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A&W Restaurants Franchise Cost & Fees

Date of Incorporation: 1919
Franchising Since: 1925
Headquarters: Lexington, Kentucky

Business Description: A&W Restaurants, Inc. is the franchisor. A&W is a wholly owned subsidiary of A Great American Brand, LLC. Currently, A&W operates restaurants and grants licenses to operate restaurants under the names A&W and A&W All American Food. The Restaurants offer A&W draft Root Beer and food products such as hamburgers, hot dogs and fries. The Restaurants are usually located in an area with high traffic volume and typically are open for lunch, dinner and evening business.

Franchise Offer: The franchisee will operate a quick-service restaurant featuring A&W Root Beer and other approved items in a freestanding restaurant, a restaurant connected to or in line with another retail space, a restaurant in an express or “captive audience” location or a restaurant in a co-brand format.

Financial Assistance: A&W does not offer, directly or indirectly, any arrangements to franchisees for financing the initial investment or the continuing operation of an A&W business. A&W does not guaranty a franchisee’s note, lease or obligation.

Training and Assistance: At least two of the franchisee’s managers will be required to attend the Training Course, which may last between 3 and 10 days. The Training Course is otherwise available to any other member of the organization the franchisee wishes to attend. The Training Course includes on-site training at designated training facilities. The trainees are exposed to operating procedures, which include preparatory procedures in the kitchen and daily administrative procedures. Trainees will learn the preparation of fountain dispensed A&W Root Beer, and the maintenance and repair of root beer dispensing equipment, as well as the cooking and handling of all other core menu food products. Trainees will learn to work each and every station in the Restaurant. Trainees will also learn management tasks. Restaurant on-the-job training may use a rotation schedule to ensure that time is spent in each of the Restaurant's stations. Non-guest related activities, such as station opening, closing, root beer dispensing, maintenance and the production of A&W Root Beer may also be scheduled as part of the rotation. Additional training classes may be offered or required for restaurant management teams and above store managers.

Territory: If the franchisee operates a Freestanding or Co-Brand Restaurant, the Franchise Agreement will designate an exclusive trading area surrounding the Restaurant within which A&W will not establish or grant a franchise for A&W Restaurants. Generally, the exclusive trading area will approximate a circular area, with the franchisee’s restaurant forming the center point and having a radius of three miles, or within which 30,000 people work or reside, whichever area is less. If the franchisee operates an Express Restaurant, the franchisee will generally not receive an exclusive territory. However, if the Express Restaurant will be located in a retail shopping mall, A&W will not develop or grant a franchise for the development of an A&W restaurant using the Marks and serving A&W products within the shopping mall building.

Term of Agreement and Renewal: The length of the initial term for Freestanding, In-line and Co-Brand Restaurants is 20 years. The initial term of the franchise agreement for Captive Restaurants is 10 years. If the franchisee is in good standing and satisfies the renewal criteria, he or she may renew for two additional option terms of five-years each for Freestanding, In-line and Co-Brand Restaurants. There is no renewal or extension for a Captive Restaurant.

Obligations and Restrictions: The franchisee is not required to actively supervise the operation of the restaurant on premises, although active on premises supervision is strongly encouraged. All restaurant managers are required to have satisfactorily completed the training course prior to assuming management control of the restaurant. The franchisee is required to offer for sale all of the menu items specified in the Operations Manual and/or the Franchise Agreement, prepared from ingredients, meeting A&W's specifications, and purchased from approved sources. Items not listed in the Operations Manual are not permitted to be sold unless authorized in writing.

