In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Freddy’s Frozen Custard & Steakburgers franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Freddy’s Frozen Custard & Steakburgers franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Freddy’s Frozen Custard & Steakburgers franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Freddy’s Frozen Custard & Steakburgers outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Freddy’s Frozen Custard & Steakburgers’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average, median, highest average, and lowest average weekly gross receipts for the 220 franchised, 16 affiliate-owned, and all 236 Freddy’s Frozen Custard & Steakburgers stores that were open prior to the beginning of the fiscal year ended December 27, 2017 (separately stated)
- 2017 average cost of sales, labor costs, and controllable expenses for the 16 affiliate-owned Freddy’s Frozen Custard & Steakburgers stores that were open prior to the beginning of the fiscal year ended December 27, 2017
Section I – Background Information
16 Things You Need to Know About the Freddy’s Frozen Custard & Steakburgers Franchise
Opens 300th Restaurant
1. Freddy’s Frozen Custard & Steakburgers celebrated the opening of the brand’s 300th location at the beginning of March 2018 in south Indianapolis, Indiana. A ribbon-cutting ceremony was hosted by the Indy Chamber of Commerce and the company’s namesake Freddy Simon attended the grand opening for a meet and greet.
2. Randy Simon, president and CEO of Freddy’s Frozen Custard & Steakburgers, said, “Opening our 300th location is a dream come true and we are grateful to our Freddy’s family and guests who have led us to reach this milestone. We have a great group of franchisees in the Indianapolis-metro that started out as cooks and cashiers at our early locations in Wichita. Their dedication and hard work earned them management positions and they went on to be successful operators. They truly understand the Freddy’s values and culture and we hope to see more stories like theirs as the catalyst of future growth.”
3. This new Freddy’s location is owned and operated by Blake Epperson, managing partner for Freddy’s franchise group ICT, LLC. Epperson joined the Freddy’s family nearly 15 years ago as an entry-level team member at the company’s original training restaurant in Wichita, Kansas. He worked his way up to general manager before partnering with several other managers from Freddy’s corporate locations in Wichita to form their own franchise group.
4. Epperson said, “The feedback we’ve received at our first restaurant in Carmel has been very positive, so we’re thrilled to expand into Indianapolis and give residents in the community another convenient location to visit. We’re prepared to serve guests with the same friendly service and great taste they’ve come to love at our Carmel location.”
Experienced Significant Growth in the First Quarter of 2018
5. Freddy’s Frozen Custard & Steakburgers experienced significant growth in the first quarter of 2018, opening 17 new restaurants. According to Freddy’s, this continued surge in franchise development has helped expand the brand’s presence in new and existing markets nationwide. One of the newest markets for Freddy’s is Chicago, where the brand opened its first restaurant in the area in February and has plans to open three additional locations by the end of this year.
6. For 2018, Freddy’s Frozen Custard & Steakburgers’ goal is to open more than 40 locations nationwide. Franchise opportunities are available in markets across the U.S., including Florida, Pennsylvania, Massachusetts, and New York.
7. Randy Simon, president and CEO of Freddy’s Frozen Custard & Steakburgers, said, “The growth we’re seeing so far in 2018 is unbelievable. It’s through leadership of our outstanding franchisees, commitment to quality products, and exceptional service that we’re able to continue expanding and make Freddy’s accessible to more people across the country.”
Signs First International Development Agreement
8. As Freddy’s Frozen Custard & Steakburgers continues its domestic growth, the brand also plans to grow internationally. At the beginning of 2018, Freddy’s announced that it had signed a development and master franchise agreement with Younata Investment Limited to bring its concept to the Middle East, with plans to develop in the United Arab Emirates, Saudi Arabia, Bahrain, Jordan, Kuwait, Lebanon, Oman, and Qatar. The first location for the region will open later this year in Dubai.
9. Randy Simon, president and CEO of Freddy’s Frozen Custard & Steakburgers, said, “We are thrilled to be expanding our family-friendly restaurant concept internationally. Freddy’s resonates with guests of all ages and backgrounds who simply enjoy fresh cooked-to-order menu items and a variety of frozen custard treats served with a smile. It’s an exciting new venture for us and for Younata Investment Limited and we look forward to working with them to make Freddy’s a success in the Middle East.”
