Smashburger Franchise Costs, Fees & FDD

Year Business Began: 2007

Franchising Since: 2008

Headquarters: Denver, Colorado

Estimated Number of Units: 225

Franchise Description: The franchisor is Smashburger Franchising LLC. The franchisor’s parent company is Jollibee Foods Corporation. The franchise is for the right to establish and operate a Smashburger restaurant featuring hamburgers, sandwiches, salads, other food items and beverages. The franchisor may elect to grant franchisees a franchise for a single Smashburger restaurant but will primarily offer the right to enter into a Multi-Unit Development Agreement to acquire franchises for an agreed upon number of Smashburger restaurants within a specifically described geographic territory according to a development schedule.
Training Overview: The initial training program involves approximately six weeks of training at one of the franchisor’s principal offices (currently, Denver Colorado) or at another location it designates and on-site training at the franchisee’s restaurant immediately before the scheduled opening. Mandatory trainees include the franchisee (or the managing owner) and designated manager (if applicable) and such other of their personnel that the franchisor specifies. If franchisees are developing their first or second Smashburger restaurant, at no additional cost to them, the franchisor will send a training team to the restaurant to assist with the grand opening (and the franchisor will determine the identity and composition of that training team). The franchisor may require franchisees (or their managing owner), their designated manager (if applicable) and other previously trained and experienced employees to attend and successfully complete various training courses that it periodically designates to its satisfaction, including courses and programs provided by third-parties, at times and locations that it designates. Besides attending these courses, franchisees (or their managing owner) and their designated manager (if applicable) must attend an annual meeting of all Smashburger restaurant franchise owners at a location the franchisor designates.

Territory Granted: The Franchise Agreement grants franchisees the right to operate a Smashburger restaurant at a single location that franchisees select, and the franchisor approves. 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 or competitive brands that the franchisor controls. The Multi-Unit Development Agreement grants franchisees the right to acquire franchises to develop, own and operate Smashburger restaurants within the designated development area that will be described in the Multi-Unit Development Agreement.

Obligations and Restrictions: If franchisees are an entity, they must identify a “managing owner” with at least a 25% ownership interest and voting power in the franchise. The franchisor may require approval of the managing owner. Franchisees (or the managing owner) are responsible for the management, direction and control of the restaurant, subject to the terms and conditions of the Franchise Agreement. Franchisees (or the managing owner) must supervise the management and operation of the restaurant and continuously exert their best efforts to promote and enhance the restaurant. Franchisees may elect not to supervise their restaurant on a full-time basis, provided that they appoint a manager who has completed the then-current initial training program to supervise operation of the restaurant. Franchisees agree that they (1) will offer and sell from their restaurant all of the products and services that the franchisor periodically specifies; (2) will not offer or sell at their restaurant, the premises or any other location any products or services the franchisor has not authorized; and (3) will discontinue selling and offering for sale any products or services that the franchisor disapproves of at any time. The franchisor may periodically set a maximum or minimum price that franchisees may charge for products and services offered by their restaurant.

Term of Agreement and Renewal: The length of the initial franchise term is 15 years. If franchisees meet the requirements, they may extend for one additional term of 15 years. For Multi-Unit Development Agreements, the term ends on the scheduled opening date of the last restaurant as specified in the development schedule. Franchisees have no right to renew their Multi-Unit Development Agreement without the franchisor’s approval.

Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee a franchisee’s promissory notes, mortgages, leases or other obligations.

Estimated Initial Investment

Name of Fee	Low	High
Initial Fees	$40,000	$40,000
Leasehold Improvements	$710,000	$1,257,000
Furniture, Fixtures and Equipment	$264,000	$458,000
Signage	$25,000	$57,000
IT, POS System	$40,000	$57,000
Three Months’ Rent	$28,000	$38,000
Security Deposit, Business Licenses	$0	$26,000
Opening Inventory and Supplies	$20,000	$28,000
Training Expenses	$35,000	$101,000
Grand Opening Advertising	$10,000	$15,000
Grand Opening Training	$0	$30,000
Miscellaneous Opening Costs	$1,000	$5,000
Professional Fees	$5,000	$15,000
Insurance Premiums—3 months	$20,000	$40,000
Liquor Licensing	$10,000	$21,000
Lease Review Fee	$1,500	$1,500
Additional Funds – 3 months	$10,000	$20,000
ESTIMATED TOTAL	$1,239,500	$2,255,500

 
Multi-Unit Development Agreement

Name of Fee	Low	High
Development Fee for Multiple Restaurants – $20,000 times the number of Restaurants (excluding the 1st one) that the franchisee agrees to open.	$40,000	$500,000
TOTAL ESTIMATED INITIAL INVESTMENT	$40,000	$500,000

 
Other Fees

Type of Fee	Amount
Royalty	5.5% of gross sales.
Proprietary Software Fee	The franchisor does not currently charge this fee. It estimates that this fee will range between $150 to $250 per month if implemented.
Marketing Fund	Currently 2.25% of gross sales, but up to 4% of gross sales.
Local Advertising Cooperative	Up to 3% of gross sales (currently this requirement is not imposed).
Local Advertising	Up to 3% of gross sales (currently this requirement is not imposed).
Interest on Late Payment	2% per month or the maximum rate allowed by applicable state law, whichever is lower. $100 per returned check or ACH denied.
Transfer Fee – Franchise Agreement	$15,000
Transfer Fee – Multi-Unit Development Agreement	The greater of 1% of the purchase price or $25,000.
Renewal Fee	50% of then-current initial franchise fee.
Inspection Fee	Reimbursement of all inspection costs.
Audit Fee	Reimbursement of all audit costs.
Interim Operations Fee	10% of gross sales plus costs and expenses.
Product or Supplier Testing	Variable (estimated to be between $0 to $250).
Additional Training	Then-current per diem charge (currently $250) plus the franchisor’s direct costs, including travel.
Insurance	If franchisees fail to obtain insurance, the franchisor may obtain insurance for them, and they must reimburse the franchisor for these amounts, plus the franchisor’s expenses.
Indemnification	Will vary under circumstances.
Costs and Attorneys’ Fees	Will vary under circumstances.
Music Fee	Currently ranges from $49.08 to $51.24 per month (plus applicable taxes, does not include set up fees).
Pest Control Services	Currently ranges from $73.69 per month plus applicable taxes.
Customer Survey and Mystery Shop Services	Currently $40 to $70 per month (subject to change).
Gift Card Service (including Aloha Command & Configuration Center)	Currently $4.75 per day (subject to change).
3rd Party Gift Card Fee	Currently ranges from 14.8% to 30.64% of 3rd party gift cards that are redeemed at the restaurant.
Loyalty Program	The franchisor does not currently charge this fee. The franchisor estimates that this fee will be $75 per month if implemented.
Non-Compliance Charge	Up to $1,000 per failure to comply with the Franchise Agreement (at the franchisor’s discretion).
Development Late Fee – Multi Unit Development Agreement	$800 per month behind schedule.
Digital Menu Board Service Fee	Currently $39 per month.
Printed Manual	Then-current charge (currently, the franchisor’s direct out of pocket costs).
Online Presence Maintenance Fee	Then-current charge (currently, not charged).
Tax Reimbursement	Franchisees must reimburse the franchisor’s expenses.
Deficiency Correction	The franchisor’s direct out-of-pocket costs.
Appraisal Fees	Direct out-of-pocket costs (shared equally).
Lost Revenue Damages	Will vary under circumstances.

The above information has been compiled from the FDD of Smashburger. Year of FDD: 2025.
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