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Blimpie Franchise Cost & Fees

Date of Incorporation: 1964
Franchising Since: 1970
Headquarters: Scottsdale, Arizona

Business Description: The franchisor is Kahala Franchising, L.L.C. Franchisees operate a quick casual restaurant called Blimpie, preparing and serving fresh deli sandwiches, salads, and other beverage and food items.

Franchise Offer: If qualified, people may (i) construct a new Blimpie restaurant; (ii) purchase one of the franchisor’s Blimpie franchises by acquiring an existing business from another franchisee or from the franchisor; or (iii) convert all of existing retail operations from another brand to the Blimpie brand.

Financial Assistance: The franchisor does not offer any direct or indirect financing or financing arrangement, nor will we guaranty the franchisee’s obligations under any note or other obligation, except potentially for the lease for the site or if the franchisee purchases a restaurant corporate-owned “as-is” by one of the franchisor’s affiliates, and only in its sole and absolute discretion.

Training and Assistance: The franchisor will make a training program available to franchisees and their designated representative after franchisees sign the Franchise Agreement. Training includes classroom training and on-the-job training to be held at KTEC (Kahala Training & Education Center) in Scottsdale, AZ, and a training store in Arizona or such other location designated by the franchisor. The franchisor will provide one of its representatives to come to the restaurant during opening week for up to six days at the franchisor’s expense to work with franchisees and their manager on their grand opening, and on operating and marketing the restaurant. The franchisor may, in the future, hold refresher or additional training programs, conferences and seminars.

Territory: The franchise is granted only for the location specified in the Franchise Agreement or a location to be approved by the franchisor. The specific site of the Blimpie restaurant is subject to the franchisor’s approval. The franchisor will not unreasonably withhold approval of the location. Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from restaurants that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls.

Term of Agreement and Renewal: For new Blimpie restaurants, the length of the initial franchise term is (i) 10 years from the date the restaurant opens to the public if franchisees own the property, or enter into a lease directly with the landlord or other third party, or (ii) the term of the sublease if you enter into a sublease with a Kahala Franchising affiliate. If franchisees are not in default and satisfy certain conditions, they may renew for a term of 10 years.

Obligations and Restrictions: While the Franchise Agreement does not specifically require franchisees or their principals to personally participate in the direct operation of the franchise, it is the franchisor’s intention to select as Blimpie franchisees only those who plan to actively participate in the direct operation and daily affairs of the Blimpie restaurant. The franchise must be personally managed with on-premises supervision and directly operated by franchisees or another partner, shareholder or member of their business organization, or a manager who must have successfully completed the Training Program. If franchisees are a married individual, their spouse must sign the Guaranty of Franchise Agreement, and, if applicable, Guaranty to the Use and Occupancy License or Guaranty of Sublease. The franchisor requires that the business is solely that of a Blimpie restaurant, and franchisees may not conduct any other business or activity at the site of the restaurant without prior written approval. For Traditional Restaurants, franchisees must offer the full menu prescribed by the franchisor, subject to change from time to time in its sole discretion. Non-traditional Restaurants may offer a more limited menu than the Traditional Restaurant, as detailed in the Operations Manual. The franchisor has the right to require franchisees to sell additional authorized products and services from time to time that it believes will be successful.

