | $381,200 | $716,250 |
Other Fees:
| Type of Fee | Amount |
|---|---|
| Royalty Fee | 6% of gross sales. If the restaurant is located in Alaska, Hawaii or Puerto Rico, the royalty fee is 8% of gross sales. |
| Creative Fund | Up to 2% of gross sales (currently 2%). |
| Bread Products | Varies, depending on franchisee’s bread product needs. |
| Local Advertising | Not less than 2% of gross sales. |
| Cooperative Advertising | Maximum – 1.5% of gross sales, which will be credited towards local advertising. |
| Interest | The lesser of (i) 10% per annum or (ii) the maximum rate allowed by applicable law. |
| Advertising and Promotional Materials | Varies, depending on franchisee’s advertising needs. |
| Prohibited Product or Service Fine | $250 per day of use of unauthorized products or services. |
| Initial Training of Additional or Replacement and Successor Personnel | $1,500 per person. |
| Additional Assistance | If franchisees request additional assistance, they must pay the current per diem charge for the franchisor’s employees used to provide the assistance and our associated costs. Current per diem is $500. |
| Cash Register Upgrades | Approximately $5,000. |
| Transfer Fee | $5,000 to reimburse the franchisor for reasonable costs and expenses in reviewing the transfer application. |
| Public Offering | $5,000 to reimburse the franchisor for reasonable costs and expenses in reviewing the proposed securities offering. |
| Additional or Remedial Training | Cost in providing the training (currently $1,500). |
| Inspection and Testing | Cost of inspection or testing (currently estimated at $5,000). |
| Vendor/Equipment Approval Fee | $5,000 to reimburse the franchisor for reasonable costs and expenses in reviewing and approving vendor equipment. |
| Audit Fee | Cost of audit (currently estimated at $5,000). |
| Late Payment or Reporting Fee | $50 per day the franchisee is late. |
| Site Evaluation Fee | A reasonable amount to be determined (currently $500). |
| Relocation Fee | $7,500 to reimburse the franchisor for its time, costs and expenses in reviewing the relocation application as well as the current and future sites. |
| Gift Card Program | Varies. |
| Time Extension Fee | $10,000 per time extension. |
If you’re interested in a Five Guys franchise, visit their website to find out more information. And for other franchising options, read more here at Franchise HOW!