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What are the TGI Fridays Franchising Details [2024 updated]
If you’re looking to buy an established franchise business, TGI Fridays is an excellent choice. The company has delivered the best comfort American food and beverages for almost six decades. They’ve perfected cocktails with affordable happy hour offerings. Here are the TGI Fridays franchising details.
Company Overview
TGI Fridays is deemed as America’s most iconic bar and grill. The company has been beefing up excellent experiences for consumers for almost 60 years. TGI Fridays has more than 900 locations in over 50 countries, which is an excellent idea for a franchising business as this brand is recognized worldwide.
The franchisor, TGI Fridays Franchisor, LLC, has around 292 locations in the United States alone. The founder, Alan Stillman, said the name means “Thank God It’s Friday.” However, the bar and restaurant company also uses the phrase “Thank Goodness It’s Friday.”
Launched in New York in 1965, Stillman opened the bar hoping he would meet women. During this time, his socializing consists of male drinking parties and private cocktail parties, which women don’t usually attend. He wanted to meet women between 23 and 37 to visit the bar and give them a comfortable atmosphere to drink cocktails.
TGI Fridays serves standard American cuisine, alcoholic beverages, and bar food. Stillman focuses on food quality and preparation in a fun red-and-white striped exterior and Tiffany-style lamps, wooden floors, striped tablecloths, Bentwood chairs, brass rails, and stained glass. The young male employees are handsome jocks who wear form-fitting striped soccer shirts.
Franchise Training Details
- The designated principal owner must attend and complete the Owner’s Orientation Program. This training lasts two days and targets the operation and management philosophy of TGI Fridays.
- The designated principal owner, general manager, kitchen manager, and two other restaurant managers must attend and complete the Management Training Program. This training lasts eight weeks called Restaurant Management Essentials (RME), which includes online and classroom sessions and an on-site on-the-job training. They must also attend the three-day Leadership that Rocks (LTR) seminar.
- Kitchen and general managers must attend and complete the Kitchen Manager Essentials and Impact General Manager Essentials Program.
- Attendees must also complete the Certified Professional Food Manager training and certification program. This is on top of the two-day New Store Opening (NSO) Seminar.
- The franchisees must attend annual conferences, meetings, and conventions on products, new operations procedures, product preparation, restaurant management, sales, and similar programs.
- The franchisor may require the principal owner to attend meetings that the franchisor deems fit under particular circumstances.
Franchise Territory
- The franchisor doesn’t give franchisees exclusive rights to use proprietary marks or use the system in any geographic area.
- The franchisor may require franchisees to engage in delivery and/or takeout setups. The franchisor will not provide territories concerning the current delivery programs.
Franchise Obligations and Conditions
- The designated manager or representative must be hands-on in daily restaurant operations and own 20% equity interest. A representative must be fully authorized to act on behalf of the franchisee. The franchisor will not require franchisees to have previous restaurant experience as long as they devote their full time, and best efforts to meet obligations under the Franchise Agreement.
- For each franchised restaurant, the principal owner must also be the “operating principal,” who will fully control business operations and financial performance.
Franchise Term and Renewal
The initial franchise term is 10 years from when franchisees open the restaurants. Franchisees can extend for two succeeding terms at five years each time.
Financial Assistance
The franchisor doesn’t offer direct or indirect financing or guarantee franchisees’ notes, leases, or obligations.
Did You Know?
Here are some TGI Fridays fun facts:
- The founder borrowed $5,000 from his mother to purchase a bar he often went to and renamed it TGI Fridays on top of $5,000 from his pocket.
- In 2013, investigators raided 17 TGI Fridays franchised restaurants due to replacing premium alcoholic beverage brands with low-cost ones and charging consumers for expensive liquor.
- TGI Fridays used to be a singles bar because the founder established TGI Fridays, hoping to meet many women.
- Celebrities such as Ann Patchett, Jon Gosselin, Ellen DeGeneres, and Brad Garrett have worked at TGI Fridays.
- Almost all TGI Fridays restaurant has an airplane propeller at the bar, symbolizing the engine that powers the business.
- The astronaut who was the fifth human to walk on the moon, Alan Shepard, attended a TGI Fridays opening in Texas in 1973.
