How To's
All The Costs Of Opening A Jersey Mike’s Franchise
Fast-casual or quick-service restaurants (QSR) have been the premier choice by potential franchisees to invest in. And most of these restaurants attribute their growth to the franchising model, which has given them huge leaps to success. One of the franchises many consider is Jersey Mike’s. But how much does a Jersey Mike’s franchise cost?
In this article, learn more about the Jersey Mike’s franchise. Plus, the investment in starting a Jersey Mike’s franchise.
Jersey Mike’s Franchise Overview
Jersey Mike’s started its journey in 1956 when it was called Mike’s Subs at first. Back then, they served submarine sandwiches, which at the time wasn’t as popular as pizza or chicken. However, due to its location in Point Pleasant, New Jersey, it became the go-to store for residents and tourists.
In 1971, Peter Cancro bought Jersey Mike’s and became the owner. And seeing the success Jersey Mike’s brought, Cancro and his former wife, Linda, expanded the business by opening more stores. But it wasn’t until 1987 that they decided to franchise the sub shop.
What makes Jersey Mike’s different from most restaurant chains is their trademark Mike’s Way®. Their subs include lettuce, onions, tomatoes, vinegar oil, and spices. They serve cold and hot subs, chips, and drinks.
Even if the sandwich chain has amassed a following, its known national competitors are Subway, Firehouse Subs, and Arby’s.
Presently, Jersey Mike’s has over 2,000 locations nationwide.
Jersey Mike’s has a comprehensive franchise process they outlined for potential franchisees. It starts when a prospective franchisee fills out and submits an online application. Those who are interested can click on this link and complete their application.
The sandwich chain also mentioned that those interested should be or have at least these:
- Restaurant experience
- Owns/owned a fast-casual restaurant or QSR
- Former Fortune 500 executive
- Former Customer or Employee
Training
The franchisor will conduct the training for the franchisee or principal, or the manager. Assistant managers and shift supervisors can also receive training if the franchisee is an entity. For first-time franchisees, they will have to complete three training phases:
- Phase 1 & 3 – On the job training for a minimum of eight weeks (180 hours). This phase can have only one person completing the training, but for Phase 3, two individuals are required.
- Phase 2 – Training is held at the Point Pleasant training center, and two individuals must complete this phase. They can accomplish this phase within 5 to 14 days for 4.25 to 9.5 hours a day. It consists of both classroom and simulated training.
Additional training programs may be required as needed.
Territory and Obligations
The franchisor will grant a designated area but not an exclusive territory for the franchisee to operate a Jersey Mike’s franchise. Jersey Mike’s fixes a 0.5 to a 1-mile radius as the designated area for any franchise.
As for obligations, it’s expected that the principal or a full-time manager will supervise and devote time to operating the franchise. The franchisee should also only sell the products approved by the franchisor and cannot sell other unrelated products.
Any franchisee that will launch a franchise will have an initial ten-year term to run it. But if franchisees plan on renewing their franchise term, franchisors can grant an additional ten year term.
Jersey Mike’s Franchise Cost
A typical Jersey Mike’s franchise cost is estimated at $169,001 to $804,045.
For those who might need financial assistance, Jersey Mike’s doesn’t offer financing, lease, or obligation. However, Jersey Mike’s did start the Coach Rod Smith Program. Here, the franchisor will provide loans to aid with capital. Franchisees can also be chosen for the program, and if they are, they can pay back the loan in five years.
Aside from that, since Jersey Mike’s is part of the United States Small Businesses Administration registry, franchisees can get expedited loan processing.
Check out the tables below for the Jersey Mike’s franchise costs and other expenses.
