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Ponderosa Steakhouse Franchise Costs & Fees

Date of Incorporation: 1965
Franchising Since: 1965
Headquarters: Plano, Texas

Business Description: Ponderosa Franchising Company (PFC) is the franchisor. Each Ponderosa Restaurant serves a wide variety of menu items featuring moderately-priced meals for the family including steak, seafood, and chicken entrees accompanied by an all-you-can-eat food bar and an all-you-can-eat sundae and dessert bar.

Franchise Offer: PFC franchises family-focused restaurants that provide guests with a distinctive, fun dining experience under the names “Ponderosa” and “Ponderosa Steakhouses.”

Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee franchisees’ note, lease or other obligation. The franchisor does offer third party financing services through Boefly, and their approved lenders.

Training and Assistance: PFC will provide a training program for up to 3 of the initial managers of the Ponderosa Restaurant at an approved training site designated by PFC to educate and acquaint them with the business system and the operation of a Ponderosa Restaurant. The Managers Training Program will be conducted at a certified training restaurant in the franchisee’s area or another site designated by PFC. The program will cover base business operating procedures including: Shift Management, Human Resource Management, Food Production and Merchandising, Quality and Standards, Cost Controls, Safety and Security, Building Equipment and Maintenance, Cleanliness, Basic Administration, Crisis Management and other topics selected by PFC representatives. After franchisees and their managers have satisfactorily completed PFC’s Managers Training Program, a field training team will provide opening assistance at no additional cost to them at their Ponderosa Restaurant for a period of not less than 7 days. PFC will provide additional training if, during the term of the Franchise Agreement, franchisees hire new managers who have not previously attended and satisfactorily completed PFC's Managers Training Program.

Territory: Under the Franchise Agreement PFC grants franchisees the right to operate a Ponderosa Restaurant at a specific location selected by franchisees, provided, the franchisor has issued a notice of no objection. Franchisees will operate out of a single Restaurant within an "Protected Area.” The Protected Area will be an area equal to a 1 mile radius from the Restaurant subject to any non-traditional development by PFC.

Term of Agreement and Renewal: The length of the initial franchise term is 15 years. “Renewal” means the right to continue to be a part of the Business System as a franchisee, provided franchisee signs the then current franchise agreement and otherwise meets the conditions in the Franchise Agreement. At the end of the term, and subject to PFC’s approval, franchisees will have the option to reacquire or renew the franchise for two additional consecutive 5-year terms.

Obligations and Restrictions: Franchisees do not have to participate personally in the operation of their Ponderosa Restaurant. However, the Restaurant must be managed by managers who have satisfactorily completed PFC's training program. If franchisees are not a business entity, then each individual franchisee (including his or her spouse) must personally guarantee all obligations to PFC under the Franchise Agreement. Franchisees may only sell the products and services specified or approved by PFC in writing. Franchisees must sell the products and services required by PFC.

Estimated Number of Units: 130

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $25,000 $40,000
Exclusive Territory Fee $40,000 $200,000
Restaurant Lease Payments $0 $41,250
Leasehold/Building Improvements $25,000 $840,000
Inventory to Begin Operating $8,000 $45,000
Architectural and Engineering $0 $45,000
Liquor License (Optional; Excluding New Jersey) $0 $10,000
Furniture, Fixtures and Equipment $143,341 $600,000
Computer Hardware and Software $0 $20,000
Gift Card Terminal (Stand Alone Terminal or POS Integration) $0 $1,200
Gift Card Costs – Cost of Cards $42 $300
Initial Funding of ACH (Automated Clearing House) Account for Gift Card Program $560 $560
Grand Opening Advertising $10,000 $15,000
Signage $10,000 $30,000
Promotional Expenses $3,000 $15,000
Insurance (annually) $25,000 $35,000
Professional Services $1,500 $5,000
Training Expenses (wages, travel and living expenses for the franchisee and/or franchisee’s managers during training) $13,000 $28,000
Business Licenses and Permits $100 $3,000
Additional Funds – Initial Period of 3 Months $86,000 $125,100
ESTIMATED TOTAL (does not include exclusive territory fee) $207,202 $1,858,160
ESTIMATED TOTAL (includes exclusive territory fee) $247,202 $2,058,160
Other Fees
Type of Fee Amount
Royalty Fee 4% of Weekly Gross Sales.
Production Fee 0.5% of Weekly Gross Sales.
Designated Market Area Advertising Contribution Up to 2.5% of Weekly Gross Sales.
National Advertising Fee Up to 2% of Gross Sales.
Audit Fee Amount incurred by PFC to audit the Restaurant.
Transfer Fee $5,000 payable in two installments: $1,000 and $4,000
Renewal Fee $5,000
Buy-Out Fee A lump sum payment equal to the sum of (a) 2% of the average annual Gross Sales for 2 years preceding date of termination multiplied by the number of years remaining in the term of the Franchise Agreement.
Accelerated Fee Payment A lump sum payment equal to the sum of 4% of the average annual Gross Sales for 2 years preceding date of termination multiplied by the number of years remaining in the term of the Franchise Agreement discounted to present value.
Collection Costs Amount incurred by PFC to collect unpaid fees.
Insufficient Funds Fee $33 (or, if less, the maximum fee allowable by law).
Public Offering Fee $3,500
Interest Charges Lesser of 12% per annum or the maximum legal rate allowable under state law for amounts past due more than 30 days.
Training $500 per additional manager trained.
Indemnity Total amount of any judgment, settlement, penalty, cost or fee.
Attorneys’ Fees All attorneys’ fees, court costs and related expenses if franchisees are not the prevailing party in any legal action.
Gift Card Program Monthly Support Fee (Third Party) Franchisees will be assessed a monthly support fee by a third party provider, which is currently $15 per month.
Grand Re-Opening Advertising Fee $5,000
Five Year Remodel Cost with Training Fees $25,000 - $50,000

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

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