Franchise Cost
Investment Tables:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $50,000 | $50,000 |
| Furniture, Equipment & Decor | $775,000 | $1,000,000 |
| Computer Systems | $73,500 | $91,000 |
| Opening Inventory | $35,000 | $60,000 |
| Hiring Expenses; Training | $65,000 | $200,000 |
| Liquor License | Varies | |
| Building & Improvements | $1,400,000 | $2,000,000 |
| Site Improvements | $175,000 | $500,000 |
| Developmental Costs | $65,000 | $100,000 |
| Insurance (3 months) | $12,500 | $25,000 |
| Miscellaneous Costs | $10,000 | $100,000 |
| Additional Funds (3 months) | $60,000 | $200,000 |
| ESTIMATED TOTAL (for a 6,200 sq. ft. to 6,800 sq. ft. restaurant) | $2,721,000 | $4,326,000 |
Other Fees
| Type of Fee | Amount |
|---|---|
| Royalty Fee | 4% of gross sales. |
| Advertising and Promotion Obligation (APO) | The franchisee’s APO will not exceed 5% of gross sales. |
| National Advertising Fund | Currently 4% of gross sales. |
| Digital Marketing Fee | Amount determined by the franchisor annually (currently 0% of gross sales). |
| Audit Fees | Deficiency in royalty fees, advertising contributions and other amounts owed, plus interest. |
| Collection Costs and Expenses | The franchisor’s costs and expenses. |
| Costs and Attorneys’ Fees | The franchisor’s costs and expenses. |
| Indemnification | The losses and expenses incurred by the franchisor and its affiliates. |
| Interest | The interest rate is the maximum rate permitted for indebtedness of this nature in the state in which the restaurant is located not to exceed 1.5% per month (or a portion of a month). |
| Late Fees | $500 |
| Liquidated Damages – Breach of Covenants against Competition | The then-current initial franchise fee plus 8% of the gross sales of the competing restaurant business for two years. |
| Early Termination Damages – Franchise Agreement | Amount equal to the average monthly royalty fees and advertising fund contributions owed for the 36 months prior to the termination, multiplied by the lesser of 36 months or the number of months remaining in the term of the Franchise Agreement. |
| Early Termination Damages – Development Agreement | Amount equal to two times the average of the total annual royalty fees and advertising contributions owed under Franchise Agreements over the prior three year period multiplied by the number of restaurants that remain to be developed pursuant to the development schedule. |
| Manager Training – Management Skills Training (Leadership That Rocks) | $600 plus airfare and incidentals per management trainee. |
| Manager Training – Restaurant Management Essentials | $500 per management trainee if training in a company-owned restaurant. |
| Manager Transfer Fee | $25,000 |
| Post-Termination or Post Expiration Expense | All amounts the franchisor may incur, currently estimate to be $1,000 to $25,000. |
| Replacement Restaurant Kitchen & Bar Equipment, Fixtures & Furniture and Purchasing Fees | Replacement restaurant kitchen & bar equipment, fixtures & furniture: total purchase amount as agreed plus 8% of the total purchase amount as purchasing fees to TGIF Inc. for acting as purchasing agent. |
| Reimbursement of Insurance Costs | The franchisor’s out-of-pocket costs of obtaining coverage. |
| Relocation | $5,000 |
| Securities Offerings | $15,000 |
| I.T. Service and Support Fee | $1,260 per month billed quarterly. |
| AirWatch | $65 one-time payment for each new or replacement mobile device followed by $27 annual support fee for each mobile device. |
| iPad Rental Fee for Yelp Waitlist | $21 per month. |
| Successor Fee | 50% of the franchisor’s then-current initial franchise fee for the first successor term and 30% of its then-current initial franchise fee for the second successor term. |
| Supplier Inspection and Testing | Reasonable fee for inspection, including the actual cost of testing. |
| Supplier Payments | The franchisor’s costs in paying any supplier that the franchisee fails to pay. |
| Taxes | Assessed amount. |
| Training Fee – Fridays NSO Team | $78,000-$83,500 |
| Transfer Fee | $5,000 or such greater amount as necessary to reimburse the franchisor for all out-of-pocket expenses associated with the transfer. |
| Background Investigation Fee (Transferees) | $10,000 maximum per entity and /or individual. |
| Guest Relations Program | $6 administrative fee per incident of guest complaint on a store level basis, excludes general inquiries. |
| Medallia Fee | $25 monthly usage fee. |
| Non-compliance Fee | 1% of gross sales. |
| Royalty Increase Alternative for Remodel Default | 2.5% of gross sales. |