In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Firehouse Subs franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Firehouse Subs franchise, based on Item 7 of the company’s 2020 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Firehouse Subs franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned Firehouse Subs outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Firehouse Subs’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average, median, high, and low weekly unit sales volume for the 38 company-owned traditional, 1,052 franchised traditional, 23 franchised free-standing with drive-thru, and 34 franchised end-cap center with drive-thru Firehouse Subs Restaurants that were open during the company’s fiscal year 2019
- 2019 average food sales, discounts, employee meals, total revenue, food costs, paper costs, total cost of sales, gross profit, wages and benefits, health insurance, marketing expenses, telephone and utilities, professional fees, rent and occupancy expenses, other operating expenses, royalty, total operating expenses, and EBITDA from operations for the 32 Firehouse Subs Restaurants that were operated in Florida and the 5 Firehouse Subs Restaurants that were operated in Iowa by the company’s affiliates for the year ending December 29, 2019, grouped according to average weekly unit sales volume (>$17,000; $14,000 to $17,000; $11,000 to $14,000; $8,000 to $11,000; and $0 to $8,000)
Section I – Background Information
19 Things You Need to Know About the Firehouse Subs Franchise
Looking for Franchisees to Grow Northern California
1. In late May 2019, Firehouse Subs announced that it was looking to expand its presence in Northern California, particularly in the Bay Area. It’s a territory that has room for at least 20 more units, each creating 15 to 20 full-time management and support staff employment opportunities.
2. The point person for Firehouse Subs in the area is Scott Kinner, the brand’s area representative who himself oversees 13 units across his territory in Central and Northern California, Southern Oregon, and Western Nevada. He’s not just looking for new franchisees, he’s got four more stores in the pipeline and scheduled to open soon.
3. According to Kinner, “Our Firehouse Subs culture is what makes us really unique. We have this amazing brand steeped in a rich firefighting and first responder tradition that resonates not only with our customers, but also across all our employees and corporate staff.”
4. It’s the very thing that brought Kinner to the brand in the first place. He had been in the franchising business for years working on the corporate side as director of operations for brands such as McDonald’s and Chipotle. Kinner said, “I was looking to make a change and knew I wanted to do something on my own. With my experience in the industry, I knew my success rate would be much higher in franchising than trying to start a business from scratch. I researched a number of different concepts, but I was really looking for something that I could stand behind and a brand that gave back to the community.”
5. Firehouse Subs fit the bill. Kinner says he invested in the brand because it was unique in its approach to business, its food, and the community. The brand is widely known for its pledge to support first responders in the communities where the stores operate. In fact, the brand has granted more than $42 million to hometown heroes across the U.S., Puerto Rico, and Canada since the Firehouse Subs Public Safety Foundation began in 2005.
6. But the brand is also known for its unique menu which features a unique process of steaming their meats and cheeses. The result is a rush of flavors served up on one of their toasted private-recipe sub rolls. Kinner is based in San Francisco and says he was originally looking to open a single unit, but after an initial phone call, the opportunity to develop the entire region was presented to him and he became the area representative for the region. He says he’s extremely satisfied with the brand and the part that he has played in his territories.
7. As a Firehouse Subs area representative, Kinner’s responsibility is to help build his territory through both franchise development and the support of existing operators in the market. “We’re all about building profit for our franchisees and we do that through innovation, product development, exceptional customer service, and streamlined operations,” he says. “We’re definitely a people-first kind of business.”
8. San Francisco, Oakland, San Jose, and the surrounding communities are growing in population and diversity, and Firehouse Subs is well positioned to meet the demand for fast and innovative menu items focused on fresh ingredients that highlight its unique commitment to first responders in the communities where the brand operates.
9. Kinner said while the brand has certain financial requirements to become a Firehouse Subs operator, potential franchisees also need to be the right “fit.” The brand is looking not only for franchisees that embrace their business philosophy, but who are also highly committed to their priority of giving back.
Introduces Family Meal Deal That Gives Back
10. In mid-May 2020, Firehouse Subs launched a limited-time offer that allowed customers to mix-and-match some of their Firehouse favorites. The new Family Meal Deal featured a choice of three medium subs – any combination of the iconic Hook & Ladder, Italian, or Firehouse Meatball – three bags of chips and three cookies for $24, plus tax.
