Franchising Since: 1975
Headquarters: Jericho, New York
Estimated Number of Units: 235
Franchise Description: Nathan's Famous Systems, Inc. is the franchisor. Nathan's Famous restaurants are fast-service restaurants operating in buildings that feature the trade dress of the franchisor. A Nathan's Famous restaurant offers customers the franchisor’s proprietary hot dogs (made with a proprietary spice formula) as well as crinkle-cut french fries, hamburgers, assorted sandwiches, platters, and other fast-service menu items. A restaurant is typically located in one of the following types of settings: a free-standing building, a food court in a shopping mall, an in-line shopping center, or an in-line urban unit. The franchisor also offers Franchise Agreements under which the franchisee would establish and operate a restaurant from a kiosk or a mobile unit. The franchisor may also offer the franchisee the opportunity to add co-branded operations using the brand, concept, and products offered by its affiliate NF Treachers (Arthur Treacher's).
Training Overview: Franchisees (or if they are a corporation or partnership, a principal of the corporation who is approved by the franchisor and designated to supervise the restaurant) must attend and complete to the franchisor’s satisfaction the initial training program offered. The length of the class will vary based on the menu level for the restaurant. If franchisees are adding a co-branded operation to the restaurant, the training will include all subjects necessary to operate the co-branded concepts. An additional number (at least three) of the franchisee’s designated management employees who the franchisor has pre-approved may also be required to attend and successfully complete the training program (the specially trained management employees) to the franchisor’s satisfaction. The classroom training will take place at one of the franchisor’s company-owned restaurants in the New York metropolitan area or at its corporate headquarters in Jericho, New York. Franchisees and their specially trained management employees must also attend additional refresher courses, seminars, and training programs that the franchisor periodically and reasonably may require.
Territory Granted: Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution (including the remote kitchen channel) or competitive brands that the franchisor controls. Similarly, the franchisor or its designees may sell grocery products, bulk products or branded products to customers for resale at any location, and some of these locations may seem to or actually compete with the franchisee’s location. Franchisees may only offer and sell from the approved location to retail customers: (1) face-to-face, for consumption on the restaurant premises; (2) face-to-face, for personal carry-out consumption; or (3) for catering or delivery (to customers’ homes, offices, and other locations), except that the franchisor has the right to revoke its approval of catering and delivery at any time. Under a mobile unit amendment, franchisees must serve food from the mobile unit only at fixed locations the franchisor approves.
Obligations and Restrictions: The Franchise Agreement does not require franchisees to participate personally in the direct operation of the restaurant, although the franchisor encourages and recommends active participation by franchisees. The franchisor does, however, require that franchisees or their operating partner devote full time, energy, and best efforts to the management of the restaurant. If franchisees are a corporation, partnership, or other entity, the franchisor requires all of their owners to sign a personal guarantee of the performance of their obligations under the Franchise Agreement. Franchisees may use the restaurant premises only to operate the franchised business. Franchisees must keep the restaurant open and in normal operation for the minimum hours and days the franchisor specifies in the manual or otherwise in writing. Franchisees must not use the premises for any other purpose or activity without first obtaining the franchisor’s written consent. Franchisees must sell only those menu items, products, and services that the franchisor has expressly approved in writing and which meet its current standards as established in the manual or otherwise in writing.
Term of Agreement and Renewal: The length of the initial franchise term is 10 years. Under a Kiosk and Mobile Unit Amendment, the initial term of the Franchise Agreement will be five years. If requirements are met, franchisees can renew for one additional five-year term. Under a Kiosk and Mobile Unit Amendment, the renewal period will also be five years.
Financial Assistance: Neither the franchisor nor any agent or affiliate offers direct or indirect financing to franchisees, guarantees any note, lease or obligation of franchisees, or have any practice or intent to sell, assign, or discount to a third party all or part of any financing arrangement of franchisees.
Estimated Initial Investment
For a Free Standing Restaurant*
| Name of Fee | Low | High |
| Initial Franchise Fee | $30,000 | $30,000 |
| Real Estate Rent | $60,000 | $195,000 |
| Restaurant Construction | $250,000 | $1,300,000 |
| Site Preparation | $25,000 | $170,000 |
| Furniture, Fixtures, and Equipment | $145,000 | $245,000 |
| Pre-Opening and Inventory Expenses | $10,000 | $15,000 |
| Training Expenses | $2,250 | $10,360 |
| Insurance | $5,000 | $7,500 |
| Security Deposits | $0 | $0 |
| Utility Deposits | $2,500 | $6,500 |
| Professional Fees | $12,000 | $25,000 |
| Business Licenses | $100 | $750 |
| Additional Funds (for first three months) | $10,000 | $25,000 |
| Grand Opening Advertising | $2,500 | $2,500 |
| ESTIMATED TOTAL (without co-branding) | $554,350 | $2,032,610 |
| Additional Costs for Arthur Treacher's Co-Branded Operation | ||
| Additional Furnishings, Fixtures and Equipment for Arthur Treacher's | $9,000 | $18,000 |
| Arthur Treacher's Initial Inventory and Supplies | $2,500 | $5,000 |
| Additional Signage for Arthur Treacher's | $3,000 | $7,500 |
| Arthur Treacher's Initial Fee | $5,000 | $7,500 |
| ESTIMATED TOTAL (if the franchisee chooses and is approved to operate both concepts) | $573,850 | $2,070,610 |
Other Fees
| Type of Fee | Amount |
| Royalty | 5.5% of gross sales. |
| Marketing Development Fund | 2.5% of gross sales. |
| Grand Opening Advertising | Varies. |
| Transfer | The greater of $4,500 (for a restaurant) or 15% of the then-current initial franchise fee, whichever is greater. (If the franchisee operates an Arthur Treacher's co-branded operation, the franchisee must also pay a $500 transfer fee.) Transfer fee for a kiosk or mobile unit is $2,500. |
| Audit by Franchisor | Cost of the audit. |
| Interest on Overdue Payments | 1.5% per month or maximum rate permitted by law, whichever is less. |
| Securities Offering | Actual expenses, at least $7,500. |
| Costs and Attorneys' Fees | Will vary under circumstances. |
| Cost of Defense | Will vary under circumstances. |
| Site Selection | Will vary under circumstances. |
| Inspection and Product Testing Charge | Will not exceed reasonable cost of inspection and actual cost of test. |
| Indemnification | Will vary under circumstances. |
| Renewal Fee | One-half of the then-current initial franchise fee, or $15,000, whichever is more. There is no renewal fee for a kiosk or mobile unit. |
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