Smashburger
Smashburger offers hamburgers, sandwiches, salads, and other food items in franchised restaurants. Known for its smashed patties, the brand operates in the quick-service restaurant sector.
About Smashburger
Smashburger IP Holder LLC, doing business as Smashburger, is an American multinational fast-casual hamburger restaurant chain founded in Denver, Colorado. As of 2022, it has more than 227 corporate and franchise-owned restaurants in 35 U.S. states, the District of Columbia and 2 Canadian provinces.
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Smashburger franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of a Smashburger Restaurant ranges from $1,239,500 to $2,255,500. This includes the development fee which is between $41,500 and $71,500 paid to the franchisor or its affiliates [p.1].
What is the initial franchise fee?
The initial franchise fee is $40,000, which must be paid in one lump sum when signing the Franchise Agreement [p.13, p.112, p.19]. This fee is non-refundable and fully earned upon payment [p.112].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is 5.5% of weekly gross sales [p.112]. For the grand opening, you must spend at least $10,000 on a marketing program in addition to other advertising obligations [p.31], but this amount does not count towards your local marketing expenditure for such year or your Marketing Cap.
How long is the initial franchise agreement, and can I renew it?
This isn't specified in the excerpts. The provided FDD does not detail the duration of the initial franchise agreement or the renewal process beyond mentioning potential changes to the agreement terms [p.139] and allowing for modifications that may affect contributions like royalties and marketing funds.
Can I sell or transfer my franchise, and what does that require?
According to the FDD, you cannot transfer ownership of your franchise except for good cause as defined by the franchisor. Any transfer requires prior written approval from the franchisor [p.82]. This includes transfers by sale, gift, merger, or other disposition, and even transfers due to death, disability, divorce, or insolvency [p.82].
On what grounds can the franchisor terminate the agreement?
This isn't specified in the excerpts.
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 qualification. However, it emphasizes the necessity of maintaining sufficient working capital reserves at all times to comply with obligations under the franchise agreements [p.11, p.112, p.78]. If the franchisor's most recent financial statements are unaudited and show a net worth below $100,000, they may require escrow of initial investment funds until certain obligations are met [p.6]. This isn't specified in the excerpts.
Do I get an exclusive or protected territory?
No, you do not receive an exclusive or protected territory according to the excerpts. The FDD indicates that you may face competition from other franchisees, company-owned outlets, and competitive brands [p.36, p.34]. Additionally, there are no territorial protections provided for your restaurant [p.109], and any delivery or off-site service territories can be limited by the franchisor [p.37].
What training and ongoing support does the franchisor provide?
The franchisor provides initial grand opening guidance for the first two restaurants at no additional cost, sending a training team for the first or second restaurant and a lead trainer for the third or subsequent ones. For ongoing operations, revenues are generated primarily from royalty fees [p.189]. The franchisor may also send a lead trainer or a training team to assist with transfers and grand openings if deemed necessary, and the franchisee is responsible for reimbursing related costs [p.164, p.27, p.34]. This isn't specified in the excerpts for other forms of ongoing support beyond initial operations.
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 is not required to provide financial performance or earnings information, but if such information is provided, it must have a reasonable basis and can only be given under specific conditions outlined in Item 19 of the disclosure document [p.49]. The franchisor does not make any representations about future financial performance or past financial performance of company-owned or franchised outlets [p.49].
What am I restricted to selling, and where must I buy supplies?
You are required to sell only the products and services that the franchisor periodically specifies [p.121]. Additionally, you may have to purchase or lease items from the franchisor or a limited group of suppliers designated by them, which might be more expensive than other options [p.3].