TGI Fridays Franchise Costs, Fees & FDD

Year Business Began: 1965

Franchising Since: 1969

Headquarters: Dallas, Texas

Estimated Number of Units: 650

Franchise Description: The franchisor is TGI Fridays Franchisor, LLC. The franchise is for full service casual theme restaurants featuring a specialized menu and full bar service, operating as “TGI Fridays.” If franchisees believe a location is suitable for a particular sized unit, they must provide the franchisor with the demographic and other information it asks for so that it can evaluate the information and decide whether to give its consent.


Training Overview: The franchisor offers a number of different training programs. The principal owner whom franchisees designate as their representative must attend and successfully complete the Owner's Orientation Program (approximately two days). The principal owner whom franchisees designate as the operating principal, the restaurant's general manager, kitchen manager and at least two other restaurant managers must attend, and successfully complete the then current Management Training Program. The current Management Training Program consists of an eight week in-store program, named Restaurant Management Essentials (RME) and a three-day seminar titled Leadership that Rocks (LTR). The kitchen managers and general managers must complete additional training respectively named Kitchen Manager Essentials (KME) and Impact General Manager Essentials Program. As part of the Management Training Program, attendees must successfully complete a Certified Professional Food Manager training and certification program as specified by the franchisor. Attendance at the two-day New Store Opening (NSO) Seminar for Trainers is required prior to any trainer's participation at a NSO. The franchisor may require that franchisees, their operating principal, and their restaurant managers take and successfully complete other training courses in addition to the initial training program. In addition, the franchisee’s operating principal must attend the annual meeting, convention or conference of franchisees and all meetings relating to new products or product preparation procedures, new operational procedures or programs, restaurant management, sales or sales promotion, or similar topics. The franchisor may also require that the operating principal attend additional meetings that it deems appropriate under special circumstances.

Territory Granted: The Franchise Agreement does not give franchisees any exclusive rights to use the system or the proprietary marks in any geographic area. Franchisees may be required to participate in delivery and/or takeout programs. No territories are provided in connection with the current delivery programs.

Obligations and Restrictions: Franchisees must devote the requisite time, energy, and best efforts to meet their obligations under the agreements. Although the franchisor emphasizes previous restaurant experience in considering prospective franchisees, it does not require franchisees to participate personally in the development or operation of the restaurant, except that their representative (who must own at least a 20% equity interest) must be fully authorized to act on their behalf in all dealings with the franchisor. For each of the franchisee’s restaurants, a principal owner must be designated to serve as the “operating principal” of the restaurant who will have full control over the day-to-day activities of the restaurant, including control over the standards of operation and financial performance. Franchisees must use the franchised restaurant solely for the operation of a Fridays restaurant. Franchisees must maintain sufficient inventories, adequately staff each shift with qualified employees and continuously operate the restaurant at its maximum capacity and efficiency for the minimum number of days and hours specified in the manuals or otherwise in writing.

Term of Agreement and Renewal: The initial franchise term is for 10 years from the date that the franchisee opens the restaurant. If franchisees meet certain qualifications, they can remain a franchisee for two successor terms of five years each.

Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee a franchisee’s note, lease or obligation.

Estimated Initial Investment

Name of Fee	Low	High
Initial Franchise Fee	$50,000	$50,000
Furniture, Decor, Equipment & Decor	$775,000	$1,000,000
Computer Systems	$73,500	$91,000
Opening Inventory	$35,000	$60,000
Hiring Expenses; Training	$65,000	$200,000
Liquor License	Varies
Building & Improvements	$1,400,000	$2,000,000
Site Improvements	$175,000	$500,000
Developmental Costs	$65,000	$100,000
Insurance (3 months)	$12,500	$25,000
Miscellaneous Costs	$10,000	$100,000
Additional Funds (3 months)	$60,000	$200,000
ESTIMATED TOTAL (for a 6,200 sq. ft. to 6,800 sq. ft. restaurant)	$2,721,000	$4,326,000

 
Other Fees

Type of Fee	Amount
Royalty Fee	4% of gross sales.
Advertising and Promotion Obligation (APO)	The franchisee’s APO will not exceed 5% of gross sales.
National Advertising Fund	Currently 1.5% of gross sales.
Digital Marketing Fee	Amount determined by the franchisor annually (currently 0% of gross sales).
Audit Fees	Deficiency in royalty fees, advertising contributions and other amounts owed, plus interest.
Collection Costs and Expenses	The franchisor’s costs and expenses.
Costs and Attorneys’ Fees	The franchisor’s costs and expenses.
Indemnification	The losses and expenses incurred by the franchisor and its affiliates.
Interest	The interest rate is the maximum rate permitted for indebtedness of this nature in the state in which the restaurant is located not to exceed 1.5% per month (or a portion of a month).
Late Fees	$500
Liquidated Damages - Breach of Covenants against Competition	The then-current initial franchise fee plus 8% of the gross sales of the competing restaurant business for two years.
Early Termination Damages – Franchise Agreement	Amount equal to the average monthly royalty fees and advertising fund contributions owed for the 36 months prior to the termination, multiplied by the lesser of 36 months or the number of months remaining in the term of the Franchise Agreement.
Early Termination Damages – Development Agreement	Amount equal to two times the average of the total annual royalty fees and advertising contributions owed under Franchise Agreements over the prior three year period multiplied by the number of restaurants that remain to be developed pursuant to the development schedule.
Manager Training - Management Skills Training (Leadership That Rocks)	$600 plus airfare and incidentals per management trainee.
Manager Training - Restaurant Management Essentials	$500 per management trainee if training in a company-owned restaurant.
Manager Transfer Fee	$25,000
Post-Termination or Post Expiration Expense	All amounts the franchisor may incur, currently estimate to be $1,000 to $25,000.
Replacement Restaurant Kitchen & Bar Equipment, Fixtures & Furniture and Purchasing Fees	Replacement restaurant kitchen & bar equipment, fixtures & furniture: total purchase amount as agreed plus 8% of the total purchase amount as purchasing fees to TGIF Inc. for acting as purchasing agent.
Reimbursement of Insurance Costs	The franchisor’s out-of-pocket costs of obtaining coverage.
Relocation	$5,000
Securities Offerings	$15,000
I.T. Service and Support Fee	$1,260 per month billed quarterly.
AirWatch	$65 one-time payment for each new or replacement mobile device followed by $27 annual support fee for each mobile device.
iPad Rental Fee for Yelp Waitlist	$21 per month.
Successor Fee	50% of the franchisor’s then-current initial franchise fee for the first successor term and 30% of its then-current initial franchise fee for the second successor term.
Supplier Inspection and Testing	Reasonable fee for inspection, including the actual cost of testing.
Supplier Payments	The franchisor’s costs in paying any supplier that the franchisee fails to pay.
Taxes	Assessed amount.
Training Fee – Fridays NSO Team	$78,000-$83,500
Transfer Fee	$5,000 or such greater amount as necessary to reimburse the franchisor for all out-of-pocket expenses associated with the transfer.
Background Investigation Fee (Transferees)	$10,000 maximum per entity and/or individual.
Guest Relations Program	$6 administrative fee per incident of guest complaint on a store level basis, excludes general inquiries.
Medallia Fee	$25 monthly usage fee.
Non-compliance Fee	1% of gross sales.
Royalty Increase Alternative for Remodel Default	2.5% of gross sales.

The above information has been compiled from the FDD of TGI Fridays. Year of FDD: 2024.

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