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Five Guys Franchise Cost & Fees

Date of Incorporation: 1986
Franchising Since: 2002
Headquarters: Lorton, Virginia

Business Description: Five Guys restaurants are fast casual dining restaurants which specialize in the sale of hamburgers, French fries, and related accompaniments in accordance with their comprehensive and unique system. Five Guys restaurants are typically located in retail shopping centers and other urban locations which are acceptable to the franchisor. Other sites such as train stations, sports arenas, airports, university campuses or other captive market spaces are considered on a case-by-case basis. Each Restaurant will typically range between 2,000 and 3,000 square feet, and will offer a menu selection featuring food items prepared according to the specified recipes and procedures.

Franchise Offer: Five Guys offers the right to establish and operate a Restaurant under the terms of a single unit franchise agreement. The franchisee may be an individual, corporation, partnership or other form of legal entity.

Financial Assistance: Five Guys does not offer, either directly or indirectly, any financing arrangements to franchisees nor do they guarantee franchisees’ notes, leases or other obligations. Franchisees of the Five Guys System are eligible for expedited and streamlined Small Business Administration loan processing through the SBA's Franchise Registry Program.

Training Assistance: The initial training program will generally last about two weeks. However, up to six weeks training may be required. Five Guys will provide instructors and training materials for the initial training of the franchisee’s Operating Principal, general manager, and one assistant manager at no additional charge. Franchisees may also have additional personnel trained by the franchisor for the Restaurant, although it may charge $1,500 per person for that training. For the opening of the franchisee’s first Restaurant, Five Guys will provide one of their trained representatives. The trained representative will provide on-site pre-opening and opening training, supervision, and management assistance for 10 days. If the franchisee reasonably requests or as the franchisor deems appropriate, it will, during the term of the Franchise Agreement, subject to the availability of personnel, provide the franchisee with additional trained representatives who will provide on-site remedial training to Restaurant personnel. Any additional training Five Guys considers necessary must be attended by the franchisee (if an individual), the general manager, and at least one assistant manager.

Territory: The Franchise Agreement grants the franchisee the right to operate a Restaurant at a single location that the franchisee selects within the assigned area and that Five Guys approves (Primary Area of Responsibility). Five Guys will determine the Primary Area of Responsibility before the Franchise Agreement is signed based on various market and economic factors such as an evaluation of market demographics, the market penetration of the franchise system and similar businesses, the availability of appropriate sites and the growth trends in the market. During the term of the Franchise Agreement, if the franchisee is in compliance with the Franchise Agreement, Five Guys will not establish a Restaurant or authorize any other person or entity to establish a Restaurant within the Primary Area of Responsibility.

Term of Agreement and Renewal: The franchise term is for 10 years from the date of the Franchise Agreement unless terminated earlier. The Agreement may be renewed at the franchisee’s option for additional consecutive five-year terms.

Obligations and Restrictions: If the franchisee is an individual, he or she must perform all obligations of the Operating Principal. If the franchisee is a corporation, partnership or other form of entity, the Operating Principal must be one of the “Controlling Principals.” The franchisee must retain at all times a general manager and the other personnel as are required to operate and manage the Restaurant. The general manager must satisfy Five Guys’ educational and business criteria as provided in the Manuals or other written instructions, and must be individually acceptable to Five Guys. The franchisee must comply with all standards and specifications relating to the purchase of all food, food products and beverage items, ingredients, supplies, materials, fixtures, furnishings, equipment (including electronic cash register, computer hardware and software), utensils and other kitchen items and products used or sold at the Restaurant.

Estimated Number of Units: 1,250

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $25,000 $25,000
Development Fee $50,000

$125,000 ( in Alaska, Hawaii & Puerto Rico)

Leasehold Improvements $100,000 $300,000
Lease Payments and other rental expenses $7,500 $20,000
Equipment $55,000 $105,000
Signage $6,500 $20,000
Initial Inventory $10,000 $15,000
Architectural/Engineering $7,000 $25,000
Electronic Cash Register System with Modem $15,000 $25,000
Facsimile Machine $350 $500
Travel, lodging and meals for initial training $100 $5,000
Business Supplies (stationery, business cards, menus, gift cards, paper and other materials)  $4,000 $8,500
Business licenses, permits, utility deposits, etc. (for first year) $5,000 $15,000
Delivery and catering expenses $0 $1,000
Insurance deposits and premiums $750 $1,250
Additional Funds for first 3 months $20,000 $25,000
ESTIMATED TOTAL
$306,200 $641,250
ESTIMATED TOTAL for Alaska, Hawaii & Puerto Rico
$381,200 $716,250
Other Fees
Type of Fee Amount
Royalty Fee 6% of Gross Sales. If the Restaurant is located in Alaska, Hawaii or Puerto Rico, the Royalty Fee is 8% of Gross Sales.
Creative Fund 2% of Gross Sales.
Bread Products Varies, depending on franchisee's bread product needs.
Local Advertising Not less than 2% of Gross Sales.
Cooperative Advertising Maximum - 1.5% of Gross Sales, which will be credited towards Local Advertising.
Advertising and Promotional Materials Varies, depending on franchisee's advertising needs.
Interest The lesser of (i) 10% per annum or (ii) the maximum rate allowed by applicable law.
Prohibited Product or Service Fine $250 per day of use of unauthorized products or services.
Initial Training of additional or replacement and successor personnel $1,500 per person.
Additional Assistance If franchisee requests additional assistance, he or she must pay the current per diem charge for Five Guys employees used to provide the assistance and our associated costs. Current per diem is $500.
Cash Register Upgrades Approximately $5,000
Transfer Fee $5,000 to reimburse Five Guys for reasonable costs and expenses in reviewing the transfer application.
Public Offering $5,000 to reimburse Five Guys for reasonable costs and expenses in reviewing the proposed securities offering.
Additional or Remedial Training Five Guys' costs providing the training.
Inspection and Testing Cost of inspection or testing. (Currently estimated at $5,000)
Vendor/Equipment Approval Fee $5,000 to reimburse Five Guys for reasonable costs and expenses in reviewing and approving vendor equipment.
Audit Fee Cost of audit.
Late Payment or Reporting Fee $50 per day if franchisee is late.
Site Evaluation Fee A reasonable amount to be determined. (Currently $500)
Relocation Fee $7,500 to reimburse Five Guys for its time, costs and expenses in reviewing the relocation application as well as the current and future sites.
Gift Card Program Varies
Time Extension Fee $10,000 per Time Extension.

The above information has been taken from the FDD of Five Guys. Year of FDD: 2015

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