Investors are drawn to food franchises because they’re a very lucrative business with a lot of marketing power behind them. They often have a loyal following and a huge customer-base in their strategically chosen location, meaning it’s almost a guaranteed success if done correctly.
Fast growth and capital are some of the biggest benefits of becoming a fast-food franchisee, but it can be quite costly to get into some of the top brands in the business. Rodney R. Hatter & Associates has a lot of experience with franchise law and are quite aware of what goes into investing in these dominating food franchises.
It’s often almost $1 million to open a valuable food franchise, but it can often be worth it. So let’s take a look at some of your options and what it takes to get involved.
You will need a nonborrowed $955,000 minimum to be considered for a McDonald’s franchise. While a small number of investors choose to open a new facility (with a down payment of 40%), most owners enter the McDonald’s franchise by purchasing an existing restaurant directly from the company or another owner for a 25% down payment. There is also a service fee of 4% of gross sales.
One of the major benefits of joining McDonald’s franchise is the company’s intensive training. Another benefit is access to McDonald’s lender relationships, which have the lowest lending rates in the fast-food industry.
To open a Subway franchise in the United States, you’re looking at an investment between $116,000 and $263,150. This includes the complete setup, as well as operating expenses for the first three months. After opening, Subway franchisees also pay a royalty fee, which is 8% of their overall gross sales.
To get involved with Pinkberry, a frozen yogurt restaurant, the initial investment ranges depending on the location, but it averages $310,000 to $615,000. Pinkberry has been pretty tight-lipped about the fees involved with their dessert chain, but it appears the investment has cash liquidity of $200,000 and a net worth of $400,000. Then there’s a 5% royalty fee and another 2% for marketing.
They also claim you could make $250,000 a month if you get 1,500 customers a day. In a bigger city, this seems likely. But maybe not in a small town.
Wendy’s is a pretty pricey franchise to take on. They require $2 million in liquid assets and a $5 million net worth for new multiunit franchisees or franchise groups. They also require a 4% royalty fee and another 4% for advertising.
Currently, Wendy’s is not accepting applications for US franchises. Franchises in Canada and overseas are available though.
Domino’s Pizza Franchise
Unlike the previous franchises, Domino’s has two categories, internal and external. Internal franchisees are investors who have already worked with Domino’s as a general manager for over a year. External, as you can guess, are franchisees who haven’t previously worked at Domino’s.
This is where things get even more interesting. The franchise fee to invest in a Domino’s is anywhere from zero bucks to $25,000. There are some groups of investors, including women, minorities and veterans, who will be offered lower fees. They even offer a quiz to find out the perfect franchise for your interests and finances.
Domino’s franchisees go through a comprehensive training program, which discusses store operations, marketing, finance, human resources and more support.
Pizza Hut Franchise
Here’s another pizza place to consider. Well, as long as you have a budget between $1.3 million and $3 million and a net worth of $1 million, including $360,000 in liquid assets.
Getting involved with Pizza Hut also includes a service fee that’s 6% of gross sales, along with an advertising fee of 2.5% to 3% of gross sales.
While this probably sounds not too shabby, Pizza Hut has a twist. Franchisees must commit to building at least three Pizza Hut restaurants over the time period of three years.
Dunkin, once known as Dunkin Donuts, requires franchisees to have at least $250,000 liquidity and a net worth of $500,000 per unit. They have financial qualifications you must meet. And they also have one of those quizzes, too.
The total investment initially ranges from $228,000 to over $1.6 million. There are also some markets that require a five-unit minimum, meaning you’d need a net worth of $2.5 million.
Related: The True Cost to Open a Franchise
Taco Bell Franchise
By 2023, Taco Bell aims to have 2,000 new locations. This is both locally and overseas, including 200 new restaurants in the US within one year.
So how do you get involved in this expansion? A stand-alone Taco Bell restaurant is between $1.2 million and $2.5 million. But this initial investment does not include the land or lease costs. There is also a royalty fee of 4% of gross sales, along with another 4% of gross sales for advertising fees.
Want to know Kentucky Fried Chicken’s secret 13 herbs and spics recipe? You’ll need a net worth of $1.5 million to $2.5 million. You’ll also need minimum liquid assets of $750,000. There’s also a royalty fee of 5.5% of your gross sales.
These were the top nine most valuable food franchises. While these fast-food chains will charge you the most for franchise fees and require the highest net worth to invest, you will get the most money back. These are trusted brands with food people crave. Franchisors have targeted certain locations where they know they will succeed and will be there to help with training and marketing.
If you’re interested in buying a franchise or draft a franchise agreement, contact Rodney R. Hatter & Associates today. We are here to improve existing franchise programs and answer any questions you have about the franchise process and fees.