Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Wendy’s Franchise Costs (2017 FDD)

by Franchise Chatter on January 7, 2016

in Franchise Costs, Hamburger Franchise

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Don't Invest in a Franchise Until You Check Out This List

Wendy's Classic Double Hamburger Photo by _gem_

This post was updated on August 17, 2017 to reflect information from Wendy’s 2017 FDD (Item 7).

Detailed Estimates of Wendy’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Wendy’s 2017 Franchise Disclosure Document

1.  Application Fee:  $5,000

  • Wendy’s usually collects the Application Fee upon your signing a Preliminary Letter Agreement. The Application Fee is applied toward the cost of initial orientation and the processing of the application.
  • Wendy’s is under no obligation to refund the Application Fee under any circumstances; however, Wendy’s may credit this fee if you are part of a special program in certain limited circumstances.

2.  Training Expenses:  $26,000 to $100,000

  • There are no additional charges paid to Wendy’s for the initial training (except for a portion of the Technical Assistance Fee).
  • However, if training occurs outside the market area of your Wendy’s Restaurant, you and your management staff are responsible for personal expenses associated with room, board, and transportation, while attending franchise training, the scope of which depends on your level of prior experience, and whether you have management staff available from existing Wendy’s Restaurants. In that instance, your training expenses will be substantially less than the amounts shown here.

3.  Initial Technical Assistance Fee:  $40,000

  • Currently, you must pay a lump sum of $40,000 upon signing the Franchise Agreement, or if you are participating in the Franchise Real Estate Procurement Program, upon executing the Franchise REPP Letter of Agreement. This fee is applied generally to help defray some of the cost to Wendy’s in providing technical assistance in the development of the Wendy’s Restaurant, initial training of the franchisee or the Operator, and in rendering other assistance associated with the opening of the Wendy’s Restaurant.

4.  Real Estate, Permits, Construction of Standard Prototype Restaurant, and Site Improvements

  • Cash Purchase:  $1,240,000 to $2,500,000
  • Financing (3 months):  $277,000 to $547,000
  • Leasing (3 months):  $24,000 to $48,500
  • You will have the option of purchasing for cash, financing, or leasing your acquisition, construction, and improvements of your Wendy’s Restaurant and premises.
  • The Wendy’s Restaurant premises will typically be located in freestanding or in-line locations, but may, in appropriate circumstances, be located within an enclosed structure (for example, a shopping mall).

5.  Equipment, Signage, and Technology

  • Cash Purchase:  $500,000 to $600,000
  • Financing (3 months):  $21,000 to $26,000
  • Leasing (3 months):  N/A
  • You will have the option of purchasing for cash or financing the equipment, signage, and technology associated with the Wendy’s Restaurant.
  • The equipment will include sinks, counters, refrigerators, freezers, double-sided grill, ovens, bun toasters, Coca-Cola Freestyle or Bevariety self-serve drink station, sandwich stations, fry station, Frosty machines, tables, chairs, cabinets, desk, and other related equipment and supplies that range in cost from $390,000 to $420,000.
  • Signage includes the installed pylon sign, directionals, building signs, exterior rotating menu board, and rotating presell menu board, that range in cost from $60,000 to $100,000.
  • Technology may include modern POS hardware and single source software, PC, Wi-Fi, commercial grade television, music system, digital menu boards, headsets, timers, and outside order confirmation display, that range in cost from $77,000 to $100,000, which includes sales taxes, local charges specific to individual Restaurants, and does not include travel costs of installers or shipping costs, which vary according to a Restaurant’s location.

6.  Opening Inventory and Supplies:  $10,000 to $14,000

  • The range will vary depending upon the actual size of the Wendy’s Restaurant, its performance, and the inventory required.

7.  Additional Funds – 3 Months:  $150,000 to $175,000

  • The estimated amounts do not include royalties and advertising fees, and assume that none of your expenses are offset by any sales generated during the initial 3-months of operations. These expenses include items like management labor, crew labor, payroll costs, benefits, repairs and maintenance, and other service contracts and miscellaneous additional costs.

8.  Grand Opening Advertising:  $7,500 to $10,000

9.  Security Deposit, Utilities, Licenses, and Other Prepaid Expenses:  $20,000 to $165,000

  • This item estimates your miscellaneous opening costs and expenses, like installation of telephones; deposits for gas, electricity, and other services; business licenses; legal and accounting expenses.

10.  Insurance Cost:  $10,000 to $35,000

11.  Total Estimated Initial Investment

  • If you pay cash for Land, Building, Site Improvements, Equipment, Signage, and Technology:  $2,008,500 to $3,644,000
  • If you finance the Land, Building, Site Improvements, Equipment, Signage, and Technology:  $566,500 to $1,117,000
  • If you lease the Land, Building, Site Improvements, and finance the Equipment, Signage, and Technology:  $292,500 to $592,500
  • The variances in the ranges are based on nearly 47 years of Wendy’s experience in the restaurant business and depend upon whether you purchase for cash, finance, or lease the land, building, improvements, equipment, signage, and technology for the Wendy’s Restaurant.
  • The totals listed may vary if you elect to use a combination of these alternatives to acquire the assets needed for the Wendy’s Restaurant. For example, you may choose to lease the site of the Wendy’s Restaurant, but purchase the necessary equipment, signage, and technology package.

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