10. Younata Investment Limited, headquartered in Dubai, is a family-owned company with over 25 years of regional business experience within the Gulf Cooperation Council and Levant area. The company has a diverse portfolio of businesses and partnerships in the MENA region including Real Estate, Healthcare, Food & Beverage, Software Solutions, and Retail.
11. Yousef Khattar, managing director of Younata Investment Limited, said, “We are very delighted to start this new relationship with Freddy’s as their first international franchisee and to bring authentic steakburgers and frozen custard to the Middle East. Younata and Freddy’s have identified many complementary synergies within our respective organizations in terms of core values as well as work ethic. Hospitality, quality, and cleanliness are values that are highly appreciated by nations and cultures from all over the world. We’re eager to begin working together to put those values into action and ensure a memorable experience for each guest who visits Freddy’s.”
Adds New Side to Permanent Menu
12. At the end of April 2018, Freddy’s Frozen Custard & Steakburgers launched its newest permanent menu item, Cheese Curds. Freddy’s premium white cheddar Cheese Curds are lightly covered with butter crumbs and fried to a gooey golden perfection. The item is available to order in a regular or large size.
13. According to Simon Redler, COO and co-founder of Freddy’s Frozen Custard & Steakburgers, “We initially tested our Cheese Curds in four different markets across the country where it quickly became a popular menu item. We’re truly looking forward to sharing this new offer with guests at all of our locations.”
14. Freddy’s Frozen Custard & Steakburgers was founded by brothers Bill and Randy Simon, and their business partner and friend Scott Redler in Wichita, Kansas. The friends named the restaurant after the Simons’ father, Freddy Simon, who was a World War II veteran and is considered an additional co-founder of the business. The Simons and Redler wanted the Freddy’s concept to be reminiscent of the classic American diner with a menu inspired by the meals that Freddy Simon prepared for his family.
15. Following the success of the first Freddy’s Frozen Custard & Steakburgers location in Wichita, the Simons and Redler started franchising in 2004. The first franchised location opened at the end of that year in Hutchinson, Kansas. Within a decade, Freddy’s grew to 100 locations. Freddy’s continues to grow with the brand’s first international location set to open sometime later in 2018.
Entrepreneur’s Franchise 500
16. Freddy’s Frozen Custard & Steakburgers ranked No. 44 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Freddy’s Frozen Custard & Steakburgers franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Freddy’s Frozen Custard & Steakburgers’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 121
- Outlets at the End of the Year: 163
- Net Change: +42
- Outlets at the Start of the Year: 163
- Outlets at the End of the Year: 220
- Net Change: +57
- Outlets at the Start of the Year: 220
- Outlets at the End of the Year: 263
- Net Change: +43
- Outlets at the Start of the Year: 14
- Outlets at the End of the Year: 14
- Net Change: 0
- Outlets at the Start of the Year: 14
- Outlets at the End of the Year: 16
- Net Change: +2
- Outlets at the Start of the Year: 16
- Outlets at the End of the Year: 19
- Net Change: +3
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
Part 1 – Sales of Affiliate-Owned and Franchised Freddy’s Frozen Custard and Steakburgers Restaurants
- As of December 27, 2017, there were 19 restaurants which are operated by the franchisor’s affiliate, FFC, under the name “Freddy’s Frozen Custard and Steakburgers” and there were 263 franchisee restaurants.
- The FFC operating restaurants and the franchisee restaurants are a mix of stand-alone units located in former restaurant or other retail buildings, stand-alone and in-line new construction, and in-line in former restaurant or other retail sites.
- This financial performance representation is based on the actual operating results of the 16 FFC stores and the franchisee-reported sales of the 220 franchise stores that were open prior to the beginning of the fiscal year ended December 27, 2017, although no accountant independently audited the specific data from which the following information was derived.
- The following table shows figures from the fiscal year ended December 27, 2017. The table shows the average weekly gross receipts for stores open prior to the beginning of the fiscal year then ended.
Weekly Gross Receipts for Franchise Stores (Fiscal Year Ended December 27, 2017) – 220 Stores