Schlotzsky’s
Date of Incorporation: 2006
Franchising Since: 2006
Headquarters: Atlanta, Georgia
Country: U.S.
Description: Schlotzsky's restaurants are quick casual restaurants featuring premium sandwiches and pizzas and complementary food and beverages.
Franchise Offer: The franchisee will conduct business under the service mark "Schlotzsky's" and any other identifying marks and symbols and will uses the unique system for the establishment, development and operation of the franchised restaurant.
Financial Assistance: The franchisor does not offer financing for trade fixtures, opening inventory, or any other purpose. In certain circumstances, the franchisor will permit to pay some of the Initial Franchise Fee on the due date. In this case, the franchisee must sign a promissory note. The franchisor may refer the franchisee to leasing or financing companies. The franchisor will not guarantee note, lease, or obligation, for any lender, or any other person or entity. The franchisor may sell, assign, or discount to a third party any note, contract or other instrument the franchisee gives to the franchisor. The franchisor does participate in the SBA's Franchise Registry Program.
Training and Assistance: The initial training program consists of three weeks of training, consisting of six days of training each week. Training classes, including refresher courses and will be offered at the training facility in Austin, Texas or another locations. The franchisor will provide refresher training on an as needed basis. The Initial Franchise Fee includes the cost of the Initial Training Program for the franchisee and the Restaurant Manager, who must attend the training. The franchisee must pay all transportation costs, meals, lodging, and other living expenses for the trainees.
Territory: The franchisee will receive an exclusive territory. The size and scope of the territory will be in the Franchise Agreement and will be determined on a case-by-case basis. The factors that consider in determining the size of a the territory include current and projected market demand, demographics and population, median household income, presence of other businesses, location of competitors, traffic patterns, access and visibility, location of other restaurants, the franchisor's future development plans and other market conditions.
Term of Agreement and Renewal: The term of the Franchise Agreement is 20 years. Renewal or extension of the term is 20 years if the franchisee complies with the renewal requirements.
Obligations and Restrictions: The franchisee must personally supervise the operation of the restaurant, unless permitted in writing. The franchisee must devote the necessary time and best efforts for the proper and effective operation of the restaurant. The franchisee must offer and sell all services, products, and programs that are required to sell. The franchisee may not sell any menu item, product, service, or program that is not a part of the franchise system. The franchisor typically requires franchisee candidates to have adequate restaurant or comparable experience (at least 6 to 12 months of experience, including managerial experience). If it is determined that a franchisee candidate does not have sufficient restaurant experience the franchisor may require the franchisee candidate to complete an internship in an existing Schlotzsky's Restaurant in addition to the training program.
Total Number of Units: More than 330 locations worldwide.
Investment Table:
Initial Investment:
| Type of Expenditure | Low | High |
|---|---|---|
| Initial Franchise Fee | $30,000 | $30,000 |
| Real Property/Site Lease | The cost of leasehold improvements depends on the type and size of Restaurant, the condition and size of the site, the local cost of contract work, and the geographic location of the Restaurant. | |
| Leasehold Improvements | $199,294 | $265,383 |
| Furniture, Fixtures, Equipment and POS | $124,811 | $225,295 |
| Exterior Signage | $11,717 | $33,164 |
| Licenses and Permits | $800 | $2,000 |
| Due Diligence / Lease Acquisition / Professional Fees | $10,000 | $15,500 |
| SUBTOTAL: CAPITAL INVESTMENT | $376,622 (Excludes real estate) | $571,342 (Excludes real estate) |
| Supplies and Inventory | $14,000 | $20,000 |
