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The Actual Cost of Owning a Wingstop Franchise
Who doesn’t love chicken wings? The majority of our population always craves a juicy chicken wing doused in our favorite sauce. If you’re planning to venture into the chicken business, this Wingstop franchise article is something that you’re looking for. Let’s dive into the details of owning this hand-sauced chicken franchise and more!
Wingstop Franchise: Overview
Wingstop started business in 1994 in Dallas, Texas. It then ventured into franchising in 1997 and successfully managed to grow into 1,445 units over the years. Wingstop Franchising LLC, the franchisor, grants the franchisee to operate a restaurant in an approved territory. As a franchisee, you have access to the following:
- Variety of highly-seasoned flavors of chicken wings
- Fresh-cut french fries
- Other foods
- Beverages
- Beer or wine
Training Program
At least two people, the franchisee and a general manager should complete the training program until the franchisor’s satisfaction. If the franchisee is preoccupied, sending out a designated principal and general manager for training will suffice. Both persons who completed the training should work full-time in the restaurant.
Typically, the overall training lasts 25 consecutive days with one day off each week. The total training hours will be split between two sites— classroom and on-the-job training. Upon opening the franchisee’s first Wingstop restaurant, the franchisor will send two trainers for the opening restaurant to assist for at least 14 days. The franchisor has sole discretion to require the following to all franchisees and their managers:
- Supplemental
- Refresher
- Recertification examination
Franchise Territory
According to the Franchise Agreement, the franchisor will guarantee competitive protection to the franchisee in a trade area around the restaurant’s premises. This agreement means that the franchisor will not open or grant any other franchisee to open another restaurant around the granted trade area. Aside from high-density population areas, a restaurant’s trade area starts from its main door and extends into a radius outwards. The radius of the franchisee’s trade area will depend on the following factors:
- Market area
- Population density
- Specific market
- Drive times
A potential franchisee must note that there is no specified minimum and maximum radius, so it entirely depends on the location you choose. As a general rule, the radius will never go as far as three miles from the restaurant. However, if a franchisee wants to operate in a non-traditional venue, the trade area is expected to be limited to the specified site location’s physical footprint.
What’s Expected from a Franchisee?
As a franchisee, you’ll be expected of the following:
- If the franchisee is an individual, the franchisor encourages full-time management of the restaurant.
- If a franchisee chooses not to be involved, the owner must appoint a general manager to supervise the day-to-day restaurant operation. It’s also required to have an assistant manager to help with the restaurant.
- If a franchisee is a business entity, the majority must select a designated principal. The appointed principal must be one of the owners and will oversee the restaurant’s operation.
- According to the Franchise Agreement, franchisees must use the proprietary sauces and seasonings of fried chicken wings. Other ingredients or herbs not specified will not be allowed.
- Franchisees are required to sell all food and beverages included in the standard menu.
- Unauthorized food, beverage, merchandise, and other products are not allowed without obtaining written consent from the franchisor.
Term of Franchise
The initial Wingstop franchise term is ten years, starting from the restaurant’s opening date. If franchisees showcase full compliance within the initial ten years, the current Franchise Agreement will allow another 10-year renewal.
Financial Assistance
Unfortunately, the franchisor does not offer any direct or indirect financing support.
Did You Know?
Before diving into the full Wingstop franchise cost breakdown, here are interesting facts about the establishment:
- Wingstop has a Wing Calculator that will help customers with their orders based on the number of people. After determining your crew’s number, you’ll have to pick the level of your hunger, whether you’re feeling snacky, hungry, or starving.
- The restaurant has an online ordering service called “Wingbot.”
- Wingstop founders also established Pizza Patron.
- Over the years, Wingstop has served more than one billion chicken wings!
Your Investment
Now, let’s dive into the full cost breakdown of the Wingstop franchise. Here are the costs that you should know:
| Name of Fee | Low | High |
|---|---|---|
| Development Fee | $10,000 | $10,000 |
| Franchise Fee | $20,000 | $20,000 |
| Rent | Varies | |
| Security Deposits | $0 | $10,000 |
| Architectural/Engineering Fees | $7,500 | $24,000 |
| Professional Fees | $1,500 | $4,000 |
| Leasehold Improvements | $150,000 | $385,000 |
| Business and Operating Permits | $3,000 | $5,500 |
| Décor Package | $7,000 | $10,100 |
| Furniture, Fixtures, Audio/Visual System, Equipment and Smallwares | $113,400 | $137,000 |
| Point-of-Sale Register, Kitchen Display, Hardware and Software | $15,000 | $27,100 |
| Signs | $8,900 | $26,500 |
| Opening Inventory | $10,000 | $15,000 |
| Opening Publicity and Promotions | $5,000 | $15,000 |
| Additional Funds – 3 months | $25,000 | $35,000 |
| ESTIMATED TOTAL (excludes real estate purchase and lease costs) | $376,300 | $724,200 |
Other Fees You Should Know
| Type of Fee | Amount |
|---|---|
| Royalty | 6% of gross sales. |
| Ad Fund | 4% of gross sales. |
| Ad Customization Fee | Reasonable charge. |
| Local Advertising and Promotional Materials | Franchisees must spend 1.5% of their restaurants’ quarterly gross sales on local advertising during 2020 and 2% thereafter. |
| Insurance | As provided in the operations manual. |
| National Gift Card Program Charges | Approximately 10% of value of Wingstop gift cards issued/sold by third-party retailers (i.e., not by Wingstop restaurants) for eventual redemption at Wingstop restaurants; amount may change in future based on charges by third-party gift card program administrator. |
| Indemnification | Unlimited but depends on nature of claim. |
| Audit Fees | Cost of audit, including auditor’s travel, meals, and lodging expenses It depends on extent of the franchisee’s noncompliance and cooperation with the franchisor. |
| Non-Reporting Fee | $250 |
| Interest/Late Charges | Interest on past-due obligations to the franchisor and its affiliates at the highest commercial contract interest rate the law permits. |
| Transfer Fees | $10,000 |
| Renewal Fee | 25% of the sum of the then current development fee and franchise fee ($7,500 currently); If franchisees renew their franchise for a 2nd 10-year renewal term after the first 10-year renewal term ends, they must pay 50% of the sum of the then current development fee and franchise fee (currently $15,000). |
| Website Maintenance Fee | $25 initial set up cost/up to $50 per month. |
| Intranet Maintenance and Development Fee | Up to $50 per month. |
| Operations Manual(s) Training Materials Replacement Charge | $35 for recipe guide, $5 for spec sheets plus shipping costs. |
| Annual Convention Attendance Charge | $500 per attendee. |
| Product and Service Purchases | Varies depending on products and services franchisees buy from the franchisor or its affiliates. |
| Attorneys’ Fees and Costs | Varies under circumstances and depends on nature of the franchisee’s non-compliance. |
| Liquidated Damages | See FDD. |
| Supplemental Training/Assistance | Up to $1,000 per trainer, plus out-of-pocket costs. |
| Tax Reimbursement | Out-of-pocket cost reimbursement. |
| Relocation | $5,000 |
| Transfer Marketing Expenditure | $2,500 – $7,500 |
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