Fosters Freeze
Fosters Freeze offers soft serve confections and other food items in various settings, from stand-alone restaurants to co-located premises. Known for its frozen treats, Fosters Freeze operates in the quick-service restaurant sector.
About Fosters Freeze
Fosters Freeze is an American chain of fast-food restaurants, primarily in California. Its first location, on La Brea Avenue in Inglewood, California, was opened by George Foster in 1946 and is still operating.
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Fosters Freeze franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of a single Fosters Freeze franchised business can vary depending on the type of location. For a stand-alone restaurant, the total investment is between $611,500 and $1,009,000 [p.2]. For a location serving only soft serve confections, it is between $178,000 and $331,500 [p.2]. For a co-located premises serving food and soft serve confections, the total investment is between $329,250 and $658,500 [p.2].
What is the initial franchise fee?
The initial franchise fee is non-refundable and fully earned immediately upon receipt. The amount varies depending on whether you are purchasing a single franchise or a Multi-3/Multi-5 franchise; for a single franchise, it ranges between $25,000 and $45,000, while the Initial Franchise Fee for a Multi-3 franchise is $90,000 and for a Multi-5 franchise is $150,000. This fee covers pre-opening assistance and offsets some of the franchisor's recruitment expenses [p.14, p.25].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is 4% of Gross Sales for Stand-Alone Restaurants or 8% for Confections and Co-Located Restaurants [p.108]. The advertising fees are not specified as a fixed amount but include contributions to the Brand Fund, which can be used for various marketing activities at the company's discretion [p.33, p.101].
How long is the initial franchise agreement, and can I renew it?
The initial term of the franchise agreement is ten years [p.93]. You may enter into a maximum of one successor franchise agreement if you meet the conditions for renewal specified in the FDD, with each successor term also being ten years [p.93].
Can I sell or transfer my franchise, and what does that require?
You can sell or transfer your franchise, but it requires approval from the franchisor [p.7]. Additionally, you must pay a transfer fee equal to 35% of the current initial franchise fee, with a minimum of $15,750 if franchises are not being offered for sale at that time [p.117].
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on any grounds available by law [p.164]. However, pursuant to Virginia Retail Franchising Act and Virginia laws, terminating a franchise without reasonable cause is unlawful [p.167]. Good cause for termination includes failure of the franchisee to comply with lawful provisions of the franchise agreement and not curing such failure after being given notice and a reasonable opportunity to cure [p.7].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts.
Do I get an exclusive or protected territory?
For a Co-Located Restaurant or Confections Restaurant, you do not receive any protected or exclusive territory [p.93, p.196]. For a Stand Alone Restaurant, you will receive a non-exclusive territory ('Protected Area'), but this does not provide exclusivity and you may still face competition from other franchisees or outlets owned by the company [p.38, p.40].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training at no cost for up to two people, one of which must be an operating principal, before opening a Fosters Freeze Business. This training can be held in California or Georgia, their training center in Salinas, California, or other locations designated by them [p.26]. For additional trainees beyond the initial two, there is a $350 per day fee for each extra person [p.36]. The franchisor also offers opening assistance for up to seven days before and after the restaurant opens, sending one to three trainers depending on the size of the restaurant [p.95]. Ongoing training for new hires and refresher courses may be provided at the franchisee's request, with potential additional fees [p.32].
How many franchised outlets are there, and how many have closed or been terminated?
As of December 31, 2023, there were 61 franchised Fosters Freeze Businesses. This number includes 58 Stand Alone Restaurants, two Confections Restaurants, and one Co-Located Restaurant. The excerpts do not specify the exact number of outlets that have closed or been terminated, only mentioning that some franchisees may have had their franchises terminated, cancelled, or not renewed during the one-year period ending December 31, 2022 [p.49].
Does the franchisor share any financial performance or earnings information?
Yes, the franchisor shares historical financial performance representation for certain outlets. Specifically, it provides this information for eight Stand Alone Restaurants and one Co-Located Restaurant that have been in operation for at least one year as of December 31, 2023, covering the years 2017 through 2023 [p.49]. This information is provided based on a reasonable basis and can be supplemented with actual records if requested [p.50].
What am I restricted to selling, and where must I buy supplies?
You are restricted to selling only those products and services authorized by the franchisor, which may differ based on the type of franchise you purchase and can vary depending on factors such as location. You must follow specific policies and procedures for what you sell. Regarding supplies, you must purchase or lease all required items from suppliers specified in the Brand Standards Manual, with some supplies potentially limited to being purchased only from designated or approved suppliers (which may include the franchisor or its affiliates). [p.45, p.104]