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Fatburger Franchise ProfileRestaurant Franchises > Quick-Service Restaurants |
What is the Initial Investment Required for a Fatburger Franchise?
To start a Fatburger franchise, the initial investment ranges from $508,600 to $1,694,900. This includes a franchise fee of $50,000. Additionally, franchisees should be prepared for ongoing fees, including a 6% royalty fee and a 3% marketing fee. It's essential to have cash reserves between $150,000 and $600,000 to cover initial expenses and ensure smooth operations during the startup phase.
What Are the Financial Performance Metrics for a Fatburger Franchise?
Fatburger franchises have an average annual revenue of approximately $1,216,850, with a median revenue of $1,080,146 per unit. The lowest revenue recorded is $437,166, while the highest can reach up to $2,442,676. Franchisees can expect to break even within 12 months and achieve a payback on their investment in about 24 months, making it a potentially lucrative opportunity.
What Are the Average Running Expenses for a Fatburger Franchise?
Operating a Fatburger franchise involves various annual expenses, totaling around $171,500. Key costs include insurance and bonds ($10,000), rent ($12,000), and miscellaneous expenses such as legal and accounting fees ($19,500). Notably, liquor licenses and fees can be significant at $40,000. Proper budgeting for these expenses is crucial for maintaining profitability.
How Many Units Does Fatburger Currently Operate?
As of 2022, Fatburger operates a total of 102 franchised units, with steady growth observed over the years: 91 units in 2020, 99 in 2021, and 102 in 2022. Notably, there are no corporate-owned units, indicating a strong focus on franchising as the primary growth strategy. This trend suggests a robust franchise model that may appeal to aspiring entrepreneurs.
Fatburger Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Fatburger Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2020 | 2021 | 2022 |
|---|---|---|---|
| Total Units | 91 | 99 | 102 |
| Net Change YoY | 8 | 3 | |
| Franchised Units | 91 | 99 | 102 |
| Net Change YoY | 8 | 3 | |
| Corporate Units | 0 | 0 | 0 |
| Net Change YoY | 0 | 0 |
Investment Overview
The initial investment for a Fatburger franchise ranges from $508,600 to $1,694,900, making it essential for potential franchisees to assess their financial readiness. The initial franchise fee is set at $50,000, with ongoing royalty fees of 6% and a marketing fee of 3%. Franchisees should prepare for a cash requirement of $150,000 to $600,000, alongside a net worth requirement of $500,000 to $1,000,000 to ensure they can support their business operations effectively.
Revenue Potential
Fatburger franchises have demonstrated strong revenue potential, with an average annual revenue of $1,216,850 per unit. The median annual revenue stands at $1,080,146, while the range of annual revenue varies significantly, from a low of $437,166 to a high of $2,442,676. This variance highlights the importance of location and management in determining financial success within the franchise model.
Operational Metrics
Franchisees can expect a breakeven time of approximately 12 months, allowing for a relatively quick return on investment. The investment payback period is estimated at 24 months, indicating the potential for profitability within the first two years of operation. Effective management practices and adherence to franchise guidelines will be crucial in achieving these financial milestones.
Franchise Growth
Fatburger has experienced steady growth in its franchise network, increasing from 91 franchised units in 2020 to 102 units by 2022. This growth trend indicates a solid demand for the brand and suggests that franchisees can benefit from being part of an expanding network. The absence of corporate-owned units emphasizes the brand's focus on franchising as its primary growth strategy.
Cost Structure
The average cost of goods sold (COGS) for a Fatburger franchise is approximately $359,100, which accounts for 29.53% of total revenue. Operating expenses average around $432,012, representing 35.50% of revenue. Understanding this cost structure is vital for franchisees as it impacts overall profitability and informs budgeting and financial planning strategies.
Support and Training
Fatburger provides comprehensive support and training for franchisees, which is essential for operational success. Initial training costs are estimated at $48,750, covering various aspects of running the franchise, from food preparation to customer service. Ongoing support helps franchisees navigate challenges and optimize their business operations, contributing to long-term success within the Fatburger system.
Frequently Asked Questions
The initial investment for a Fatburger franchise ranges from $508,600 to $1,694,900. This includes the franchise fee, equipment, and other startup costs.