Five Guys
Five Guys offers fast casual restaurants specializing in fresh burgers and fries. Known for high-quality ingredients and customer satisfaction, it operates in the quick-service restaurant sector.
About Five Guys
Five Guys Enterprises, LLC is an American multinational fast food chain focused on hamburgers, hot dogs, and french fries. It is headquartered in Alexandria, Virginia.
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Five Guys franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to establish one FIVE GUYS ® restaurant ranges from $1,027,850 to $1,500,750. This includes a Development Fee of $50,000 per restaurant (with a higher fee for locations in Alaska, Hawaii, or Puerto Rico) and other costs such as leasehold improvements, licenses, and utilities [p.1, p.22].
What is the initial franchise fee?
The initial franchise fee is an upfront fee charged to franchisees to open franchised restaurants [p.84]. This fee is recorded as deferred revenue when received and recognized over the contractual term of each respective franchise agreement, upon the store's opening [p.84].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is six percent (6%) of the Restaurant's 'Gross Sales' each week, due by electronic funds transfer on or before Wednesday following the end of each week [p.166]. Additionally, Franchisee must spend not less than two percent (2%) of the Gross Sales annually on advertising for the Restaurant in its local area ('Local Advertising') [p.176].
How long is the initial franchise agreement, and can I renew it?
This isn't specified in the excerpts.
Can I sell or transfer my franchise, and what does that require?
According to the FDD, you cannot freely transfer ownership of your franchise without the franchisor's permission, except for good cause. Good cause includes but is not limited to specific reasons determined by the franchisor [p.5(g)]. This isn't specified in the excerpts.
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement for good cause, which includes the failure of the franchisee to comply with any lawful provision of the franchise agreement and failing to cure such failure after being given written notice and a reasonable opportunity (no more than 30 days) to do so [p.5].
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 require franchisees to maintain sufficient working capital to fulfill their obligations under the agreement [p.169].
Do I get an exclusive or protected territory?
Yes, you generally get an exclusive territory. According to [p.40], your Primary Area of Responsibility will be described in Attachment A and is your exclusive territory, typically consisting of contiguous property controlled by the landlord where the Restaurant is located. However, this exclusivity may not apply if your Primary Area of Responsibility is limited only to the specific physical space occupied by the Restaurant, as mentioned in [p.41].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training for the Operating Principal, general manager, and one assistant manager at no additional charge. This training typically lasts about 2 weeks but can extend up to 6 weeks. Additional personnel training may cost $1,500 per person. The franchisor also offers an internet-based training program that may be required or offered alongside training videos [p.34, p.45]. Furthermore, the franchisor's parent company guarantees its obligations under the management agreement with FGE, ensuring ongoing support and services to franchisees [p.64].
How many franchised outlets are there, and how many have closed or been terminated?
This isn't specified in the excerpts.
Does the franchisor share any financial performance or earnings information?
The franchisor can provide actual records of an existing outlet if you are considering purchasing it, but they do not make any representations about a franchisee's future financial performance or the past performance of company-owned or franchised outlets. Additionally, they do not authorize their employees or representatives to make such representations either orally or in writing [p.54].
What am I restricted to selling, and where must I buy supplies?
You are required to sell only the menu items, food products, and other products and services that the franchisor has expressly approved in writing. You must obtain all food and beverage items, ingredients, supplies, materials, fixtures, furnishings, equipment, and other products used or offered for sale at the Restaurant from suppliers who demonstrate the ability to meet the franchisor's then-current standards and specifications [p.46, p.23]. These suppliers are typically designated by the franchisor [p.23], and you must obtain written approval before purchasing from any unapproved supplier [p.23].