FDD Talk 2017: What You Need to Know About the Freddy’s Frozen Custard and Steakburgers Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk 2017 post, you’ll learn the following:

• Section I – Background information on the Freddy’s Frozen Custard and Steakburgers franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Freddy’s Frozen Custard and Steakburgers franchise, based on Item 7 of the company’s 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Freddy’s Frozen Custard and Steakburgers franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Freddy’s Frozen Custard and Steakburgers’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average, highest average, and lowest average weekly gross sales for the 163 franchised, 14 affiliate-operated, and all 177 Freddy’s Frozen Custard & Steakburgers stores that were open prior to the beginning of the fiscal year ended December 28, 2016 (separately stated)

• 2016 average costs of sales, labor costs, and controllable expenses for the 1 affiliate-operated Freddy’s Frozen Custard & Steakburgers store with average weekly sales less than $30,997, and the 13 affiliate-operated Freddy’s Frozen Custard & Steakburgers stores with average weekly sales greater than $30,997 (separately stated)

Section I – Background Information

9 Things You Need to Know About the Freddy’s Frozen Custard & Steakburgers Franchise

Poised for Strongest Year Yet After Record Growth in 2016

1.  Freddy’s Frozen Custard & Steakburgers ended 2016 on a high note as the company experienced record growth. In 2016, Freddy’s opened 59 new restaurants, requiring approximately $120 million in development spending nationwide, and enjoyed 40 percent year-over-year new-restaurant growth. The franchise opened in four new states:  Alabama, Louisiana, Michigan, and Montana, increasing its state count to 30.

2.  Freddy’s projects that 2017 will be an even bigger year for the company with plans to open 70 new locations by the end of the year in existing and new markets, including three new states:  Wyoming, Maryland, and Mississippi.

Returning and New Seasonal Items

3.  To keep things fresh, Freddy’s Frozen Custard & Steakburgers often releases seasonal limited-time-offer menu items. In late February, Freddy’s brought back a few seasonal favorites, the Fish Sandwich, the Fish & Chips Basket, and the Mint ‘n Oreo Concrete. These items were available at participating locations from the end of February until mid-April.

4.  To kick off the start of summer, Freddy’s introduced the Spicy Chicken Sandwich and Peanut Butter Crunch Concrete in early May. Both items are limited-time offers and will run until mid-June or while supplies last at participating locations. According to Chief Operating Officer Scott Redler, Freddy’s fans are always anticipating what limited-time offers will be released next.

Celebrated Namesake’s 92nd Birthday with Discount Custard

5.  From February 17 through February 26, Freddy’s offered a couple of its frozen custard treats for 92-cents as a way to celebrate its co-founder and namesake, Freddy Simon. During the celebration week, customers were able to purchase a 92-cent single scoop of chocolate or vanilla frozen custard served in either a traditional cake cone or a dish.

6.  Also during the event, fans were encouraged to send Freddy a birthday message and photo through Facebook, Twitter, and Instagram using the hashtag #HappyBDayFreddy and tagging @FreddysUSA for a chance to be featured on the restaurant’s official social media accounts. A life size cutout of Freddy was available at participating locations for guests to take pictures with.

Company History

7.  Freddy’s Frozen Custard & Steakburgers was founded in 2002 by two brothers, Bill and Randy Simon, and restaurateur Scott Redler in Wichita, Kansas. The brothers named the restaurant after their father Freddy Simon, who is sometimes also credited as a co-founder.

8.  Freddy’s opened its first franchised location in Hutchinson, Kansas in 2004 and growth remained moderate for nearly a decade. The company’s growth has picked up in recent years with its 100th location opening in 2013. Today, there are over 240 locations across 30 states with plans to have over 300 locations in the U.S. by the end of 2017.

Entrepreneur’s Franchise 500

9. Freddy’s Frozen Custard & Steakburgers has ranked on Entrepreneur’s annual Franchise 500 list most years in the last decade (it did not rank in 2011, 2010, 2008, and 2007). The company’s highest rank was No. 41 in 2017, while its lowest rank was No. 441 in 2009.

Section II – Estimated Costs

• Please click here for detailed estimates of Freddy’s Frozen Custard and Steakburgers franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Freddy’s Frozen Custard and Steakburgers’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis