Texas Roadhouse
Texas Roadhouse offers steaks, ribs, and full bar service in casual dining restaurants. Known for its specialty menu items, it operates in the American cuisine restaurant franchise sector.
Texas Roadhouse franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of a Texas Roadhouse franchised business is between $5,396,500 and $7,901,500 for a new Restaurant and $3,894,500 to $6,388,500 for a renovation (exclusive of land costs). This includes the $40,000 franchise fee and approximately $90,000 in other amounts payable to the franchisor. [p.1]
What is the initial franchise fee?
The initial franchise fee is $40,000, paid in two installments: $15,000 upon signing the Franchise Agreement and the remaining $25,000 four weeks before the Restaurant opens [p.11, p.108].
What are the ongoing royalty and advertising fees?
The franchisee must pay a continuing royalty fee of four percent (4%) of Royalty Sales each month [p.108]. Additionally, the franchisee may be required to contribute up to 2.5% of Royalty Sales to the Marketing Fund at Franchisor's discretion [p.35], though initially it is set at 0.3% of Royalty Sales [p.35].
How long is the initial franchise agreement, and can I renew it?
This isn't specified in the excerpts. The FDD excerpts do not provide information about the duration of the initial franchise agreement or the renewal terms beyond stating conditions under which a transferee might be required to sign a new agreement [p.139].
Can I sell or transfer my franchise, and what does that require?
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, such as 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 to do so [p.67(c)]. Additionally, the franchisor may have grounds to refuse to renew the franchise without fairly compensating the franchisee under certain conditions [p.67(d)-(f)], but these provisions are subject to state laws like Virginia's Retail Franchising Act which requires 'reasonable cause' for cancellation [p.66].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The FDD does discuss financial statements and working capital requirements, but it doesn't provide specific details on net worth or liquid capital needed for franchisee qualification. [p.112] mentions that Franchisees must maintain sufficient working capital to fulfill their obligations under the agreement, but exact figures are not provided.
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory [p.38]. Your assigned area will not exceed a ten-mile radius and is subject to competition from other Texas Roadhouse Restaurants, Bubba's, Jaggers, and potentially future channels of distribution controlled by the company [p.40, p.103].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training for the Operating Principal and up to five Managers at no additional cost for the first restaurant, unless an affiliated entity has previously established a Texas Roadhouse Restaurant, in which case a fee of $3,500 per person may apply. Initial training includes general support from experienced trainers with 5 to 20 years of experience. Ongoing support and additional training programs and seminars are also provided, though fees may be charged for these services [p.11, p.34].
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 may provide actual records of an existing outlet if purchased, but does not make representations about future financial performance. Additionally, the franchisor is required to disclose certain financial statements and working capital requirements [p.N]. This isn't specified in the excerpts for general financial performance or earnings projections.
What am I restricted to selling, and where must I buy supplies?
You are generally restricted to selling items that conform to the franchisor's standards and specifications. According to [p.46], you must purchase certain merchandise like pre-packaged food products and Texas Roadhouse memorabilia bearing the Marks from the franchisor or a source they designate or approve. Additionally, you must comply with the franchisor's methods, standards, and specifications for purchasing all other items used or sold at the restaurant ([p.45]).