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Food Franchise Industry Report 2015: Choosing a Food Franchise

Choosing the right food franchise investment opportunity for you involves carefully researching franchises and their respective industries. In this section, you will find an overview of the information you need to make a wise investment decision.

Please note: the provisions and fees illustrated in this report are some of the most common and not a complete listing. All figures come from the Franchise Disclosure Document (FDD) of each respective franchise dated 2015. Please review the FDD of a franchise for all of the provisions and fees related to investing in that particular franchise.

Food Franchise Report 2015

Advice for New Franchisees

Earlier in the report, you read how Jim Tselikis, the co-founder of Cousins Maine Lobsters, used food trucks to scout a good physical location for a restaurant. During his appearance on Business Rockstars, he also described 3 things every entrepreneur needs to do when starting a business. They work well for new franchisees too:

  1. Eat, sleep and breathe what you’re doing.
  2. Have humility. You’re not going to know everything.
  3. Be passionate about what you’re doing.

Types of Franchises

Once you decide on a food franchise system (i.e. a Domino’s vs a Papa John’s), there is still the decision of what type of franchise you want to own. Because food is such a sought after product, there are few limits on where a franchise can go.

Traditional units are the most “regular” kinds of a franchise. These are units that are utilized most often by patrons. They can be standalone or part of a strip mall.

Non-traditional store units, also referred to as special venue stores, are typically located at or within another entity such as a hotel, an office building, an airport, a sports stadiums, a convenience store, etc. As noted in the food franchise trends section, some franchises have moved into offering a food truck, or mobile kitchen, as another non-traditional format option.

These different types of franchises can be referred to in a number of different ways. For example, the following franchise types are currently being offered by Scooter’s Coffee. The first two fall under a more traditional heading whereas the third is more non-traditional:

  • Coffeehouse with Drive-thru: These units are generally spaces located in a strip center and are known as “end-cap space”; or they are free-standing buildings with inside seating. These stores may have a drive-up window, plus some inside seating.
  • Drive-Up Kiosks: With the drive-up kiosk there is no seating; sales are primarily of drinks served through drive-up windows. They are usually located in a parking lot near other retail shopping.
  • Specialty: These stores are carts or small spaces located in specialty locations (e.g. airports and business atriums), but are also located within other businesses such as hospitals or large office buildings.

These different location types call for different needs that would impact your cost in terms of construction, equipment, staffing, and rent.

Financial Considerations

One of the first financial questions many prospective franchisees ask themselves is “do I have enough money to start a franchise?” Some common costs of owning a franchise include the initial investment and royalty payments. While these figures only give a small glimpse into what the costs are for owning a franchise, they are a good starting point in narrowing down your many food franchise options.

Initial Investment

The amount necessary to open a franchise varies depending on the unique business system and execution requirements. The following chart demonstrates, by comparison, estimated initial investment ranges associated with opening one of the 20 sample franchises presented.

 Estimated Initial Investment Ranges for Food Franchises

*Please note that because of the variability, some of these ranges do not include a real estate cost estimate.


Initial costs associated with opening a franchise include the franchise fee, land and building costs, training expenses (such as travel and living expenses, not the actual training courses), grand opening advertising and marketing costs, and more.

As you can see above, the initial investment can range widely within a single franchise system. That is because of factors such as real estate cost differences from area to area, whether or not a building is being constructed or retrofit and, as described above, the type of franchise the franchisee decides to open.

Ongoing Fees

When setting your franchise budget, don’t forget about the ongoing fees. In addition to normal business operating costs like payroll and utilities, the most common ongoing fee for franchises is a royalty. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes. Examples of how royalties are collected are provided below for each sample franchise.




For Full Bakeries, 7.0% of Net Sales; For Express Bakeries, the then current price per case of freezer to oven rolls or other approved proprietary Cinnabon products.

Cold Stone Creamery

6% of Gross Sales plus a maximum surcharge of $10 per week


5.5% of Store's weekly Royalty Sales

Dunkin' Donuts

5.9% of gross sales

Edible Arrangements

5% of Business’ weekly Gross Sales or $200, whichever is more

Jamba Juice

Between 5% and 8% of Net Sales

Johnny Rockets

5% of Weekly Gross Sales


5% of gross revenues or a minimum of $825, whichever is greater per month; or 8.5% for an Express Unit


4% of Gross Sales


6% of Gross Sales


5% of Net Sales

Panera Bread

5% of Net Sales


6% of Gross Sales

Scooter's Coffee

6% of Gross Sales

Smoothie King

4% to 6% of Gross Sales


8% of total gross sales

The Melting Pot

4.5% of monthly Gross Revenues

Tim Hortons

4.5% - 6% of Gross Sales or more under limited circumstances

Toppers Pizza

5.5% of Gross Sales


Greater of 4% of Gross Sales or $1,000 per month

Other regular ongoing fees include marketing, software and technology costs. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.

Prior to investing, prospective franchisees should do their research and carefully review a franchisor’s FDD for more detailed information on all systems, procedures and costs.

For more information on numerous food franchises, please see our food franchise profiles.


Food Franchises...

WOOPS! Bring a little taste of Europe to your community, with no bakery background needed! Read More Min. Cash Required:

Doc Popcorn Doc Popcorn is the largest franchised retailer of fresh-popped popcorn on the planet, ranked on Entrepreneur’s Top... Read More Min. Cash Required:

East Coast Wings & Grill Join a franchise with 12 years of same store growth and continuous accolades. Read More Min. Cash Required:

Rex's Chicken Rex's Chicken - food too good to pass up. Bite-size chicken. King-size opportunity! Read More Min. Cash Required:

Sertinos Café Sertinos Café - get a taste of what we're all about! It all starts with great food. Read More Min. Cash Required:

FRESH - Healthy Café Enjoy a juicy return on investment with this FRESH and healthy fast casual franchise. Your success is our goal! Read More Min. Cash Required:

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