Estimated Number of Units: 1,100

Investment Tables:
Initial Investment for an Inline Restaurant
Name of Fee Low High
Real Estate Not included
Professional Fees, Licenses & Permits $15,000 $40,000
Building Costs including Site Work $75,000 $460,000
Signs $15,000 $40,000
Furnishings, Fixtures & Equipment $100,000 $210,000
Initial Franchise Fee $30,000 $30,000
Grand Opening Promotion Deposit $5,000 $5,000
Training Course Expenses $500 $10,000
On-Site Training Expenses $6,000 $25,000
Miscellaneous Opening Costs $6,000 $10,000
Opening Inventory $6,000 $12,000
Additional Funds - 3 Months $30,000 $150,000
Estimated Total (Does not include real estate costs) $288,500 $992,000
Initial Investment for a Free Standing Restaurant
Name of Fee Low High
Real Estate Not included
Professional Fees, Licenses & Permits $60,000 $80,000
Building Costs including Site Work $495,000 $630,000
Signs $25,000 $60,000
Furnishings, Fixtures & Equipment $100,000 $456,000
Initial Franchise Fee $30,000 $30,000
Grand Opening Promotion Deposit $5,000 $5,000
Training Course Expenses $500 $10,000
On-Site Training Expenses $6,000 $25,000
Miscellaneous Opening Costs $6,000 $10,000
Opening Inventory $6,000 $12,000
Additional Funds - 3 Months $45,000 $150,000
Estimated Total (Does not include real estate costs) $778,500 $1,468,000
Initial Investment for a Captive Restaurant
Name of Fee Low High
Real Estate Not included
Professional Fees, Licenses & Permits $5,000 $30,000
Leasehold Improvements $50,000 $200,000
Signs $5,000 $15,000
Furnishings, Fixtures & Equipment $40,000 $195,000
Offsite Storage Area (Approx. 300 Sq. Ft.) $0 $10,000
Initial Franchise Fee $15,000 $15,000
Grand Opening Promotion Deposit $2,500 $2,500
Training Course Expenses $500 $10,000
On-Site Training Expenses $6,000 $25,000
Miscellaneous Opening Costs $6,000 $10,000
Opening Inventory $3,500 $8,000
Additional Funds - 3 Months $30,000 $140,000
Estimated Total (Does not include real estate costs) $163,500 $660,50000
Initial Investment for a Co-Brand Restaurant (Conversion/Remodel)
Name of Fee Low High
Real Estate Not included
Professional Fees, Licenses & Permits $5,000 $15,000
Building Costs including Site Work $50,000 $125,000
Signs $5,000 $50,000
Furnishings, Fixtures & Equipment $40,000 $100,000
Initial Franchise Fee $30,000 $30,000
Grand Opening Promotion Deposit $5,000 $5,000
Training Expenses $500 $10,000
On-Site Training Expenses $6,000 $10,000
Miscellaneous Opening Costs $6,000 $10,000
Opening Inventory $3,500 $8,000
Additional Funds - 3 Months $30,000 $150,000
Estimated Total (Does not include real estate costs) $181,000 $528,000
Other Fees
Type of Fee Amount
Royalty Fee 5% of net sales.
Advertising Fee 5% of net sales for Freestanding, Inline, or Co-Brand A&W Restaurants; 2% of net sales for Captive A&W Restaurants.
Training Courses Additional and subsequent trainee charge: $200 per person per day.
Training Materials and Fees Actual costs for training materials.
On-Site Training or Assistance Fee $200 per day.
Interest on Late Payments Lesser of 18% per annum or highest legal rate allowable under state law.
Transfer A $5,000 fee is payable in connection with an approved transfer of each Franchise Agreement for an A&W Restaurant.
Audit All costs of audit and underpaid fees plus 18% interest on underpayment from date due.
Insurance $4,000 - $10,000 (estimate).
Supplier Approval A&Ws actual costs.
Indemnification Will vary under circumstances.
Inventory Replacement Will vary depending upon sales level.
Food Standards Consultation A&W may cause a third party vendor to conduct food standards consultations of the Restaurant. A&W currently does not charge franchisees any fees for initial inspections, but it may do so in the future. A&W reserves the right to charge franchisees for any subsequent inspection that is necessary due to a failed initial inspection or franchisee's failure to allow an initial inspection.

The above information has been taken from the FDD of A&W Restaurants. Year of FDD: 2016

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