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Howard Johnson Franchise ProfileRestaurant Franchises > Full-Service Restaurants |
Initial Investment Overview for Howard Johnson Franchise
To open a Howard Johnson franchise, potential franchisees should be prepared for a significant financial commitment. The initial investment ranges from $275,644 to $9,866,535, which includes a franchise fee of $35,000. Franchisees should also anticipate ongoing costs, including a royalty fee of 4.5% and a marketing fee of 4%. The cash required to start a franchise can vary between $275,644 and $2,921,704, with a net worth requirement of $500,000 to $750,000.
Revenue Potential of Howard Johnson Units
Howard Johnson franchises can generate varying annual revenues, with the average unit earning approximately $1,300,000. However, revenues can range significantly, from a low of $23,000 to a high of $1,500,000 per unit. Understanding this revenue potential is crucial for franchisees to assess the viability of their investment and plan for operational expenses. The median annual revenue stands at $37,000, highlighting the importance of location and management in achieving financial success.
Franchise Growth and Market Presence
The Howard Johnson franchise has shown a steady presence in the market with a total of 188 franchised units in 2018, which decreased to 168 by 2020. This trend indicates a need for potential franchisees to carefully evaluate market conditions and competition in their desired locations. The absence of corporate-owned units suggests a focus on franchising, which may offer more opportunities for individual investors seeking to enter the hospitality sector.
Operational Insights and Financial Management
Effective financial management is essential for Howard Johnson franchisees to ensure profitability. Average operating expenses are reported at $1,346,000, which exceeds revenue by 3.5%, indicating the need for careful cost control. Franchisees should be aware of key expenses, such as rent and utilities ($70,000), marketing and advertising ($20,000), and salaries ($40,000). Understanding these operational costs is vital for achieving the average EBITDA of $327,000, which represents 25.2% of revenue.
Howard Johnson 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:
Howard Johnson Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2018 | 2019 | 2020 |
|---|---|---|---|
| Total Units | 188 | 174 | 168 |
| Net Change YoY | -14 | -6 | |
| Franchised Units | 188 | 174 | 168 |
| Net Change YoY | -14 | -6 | |
| Corporate Units | 0 | 0 | 0 |
| Net Change YoY |
Investment Overview
The Howard Johnson franchise presents a diverse investment landscape, with initial costs ranging from $275,644 to $9,866,535. The franchise fee is set at $35,000, and franchisees can expect ongoing royalty fees of 4.5% and a marketing fee of 4%. To qualify, potential franchisees need a cash requirement between $275,644 and $2,921,704, along with a net worth ranging from $500,000 to $750,000.
Revenue Potential
Howard Johnson franchise units show varying revenue performance, with average annual revenue at approximately $70,077 and a median of $37,000. The lowest annual revenue reported is $23,000, while some units achieve as much as $1,500,000. This range highlights the potential for significant earnings depending on location and management effectiveness.
Franchise Growth
The Howard Johnson brand has experienced a gradual decline in franchised units over recent years, with 188 units in 2018, dropping to 168 by 2020. This trend indicates a need for strategic growth initiatives to revitalize the brand and attract new franchisees, ensuring long-term sustainability in the competitive hospitality market.
Operational Metrics
Franchisees can expect a breakeven time of approximately 24 months, with an investment payback period estimated at 36 months. These metrics are crucial for potential investors as they provide insights into the timeline for recovering the initial investment and achieving profitability.
Average Expenses
The average running expenses for a Howard Johnson franchise are around $275,000 annually. Key expense categories include rent and utilities ($70,000), marketing and advertising ($20,000), and management salaries ($40,000). Understanding these costs is essential for franchisees to manage their financial performance effectively.
Company Background
Howard Johnson has a rich history in the hospitality industry, known for its family-friendly accommodations and dining options. Founded in 1925, the brand has evolved over the decades, focusing on providing value and comfort to travelers. Today, Howard Johnson continues to leverage its legacy while adapting to modern hospitality trends, making it a recognizable name in the franchise market.
Frequently Asked Questions
The initial investment for a Howard Johnson franchise ranges from $275,644 to $9,866,535, depending on various factors such as location and facility size.