| Insurance Cost | $15,000 | $24,000 |
| Deposits | $2,000 | $10,000 |
| Training Costs (Travel, Meals, Lodging, Salaries, Pre-Opening, Crew Labor) | $17,000 | $32,000 |
| Grand Opening Advertising and Promotions Expenditure | $10,000 | $10,000 |
| Three Months of Additional Funds (excluding rent or mortgage payments) | $39,000 | $48,000 |
| SUBTOTAL: OPERATING EXPENSES | $97,000 | $144,000 |
| Total Initial Investment | $473,622 | $715,342 |
Ongoing Fees:
| Type of Fee | Amount |
|---|---|
| Royalty | 6.0% of Gross Sales |
| Advertising Contribution | 4.0% of Gross Sales (currently, 1.0% of Gross Sales collected for the Ad Fund will be spent directly by the Ad Fund and the remaining 3.0% of Gross Sales collected for the Ad Fund will be remitted by the Ad Fund to local advertising groups) |
| Promotions | Costs to purchase, lease and install all materials necessary to promotional campaigns, including counter cards, posters, banners, signs, photographs, give-away items and gift cards. Costs plus a reasonable administrative fee. Outdoor banners, for example, currently cost about $110. |
| Local Advertising and Promotions | The franchisee determines this amount, which may be a dollar amount or a targeted percentage of Gross Sales. |
| EFT NSF Fee | The franchisor’s out-of-pocket costs and an administrative fee |
| Late Report Fee | $100 per day |
| Replacement Manager Initial Training Fee | Up to $500 per trainee |
| On-Site Training and Assistance | $50 per hour plus trainers' expenses |
| Consulting Fee | $500 per day |
| Adulteration, Dilution or Failure of Sanitation Inspection Fee | The franchisor’s expenses, including attorneys' fees, and inspection fees of up to $5,000 per visit |
| Interest | Lesser of maximum legal interest rate, or 15% per year |
| Taxes | Franchisor’s cost |
| Advances | Franchisor’s cost |
| Relocation Extension Fee | $1,500 per year of extension on Term |
| Transfer Fee | $7,500 |
| Renewal Fee | $2,500 |
| Appraiser's Fee | 50% of appraiser's fee |
| Indemnification of Franchisor | Franchisor’s cost |
| Attorneys' Fees | Franchisor’s cost |
| Supplier/Product Testing Fee |
Cost of testing and inspection |
| Reinstatement Fee | $2,500 |
| Audit | Cost of audit |
| Rent | Will vary based on location and other factors; Estimated rent will range between $3,000 and $20,000 per month. |
| Communication Access | Reasonable fee. |
| Updating, relocation or reconstruction of your Restaurant | Amount varies and is based on the extent of reconstruction or costs associated with updating, relocation and outfitting of new premises for the franchisee’s Restaurant. The franchisor estimates the amount may range from $10,000 to $100,000 but could be higher depending on the age, condition and size of the Restaurant. |
| Updating and maintaining computer systems; Systems Fee | The franchisor estimates the cost of computer hardware and software maintenance to be $4,000 to $5,000 per year. The amount for upgrades varies based on the extent of the upgrade or services provided. |
| Credit Card Fees | Equipment costs and set up fees estimated to be up to $350 per terminal if purchased through the franchisor’s preferred provider or $35 a month if rented through the franchisor’s preferred provider. These costs could be substantially higher if purchased or rented from another processor or terminal provider. Transaction fees estimated to be from 2.5% to 5.0% of transaction amounts. Other fees may apply depending on the vendor used for credit card processing. |
| Gift Card and Loyalty Card Fees Amount of fees. | Equipment costs and set up fees estimated to be up to $700 per terminal if not tied into credit card terminal described in Credit Card section above. Other fees apply to the purchase, use, and service of cards; these fees are variable based on the volume purchased or transacted or the service received, although estimated that for normal usage these fees will not exceed $250 to $700 annually. |
| Technology Training | Will vary |
| Legal Administration Costs | Will vary based on the nature of the request, estimated cost will not exceed $2.000-$5,000. |
Date of FDD: 2010
The above information has been taken from the UFOC/FDD and online sources of Schlotzsky's
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