Zaxbys
Zaxbys offers quick casual dining with an upscale menu focusing on chicken fingers, buffalo wings, and unique sauces. Known for its flavorful sauces and variety of chicken-based dishes, Zaxbys operates in the quick-service restaurant sector.
About Zaxbys
Zaxby's SPE Franchisor LLC, doing business as Zaxbys, is an American chain of fast casual restaurants offering chicken fingers, sandwiches, chicken wings, appetizers, and salads. The chain operates primarily in the Southern United States and has more than 900 locations. Most Zaxbys restaurants are owned and operated through franchising.
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Zaxbys franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of a Zaxbys Restaurant ranges from $1,445,000 to $3,810,500. This includes a mandatory payment of $40,200 to $45,000 to the franchisor or its affiliates and additional fees if developing more than one restaurant. The exact amount can vary based on several factors such as location, real estate costs, and whether the landlord pays for leasehold improvements [p.1, p.27].
What is the initial franchise fee?
The initial franchise fee is $35,000. This fee is due upon execution of the franchise agreement and is generally nonrefundable [p.14, p.78, p.170, p.188].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee starts at 2% of gross sales for the first year, increases to 4% in the second year, and remains at 6% thereafter [p.331]. Advertising and conference cooperative contributions are required based on a percentage of restaurant sales, but these fees are not separately recognized from the royalty payments; instead, they are presented gross in financial statements [p.189].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement is effective and binding for an initial term of ten years from the opening of the restaurant [p.78]. You have the right to renew this agreement for an additional ten-year term at a cost of 50% of the current franchise fee at the renewal date, provided you meet all conditions set forth in the agreement [p.78].
Can I sell or transfer my franchise, and what does that require?
According to the FDD, you generally cannot sell or transfer your ownership of the franchise without good cause as defined by the franchisor. However, the franchisor may have a right of first refusal to purchase the franchise instead [p.285]. This isn't specified in the excerpts for all conditions and procedures related to transferring your franchise.
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement for good cause, which includes the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice and a reasonable opportunity (no more than 30 days) to do so [p.285]. Additionally, termination may occur if there is a default under other related agreements that would permit the other party to terminate those agreements [p.111].
What financial requirements — net worth and liquid capital — do I need to qualify?
The franchisee must have sufficient equity capital to operate the Restaurant [p.105], but specific net worth or liquid capital figures are not provided in these excerpts. This isn't specified in the excerpts.
Do I get an exclusive or protected territory?
You will have limited protected rights within a designated Protected Area around your Restaurant, but this is not an exclusive territory. The size of the Protected Area can be defined by the franchisor in their discretion and may be reduced if you default under the Franchise Agreement [p.47, p.48]. This isn't specified in the excerpts for Developers [p.50].
What training and ongoing support does the franchisor provide?
The franchisor provides periodic additional training programs at their discretion [p.87]. These can be conducted via various means such as off-site locations or teleconferencing [p.87]. Additionally, the franchisor offers support for a digital platform used by franchisees for online ordering management [p.43]. ZFL (presumably the franchisor) will provide required support and services to franchisees under a management agreement [p.69], though it is not a party to the Franchise Agreement or Development Agreement with franchisees [p.69]. Overall, while specific details of ongoing training fees are provided for experienced franchisees [p.45], general provisions regarding training and support are outlined in these excerpts.
How many franchised outlets are there, and how many have closed or been terminated?
As of December 29, 2024, there were 826 Franchised Restaurants out of a total of 969 open and operating Restaurants [p.59]. This means that 143 Restaurants were not franchised (owned or controlled by the company's affiliate) and 13 Franchised Restaurants had closed for more than one month during the specified period, but their exact number of closures or terminations is not detailed in these excerpts [p.59].
Does the franchisor share any financial performance or earnings information?
The franchisor may provide actual records of an existing outlet if you are considering purchasing it. However, beyond this, the franchisor does not make any financial performance representations and does not authorize its employees or representatives to make such representations either orally or in writing [p.63]. If you receive any other financial performance information or projections of your future income, you should report it to the specified contacts [p.63].
What am I restricted to selling, and where must I buy supplies?
You are restricted to offering only the products and services that the franchisor has approved in writing. You must also offer all mandatory products and services as specified in the Manual. Additionally, you must purchase or lease certain items from suppliers approved by the franchisor, including inventory items, ingredients, packaging, equipment, supplies, signage, uniforms, smallwares, interior décor, advertising materials, and more [p.28-29]. This includes purchasing or licensing equipment and software used in the Technology System from designated or approved suppliers as described in Item 11 of the FDD [p.28] and [p.3].