Freddys
Freddys operates restaurants offering steakburgers, hot dogs, and frozen custard. Known for casual dining with a focus on frozen custard, it competes in the quick-service restaurant industry.
Freddys franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of a Freddy's Restaurant franchise ranges from $785,936 to $1,198,665 for an In-Line Restaurant, $1,277,598 to $2,497,566 for an End-Cap Restaurant, and $1,487,598 to $2,753,566 for a Standalone Restaurant. [p.1]
What is the initial franchise fee?
The initial franchise license fees are not specified as a fixed amount in the provided excerpts. However, it is mentioned that the initial development fee, which includes both initial and renewal franchise license fees, will generally be the sum of $15,000 times the number of restaurants to be established plus $20,000 for the first restaurant, payable upon signing of the Development Agreement [p.1].
What are the ongoing royalty and advertising fees?
Ongoing royalty fees are calculated as a percentage of franchised restaurant sales over the term of the franchise license agreement and represent sales-based royalties related to the Company's performance obligations. Advertising fees, also calculated as a percentage of sales, support marketing efforts that increase brand recognition for all Freddy's restaurants and are recognized as revenues when franchised restaurant sales occur [p.167].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement typically lasts for 15 years [p.192]. You can renew the agreement upon payment of renewal fees due before the expiration date, which generally occur every 15 years [p.3, p.192]. The terms of the renewed agreement may differ from the current one and could include higher rates for continuing fees that are not less favorable to you than those offered to new franchisees [p.97].
Can I sell or transfer my franchise, and what does that require?
According to the FDD, a franchisor can refuse to permit the transfer of ownership of a franchise except for good cause [p.240]. Good cause includes but is not limited to unspecified reasons, and this does not prevent the franchisor from exercising a right of first refusal to purchase the franchise.
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on good cause, which includes the failure of the franchisee to comply with any lawful provision of the License Agreement and to cure such failure after being given written notice and a reasonable opportunity to cure, not exceeding 30 days [p.240]. Additionally, RCW 19.100.180 and potentially court decisions may supersede the termination terms in your relationship with the franchisor [p.246].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The FDD does not provide specific details on net worth or liquid capital requirements for franchisees. However, it mentions that potential transferees must demonstrate a good moral character, business reputation, financial capacity, and credit rating [p.126], and that you must have adequate financial resources and capital to operate the Restaurant [p.39].
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory [p.36]. You have a protected territory within your Assigned Area/Assigned Territory, but you may face competition from other franchisees, outlets owned by the company, and other channels of distribution or competitive brands controlled by them [p.36].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training for one general manager and one assistant manager, as well as up to three additional personnel through their 'Level 2' and 'Level 1' training programs. Ongoing services include oversight to maintain standards of operation, compliance with the system and quality, cleanliness, and service requirements. The franchisor also has the right to modify authorized products or services, equipment requirements, quality standards, and operating procedures as needed. [p.103]
How many franchised outlets are there, and how many have closed or been terminated?
As of December 25, 2024, there were 514 franchised restaurants. However, the number of franchised outlets that have closed or been terminated during the most recently completed fiscal year is not specified in the excerpts provided. [p.58] mentions a list of franchisees with transferred, terminated, canceled, or otherwise ceased operations, but the specific numbers are not given.
Does the franchisor share any financial performance or earnings information?
The franchisor, Freddy's, L.L.C., does not make any financial performance representations except for providing actual records of an existing outlet if a prospective franchisee is purchasing one. The financial performance information provided may be based on royalty reports and other financial reports from franchisees, but the company has not audited or verified this information's accuracy [p.50, p.106].
What am I restricted to selling, and where must I buy supplies?
You are required to offer all products and services designated by the franchisor. You must purchase or lease most food, beverage, paper goods, inventory, computer hardware, and software meeting standards established by the franchisor. These items should comply with brand names and suppliers specified by them, along with minimum quality standards. This information is detailed in [p.21] of the FDD.