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $18,500 | $18,500 |
| Real Estate and Construction Fee | $5,000 | $5,000 |
| Rent/Lease CAM/Taxes/Lease and Utility Security Deposits | $0 | $42,009 |
| Architectural Fees | $1,100 | $17,892 |
| Leasehold Improvements | $92,529 | $339,567 |
| Equipment/Furniture/Small Wares | $9,250 | $126,709 |
| Initial Inventory | $2,000 | $26,925 |
| Insurance | $2,000 | $12,000 |
| Training | $1,200 | $49,974 |
| Grand Opening Advertising | $12,500 | $12,500 |
| Exterior Signage | $2,210 | $30,089 |
| Interior Branding/Graphics | $2,087 | $31,698 |
| Uniforms, Office Equipment and Supplies, TVs/Stereo System/Security System | $1,021 | $45,875 |
| POS System | $4,079 | $14,184 |
| Professional Fees (lawyer, accountant, etc.) | $500 | $15,623 |
| Business Licenses and Permits | $25 | $500 |
| Additional Funds for 3 Months | $15,000 | $15,000 |
| ESTIMATED TOTAL | $169,001 | $804,045 |
Other Costs
| Type of Fee | Amount |
|---|---|
| Continuing Services and Royalty Fees | 6.5% of gross receipts for a standard franchise agreement. |
| Grand Opening Advertising | $12,500; $5,000 for transfers or relocations. |
| Real Estate and Construction Fee | $5,000 |
| Corporate Advertising and Development Fund | Currently 1% of gross receipts. |
| Cooperative Advertising | Currently not required. |
| National Media Fund | 4% of gross receipts. |
| Audit | Cost of audit plus interest on underpayment. |
| Operation of the Franchised Restaurant in Case of Franchisee’s Default | $75 per hour, plus expenses. |
| Late Fees | Highest applicable lawful rate for open account business credit, not to exceed 1.5% per month; 5% charge on late continuing services and royalty fee, and other amounts owed equal to higher of 5% of amount due or $25. |
| Supplier/Supplies Approval | Reasonable cost of inspection and actual cost of test. |
| General Contractor and Architect Approval | $5,000 each. |
| Operation of the Franchised Restaurant in Case of the Franchisee’s Absence, Incapacity or Death | $75 per hour, plus expenses. Rate is subject to change. |
| Monthly Software License Fee and Support Package for Point of Sales System, including all Currently Provided Software Programs, Licensing Fees, Software Upgrades, and Support Services (Help Desk) | $295/month. |
| Secure Network Fee for Processing of Credit Cards and Transferring of Sales Data | $32/month. |
| Gift Card Program | $9.50/month. |
| Third-Party Delivery Fee | $7 per delivery. |
| Online-Ordering Fees | $0.2921 per transaction and 3.74% of the sale of each such transaction. |
| Transfer Fee | $5,000 to transfer the franchise agreement. |
| Replacement Training | $2,500 (or a pro rata portion if training is not Phases 1 and 3, 360 hours). Rate is subject to change. |
| Additional Assistance | $75 per hour, plus expenses. Rate is subject to change. |
| Continuing Education | Franchisees must pay their expenses as well as their employees’ expenses in attending these programs. |
| Maintenance | Cost of maintenance. |
| Cost of Enforcement or Defense | All costs including attorneys’ fees. The franchisor’s in house counsel fee shall be charged at a rate of $300 per hour. |
| Relocation Fee | $5,000 |
| Bookkeeping/Accounting Fee | Currently, the fee is estimated to be $150 per week, but the fee is subject to change. |
| Indemnification | All costs including attorneys’ fees. |
| Liquidated Damages | Average monthly royalty and advertising fees for the 12 month period before termination multiplied by the lesser of 36 or the number of months remaining in franchise agreement. |
Did You Know?
- Since 2011, Jersey Mike’s has been donating to charity organizations. They even dedicate the last Wednesday of March as the Jersey Mike’s Day of Giving®. So far, they have donated over $30 million.
- In 2010, Jersey Mike’s was awarded the Best Sub Sandwich by the press. Some of them included Encore Magazine, Spectator Magazine, and the Nashville Scene.
- Back in 2015, they opened their 1000th unit. Five owners and their restaurants share the honor of having the 1000th restaurant opened on October 14.
- They rolled out gluten-free rolls nationwide in 2017; the sandwich chain started offering them to California stores to test it out.
- They have a catering service available, and customers can choose among the three options. The first is Subs by the Box, which includes ten cold subs. The second is Subs by the Bag, which includes Mini subs (serves: 1), regular, tub, or wrap (serves: 2), and giant (serves: 4). Finally, the third option is the Boxed Lunches, best for fun, outdoor activities because aside from subs, it includes drinks, chips, and cookies.
For more franchise-related information, check out more resources here at Franchise How!