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Ramada Franchise ProfileRestaurant Franchises > Full-Service Restaurants |
What Are the Initial Investment Requirements for a Ramada Franchise?
To open a Ramada franchise, you will need to consider a range of initial investment costs. The franchise fee is set at $35,000, while total initial investments can vary significantly, ranging from $197,550 to as high as $16,911,356. It's crucial to have cash on hand between $197,550 and $4,823,330, along with a net worth requirement of $500,000 to $1,000,000. These figures highlight the diverse opportunities available within the Ramada brand, accommodating different levels of investment and business aspirations.
What Are the Ongoing Fees and Financial Metrics for Ramada Franchisees?
Ramada franchisees are subject to ongoing financial obligations, including a royalty fee of 4.5% of revenue and a marketing fee of 4%. Understanding these fees is essential for managing your budget effectively. On average, Ramada units generate annual revenues of approximately $1,565,000, with a gross profit margin of 79.6%. This financial performance indicates the potential for profitability, but it's vital to keep an eye on operating expenses, which typically account for about 51.1% of revenue.
How Long Does It Take to Break Even with a Ramada Franchise?
The breakeven time for a Ramada franchise is approximately 18 months, which is relatively quick compared to other franchise opportunities. This means that after this period, you could start seeing a return on your investment. Additionally, the investment payback period is around 24 months, allowing franchisees to recoup their initial investment within two years if the business performs well. These timelines can be attractive for aspiring entrepreneurs looking for a faster route to profitability.
What Is the Current Status of Ramada Franchise Units?
As of recent years, Ramada has shown a consistent presence in the franchise market, with 335 franchised units in 2019, decreasing slightly to 321 in 2020, and 317 in 2021. Notably, there are no corporate-owned units, indicating a strong focus on franchising as the primary growth model. This trend may suggest stability within the brand, but potential franchisees should carefully consider market conditions and competition in their desired locations before committing.
Ramada 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:
Ramada Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2019 | 2020 | 2021 |
|---|---|---|---|
| Total Units | 335 | 321 | 317 |
| Net Change YoY | -14 | -4 | |
| Franchised Units | 335 | 321 | 317 |
| Net Change YoY | -14 | -4 | |
| Corporate Units | 0 | 0 | 0 |
| Net Change YoY |
Initial Investment
The Ramada franchise offers a range of initial investment options, with costs ranging from $197,550 to $16,911,356. This flexibility allows potential franchisees to choose a model that aligns with their financial capacity and business goals. The initial franchise fee is set at $35,000, making it accessible for those looking to enter the hospitality industry.
Ongoing Fees
Franchisees are required to pay a royalty fee of 4.5% on gross sales, along with a marketing fee of 4%. These ongoing fees contribute to the brand's overall marketing efforts and support services, helping franchisees maintain competitive positioning in the market while benefiting from a recognized brand.
Financial Performance
The average annual revenue per Ramada unit is approximately $1,565,000, with a median annual revenue of $1,000,000. This strong financial performance reflects the brand's established presence in the hospitality sector and the potential for profitability for franchise owners.
Breakeven and Payback
Franchisees can expect to reach breakeven within 18 months of operation, with an investment payback period of about 24 months. This timeline indicates a relatively quick return on investment, appealing to entrepreneurs seeking a viable business opportunity in the franchise landscape.
Franchise Growth
Ramada has shown steady franchise growth, with a total of 335 franchised units in 2019, slightly declining to 317 by 2021. This trend highlights the brand's resilience in the market and the ongoing interest in franchise ownership, despite fluctuations in the hospitality industry.
Operational Insights
Average operating expenses for a Ramada franchise amount to around $799,000 annually, which is 51.1% of revenue. Understanding these costs is crucial for new franchisees to effectively manage their operations and maintain profitability while delivering quality service to guests.
Frequently Asked Questions
The initial investment for a Ramada franchise ranges from $197,550 to $16,911,356, depending on various factors such as location and size of the property.