Estimated Number of Units: 365

Investment Tables:
Initial Investment for a Traditional Restaurant
Name of Fee Low High
Franchise Fee $9,520 $19,900
Rent/Security Deposit (3 months) $3,000 $15,000
Travel and Living Expenses (2 people) while training, not including salaries, if any, for franchisees and their employees $3,000 $7,500
Real Estate Varies
Lease Review Fee $0 $1,250
Architectural Fees $1,000 $10,000
Construction Costs/Leasehold improvements $35,000 $175,000
Restaurant Equipment, Furniture, Small Wares, Menu Boards and Interior Signage $45,000 $85,000
Exterior Signage $3,000 $12,000
Computer Hardware, Software (POS System) $2,700 $12,000
PCI Compliance Costs $0 $1,300
Opening Inventory (food and paper) $4,000 $6,000
Grand Opening Fee $10,000 $10,000
Business Insurance $1,000 $5,000
Miscellaneous Opening Costs $4,750 $18,500
Depository Account $3,000 $3,000
Additional Funds (first 3 months) $15,000 $20,000
ESTIMATED TOTAL (Does not include real estate costs, construction of the building or rent for the business location except for the initial security deposit.) $139,970 $401,450
Initial Investment for a Non-Traditional Restaurant
Name of Fee Low High
Franchise Fee $5,520 $11,900
Rent/Security Deposit (3 months) $3,000 $15,000
Travel and Living Expenses (2 people) while training, not including salaries, if any, for franchisees and their employees $3,000 $7,500
Real Estate Varies
Lease Review Fee $0 $1,250
Architectural Fees and Project Management Fees $1,000 $10,000
Construction Costs/Leasehold improvements $5,000 $75,000
Restaurant Equipment, Furniture, Small Wares, Menu Boards and Interior Signage $19,000 $70,000
Exterior Signage $3,000 $12,000
Computer Hardware, Software (POS System) $2,700 $12,000
PCI Compliance Costs $0 $1,300
Opening Inventory (food and paper) $4,000 $6,000
Grand Opening Fee $5,000 $5,000
Business Insurance $1,000 $5,000
Miscellaneous Opening Costs $4,750 $18,500
Depository Account $3,000 $3,000
Additional Funds (first 3 months) $15,000 $20,000
ESTIMATED TOTAL (Does not include real estate costs, construction of the building or rent for the business location except for the initial security deposit.) $74,970 $273,450
Other Fees
Type of Fee Amount
Royalty Fee and Surcharge Royalty Fee is the greater of the following: (i) 6% of total weekly Gross Sales or (ii) $200 per week. Surcharge is a maximum of $10 per week in addition to the Royalty Fee.
Advertising Fees 4% of weekly Gross Sales.
Additional People Training Fee $1,000 per person ($500 per person for the In-Store portion of the Training Program, and $500 per person for the New Owner Training portion of the Training Program).
Additional Training Fee $300 per person per day.
Annual Meeting Registration Fee Up to $1,000 plus incidental costs to attend.
Data Fees Up to $75 per month (subject to reasonable annual and/or service enhancement increases).
POS Help Desk Phone Support Maintenance Contract Fee $55 per month.
Gift Card Redemption Fee Currently 9% of the amount of the gift card redemption.
Online Ordering Activation Fee Currently, one-time fee of $250
Gateway Fee for Online Ordering $9.95 per month plus $0.07 per transaction.
Online Ordering Fees (i) 10% of online order sale plus $0.50 dispatch per order, or (ii) $60 per month plus $0.50 dispatch per order.
Renewal Franchise Fee $5,000
Transfer – Franchise Fee $5,000
Transfer Training Fee $1,500 for two individuals ($750 for each individual).
Document Administration Fee $500
Relocation Fee $500
Default Interest $50 plus interest at 1-1/2% per month or maximum legal rate, if less.
Late Report Fee $100 per report.
Collection Costs All collection costs including reasonable attorneys' fees.
Non-Sufficient Funds Fee $50 for each electronic funds transfer returned for non-sufficient funds; $25 for each check or draft returned for non-sufficient funds.
Audit Cost of Audit plus interest at Default Rate on underpayments or the maximum rate permissible by law.
New Supplier Approval Fee A charge not to exceed the reasonable cost of the inspection and the actual cost of the test not to exceed $5,000
Early Termination Fee The average monthly Royalty and Advertising Fees paid for any consecutive 12 month period within the preceding 48 month period multiplied by the number of months remaining in the term of the Franchise Agreement, and the product is divided by 2
Non-Participation Fee $100 per day.
Management Fee 6% of the Franchised Business’ Gross Sales (in addition to the Royalty Fee and Advertising Fee) plus the franchisor’s direct out-of-pocket costs and expenses.

The above information has been taken from the FDD of Blimpie. Year of FDD: 2016

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