Sonic

Date of Incorporation: 1948

Franchising Since: 1974

Address: Oklahoma City, Oklahoma

Country: USA

Description: Sonic Industries LLC licenses the operation of Sonic Drive-Ins, serving made-when-you-order Ex-Long Chili Cheese Coneys, hamburgers, wraps, other sandwiches and salads, hand-battered Onion Rings, Tater Tots and a full breakfast menu. The franchise also offers a variety of well-known Frozen Favorites® treats and drinks, CreamSlush® treats and SONIC Blast® soft-serve desserts. At a typical Sonic Drive-In, a customer parks in a drive-in space and orders through an intercom speaker system. A Carhop then delivers the customer's food directly to the customer's vehicle. The Sonic Drive-In also may include a drive-thru lane, a patio and indoor seating.

Franchise Offer: Sonic offers the franchisee the opportunity to use its trademarks under the Sonic name, at a single location under the terms of the License Agreement. A Sonic Drive-In typically is a free-standing, one-story building with surrounding parking stalls covered by canopies, providing in-car service for approximately 20 to 36 cars. Many Sonic Drive-ins also incorporate drive-thru service and patio seating, and some may provide indoor seating.

Financial Assistance: Sonic offers financing to the franchisee for the Sonic Sign package for a 10-year lease term. The franchisor will lease a Sonic sign package at rental rates ranging from approximately $120 per month for a single monument type sign to $790 per month for a large Sonic sign package.

Training and Assistance: Training is provided to the franchisee and at least one individual working full time at the new Sonic Drive-In. This includes up to 150 hours of ‘On-the-job’ training at a Sonic technical training drive-in at various locations throughout the United States, and in the classroom training of a 5 days Sonic Management Seminar. The classroom training is located at Sonic's corporate office in Oklahoma City, Oklahoma.

Territory: Sonic will grant the franchisee the right to operate a Sonic Drive-In either at a specific location or at a location within a specified area subject to Sonic's approval of the specific location within six months after the License Agreement date. Sonic will not own or operate a Sonic Drive-In and will not franchise any other person to own or operate a Sonic Drive-In within the “Protected Area”.

Litigation: Yes, 1 action

Term of Agreement and Renewal:
The length of the franchise agreement is 20 years, with an option to renew for one additional 10-year term.

Obligations and Restrictions: Sonic does not require that the franchisee personally supervise the operation of the Sonic Drive-in. However, at least one individual (usually the manager) working full time at the Sonic Drive-in must attend and successfully complete the Stage Career Development Program and any other training program developed and designated by Sonic from time to time. If the trained individual ceases to work full time at the Sonic Drive-in, the franchisee will have 120 days to replace the individual with someone who has completed the Stage Career Development Program.

Total Number of Units: 2,791 franchised units at the end of 2008.

Financial Statements: Average Net Sales in 2008 totalled $1.15mn, with 44% of franchised units having sales at or above this figure.

Investment Tables:

Initial Investment:

Name of Fee Low High
Franchise Fee $30,000 $30,000
Payroll $72,600 $89,000
Training, Travel and Living Expenses while training $57,000 $96,000
Advertising Funds $7,500 $22,000
Opening Inventory $32,600 $121,000
Security deposits, impact fees for utilities, utility deposits, business license and other prepaid expenses $10,000 $12,000
Insurance Premiums $8,000 $31,000
Additional Funds – 3 months $7,000 $28,000
Land $218,000 $1,127,000
Building and Site Work $525,000 $1,471,000
Equipment $136,000 $184,000
Point-of-Sale System $58,600 $103,800
Sonic Sign $7,000 $46,000
LED Electronic Message Center $25,000 $38,000
Total estimated Initial Investment $1,194,300 $3,398,800

 

Ongoing Fees:

Name of Fee Amount
Royalty Fee 2%- 5% of Gross Sales
Brand Fee 0.75% of Gross Sales
Advertising Cooperative Fee 3.25% (Minimum) of Gross Sales
Additional Training Fee $400 per Person
Transfer Fee $1,500
Audit Fee and Surcharge Cost of Audit plus 10% of unpaid amounts
Late Charge 1.75% of Amount Overdue
Renewal Fee $6,000

 

 

The above information has been taken from the UFOC/FDD of Sonic.
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