Sbarro
Sbarro offers Italian-style restaurants in various locations like shopping centers and college campuses. Known for its pizza and pasta dishes, Sbarro franchises provide an established brand in the casual dining restaurant industry.
About Sbarro
Sbarro, LLC is an American fast food restaurant that specializes in New York–style pizza sold by the slice and other Italian-American cuisine. In 2011, the company was ranked 15th in foreign sales among U.S.-based quick-serve and fast-casual companies by QSR Magazine. In 2008, Sbarro was rated the No. 1 Quick Service Restaurant in the Italian segment by Entrepreneur magazine. However, diners and critics have criticized the quality of the food, with some suggesting a link between food quality and the company's two bankruptcies. Sbarro has over 600 locations in 28 countries. Sbarro stores are located in shopping malls, department stores, airports, service areas, and college campuses, as well as in the Pentagon, American naval bases, and casinos.
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Sbarro franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of a Conversion Restaurant is between $99,900 and $394,500. For a new Sbarro Restaurant, the total initial investment ranges from $211,900 to $931,000 for a Traditional location, and from $310,150 (plus percentage of gross sales) to $1,006,000 for a Non-Traditional location. [p.1]
What is the initial franchise fee?
The initial franchise fee varies depending on the type of location and can range from $20,000 to $35,000. For traditional locations like shopping malls or airports, it generally starts at $30,000. Non-traditional locations, such as convenience store kiosks, also fall within this range but are determined on a case-by-case basis considering various factors. This fee is non-refundable and is part of the general operating funds [p.323].
What are the ongoing royalty and advertising fees?
Ongoing royalty fees are calculated as a percentage of gross revenues derived by the restaurant, specifically 1.5% based on the provided excerpt [p.80]. These fees are paid weekly and are recognized by the company at a point in time in the month they are earned based on franchisee sales [p.289].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement typically lasts for 10 years [p.290]. According to the FDD, this term does not specify an automatic renewal option; however, the franchisee has the right to renew the lease or sublease for a period at least equal to the term of the franchise agreement, either through an initial term of that length or by exercising rights to renew [p.66].
Can I sell or transfer my franchise, and what does that require?
According to [p.90], you must give written notice to SBARRO if you intend to sell or otherwise transfer your franchise agreement and the granted franchise. SBARRO will have a first option to purchase the franchise within 30 days of receiving your notice, with this option lasting for up to 90 days in total. [p.6] also states that transfers are generally permitted only for good cause, as determined by the franchisor.
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement if there is a failure by the franchisee to comply with any lawful provision of the franchise agreement and such failure is not cured within a reasonable period, which cannot exceed 30 days [p.6]. Additionally, the franchisor may terminate the agreement on any grounds available by law [p.323].
What financial requirements — net worth and liquid capital — do I need to qualify?
The FDD does not specify exact net worth or liquid capital requirements for franchisees. However, if the franchisor's most recent financial statements are unaudited and show a net worth of less than $100,000.00, the franchisee may request escrow of initial investments until obligations are fulfilled [p.7]. Additionally, Sbarro LLC requires an attestation regarding the accuracy of financial data from the franchisor [p.176], and considers highly liquid investments with a three-month maturity or less as cash equivalents [p.254]. This isn't specified in the excerpts for exact net worth or liquid capital requirements for franchisees.
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory [p.40]. Sbarro retains the right to establish other units that may compete with your restaurant in any degree of proximity to your location [p.39]. This isn't specified in the excerpts for development agreements either.
What training and ongoing support does the franchisor provide?
The franchisor provides mandatory training programs that are conducted at an approved Sbarro restaurant, typically overseen by experienced trainers with an average of 13 years of experience. Training includes both general restaurant industry training and company-specific training, which is considered highly interrelated to the brand [p.34, p.290]. Ongoing support services include the use of intellectual property such as the name, recipes, and vendor relationships, along with marketing and advertising support from the Company [p.260].
How many franchised outlets are there, and how many have closed or been terminated?
As of December 31, 2023, there were 571 franchised units. The FDD does not specify the number of closed or terminated franchises; it only mentions that four company-owned locations were discontinued during the 2024 calendar year [p.48].
Does the franchisor share any financial performance or earnings information?
The franchisor does not make any financial performance representations other than historical ones. However, if you are purchasing an existing outlet, they may provide actual records of that outlet's performance [p.50]. The franchisor can also provide financial performance information based on the operating results of their company locations under certain conditions [p.48], but this does not include the results from franchised locations due to non-enforcement of the right to receive audited financial information from franchisees [p.48].
What am I restricted to selling, and where must I buy supplies?
You are restricted to selling only the foods, beverages, menu items, and other products designated and authorized by Sbarro as outlined in the Manuals and lease. You may not sell any goods not specifically approved in writing by Sbarro [p.44]. Additionally, you must purchase all food and beverage ingredients, and other required products and services from approved suppliers designated by Sbarro, which conform to their specifications [p.26].