Cheba Hut
Cheba Hut offers quick-service sandwich restaurants with toasted submarine sandwiches, original sauces, salads, and more in a casual atmosphere. Known for its distinctive menu items and franchise investment opportunities, Cheba Hut operates in the fast-casual food service industry.
About Cheba Hut
Cheba Hut Toasted Subs is a cannabis-themed restaurant franchise-chain in the United States.
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Cheba Hut franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment to open one Cheba Hut franchised business ranges between $631,150 and $2,086,100. This includes an initial franchise fee of $50,000, costs for décor pieces ranging from $420 to $4,200, and other fees as specified in the document [p.70, p.12].
What is the initial franchise fee?
The initial franchise fee is $130,000 and is fully earned upon receipt and non-refundable. This fee applies whether opening a single franchise or up to three franchises under a Multi-3 Franchise, with no additional Initial Franchise Fee required for opening additional Cheba Hut Businesses under the same agreement [p.70, p.179]. However, in Virginia, the payment of the initial franchise fee is deferred until the franchisor has completed its pre-opening obligations [p.156].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is 5% of Net Sales paid weekly on Wednesday of each week. Additionally, a 2% contribution (which can be raised to up to 4.20%) of weekly Net Sales must be made to the Brand Fund for advertising and promotional activities [p.70, p.63].
How long is the initial franchise agreement, and can I renew it?
The initial term of the franchise agreement is ten years [p.56]. You may be eligible for one successor franchise agreement upon meeting the conditions specified in the FDD, which would also have a term of ten years [p.56]. However, you will need to meet certain conditions and there is no guarantee that another franchise agreement will be granted by the franchisor in their sole discretion [p.56].
Can I sell or transfer my franchise, and what does that require?
According to the FDD, you must obtain permission from the franchisor before transferring ownership of your franchise or entering into a successor franchise agreement [p.5]. The franchisor can refuse to permit such transfers except for good cause [p.5], which is defined but not fully detailed in the provided excerpts.
On what grounds can the franchisor terminate the agreement?
According to [p.153], the franchisor may terminate the agreement on any grounds available by law. However, [p.156] notes that terminating a franchise without reasonable cause is unlawful under Virginia's Retail Franchising Act, and provisions for termination must comply with this act or Virginia laws.
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The provided FDD does not detail specific net worth or liquid capital requirements for franchisees to qualify. However, it does state that franchisees must maintain sufficient working capital to operate the Cheba Hut Restaurant and fulfill their obligations under the Franchise Agreement [p.62].
Do I get an exclusive or protected territory?
The exclusivity of the territory depends on the location of your restaurant. If it is not in a metropolitan area or a non-traditional location, you will receive an exclusive territory [p.34]. However, if your restaurant is in a metropolitan area or a non-traditional location and exclusivity is not granted, you may face competition from other franchisees or outlets owned by the company [p.142].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training at no cost for up to three people, which must be completed before opening the Cheba Hut Business. Additional training may be required if a new Managing Operator or Designated Manager is appointed, with fees of $3,500 plus expenses per additional person [p.31]. Periodically, the franchisor may require attendance at system-wide refresher or additional training courses, some of which may be optional while others are mandatory [p.33]. There is also an annual meeting requirement where attendees must pay a convention fee [p.33].
How many franchised outlets are there, and how many have closed or been terminated?
As of December 31, 2024, there were 75 Cheba Hut Businesses in total, consisting of two affiliate-owned locations and 73 franchised locations. This isn't specified in the excerpts regarding the number of closed or terminated outlets.
Does the franchisor share any financial performance or earnings information?
The franchisor does not make any financial performance representations other than the ones provided in Item 19 [p.47]. However, if you are purchasing an existing outlet, the franchisor may provide actual records of that outlet's performance [p.47]. Additionally, the franchisor requires you to report any other financial performance information or projections of your future income and advises conducting an independent investigation of costs and expenses [p.47, p.143].
What am I restricted to selling, and where must I buy supplies?
You may be required to purchase certain items from the franchisor or a limited group of designated suppliers, which could result in higher costs [p.3]. Additionally, you are prohibited from operating a similar business during the term of the franchise and must purchase specific décor pieces from the franchisor and its affiliate prior to opening [p.11]. The franchisor also restricts your ability to engage in certain transactions that might compete with Cheba Hut Businesses [p.55], and you are restricted from selling products not aligned with the Cheba Hut system during the term of the franchise [p.35].