11. Even better, the Family Meal Deal helps save lives. A portion of every purchase of a Family Meal Deal went directly to Firehouse Subs Public Safety Foundation to provide lifesaving equipment to first responders. To date, the Foundation has donated more than $50 million to hometown heroes across the U.S. and Canada.
12. Since early March, through the Firehouse Subs Public Safety Foundation’s COVID-19 Disaster Relief Fund, the Foundation has partnered with locally-owned Firehouse Subs restaurants across the nation to feed tens of thousands of healthcare workers and first responders on the front lines of the pandemic, as well as individuals and families in need and seniors who are unable to leave their homes.
13. Don Fox, chief executive officer of Firehouse Subs, said, “To the guests who support Firehouse Subs, every order not only makes a difference in the lives of our local restaurant owners and their crews, but we are able to continue to make an impact in the communities we serve through our Foundation. Our passion to support public safety within our communities is truly in the DNA of our entire Firehouse Subs family. With our newly launched Family Meal Deal, guests can enjoy the same great-quality subs they know and love, while feeling good about their purchase knowing it has a greater impact.”
Donates 9,000 Subs to People in Need
14. At the beginning of April 2020, Firehouse Subs announced that its franchisees across the country had partnered with Firehouse Subs Public Safety Foundation to donate more than 9,000 subs to firefighters, police officers, and healthcare workers, as well as individuals and families in need and seniors who are unable to leave their homes, including:
- More than 1,600 meals donated to first responders, nursing homes, and healthcare workers in Manchester, New Hampshire;
- More than 1,800 meals donated to first responders and students in the Kalispell Public School District in the Columbia Falls, Montana area;
- More than 1,400 meals donated to several school districts in the Greenville, Texas area.
15. Firehouse Subs was founded in 1994 by brothers Chris and Robin Sorensen in Jacksonville, Florida. The Sorensens were former firefighters who were looking to start their own business and settled on selling sub sandwiches. With Firehouse Subs, the Sorensens wanted to find the best meats, cheeses, and toppings to create high-quality sandwiches.
16. The first Firehouse Subs shop was a success and the Sorensens first tried franchising the concept in 1995. However, it didn’t take long for the Sorensens to change their minds about franchising and they bought those locations back. The Sorensens decided to focus on opening only company-owned locations, particularly in the Jacksonville area.
17. Around the year 2000, the Sorensens decided to give franchising another go, but took a different approach. This time around, they hired consultants to help formulate a solid franchise plan. A year later, Firehouse Subs started franchising once again and by 2003, the company had opened 100 locations.
18. Over the next decade, Firehouse Subs continued to grow around the United States and in 2016, the company opened its 1,000th store. Firehouse Subs now has locations across the United States, as well as in Puerto Rico and Canada.
Entrepreneur’s Franchise 500
19. Firehouse Subs ranked No. 59 on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Firehouse Subs franchise costs, based on Item 7 of the company’s 2020 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Firehouse Subs’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 1,006
- Outlets at the End of the Year: 1,051
- Net Change: +45
- Outlets at the Start of the Year: 1,051
- Outlets at the End of the Year: 1,093
- Net Change: +42
- Outlets at the Start of the Year: 1,093
- Outlets at the End of the Year: 1,115
- Net Change: +22
- Outlets at the Start of the Year: 32
- Outlets at the End of the Year: 37
- Net Change: +5
- Outlets at the Start of the Year: 37
- Outlets at the End of the Year: 37
- Net Change: 0
- Outlets at the Start of the Year: 37
- Outlets at the End of the Year: 38
- Net Change: +1
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
Part 1 – Firehouse Subs’ Historical Average Unit Volume for Company-Owned and Franchised Locations
- The following charts show historical sales information regarding both franchised and affiliated Firehouse Subs Restaurants that were open during the company’s fiscal year 2019.
- This historical sales information was compiled using the reports provided to Firehouse Subs by these Restaurants. The reports are provided to Firehouse Subs on a cash accounting basis and are used to form the basis of royalty payments to the franchisor.
- The franchisor does not directly operate any Restaurants; all company-owned Restaurants are operated by affiliates, which are owned and controlled by the franchisor’s parent – FRG.
- The characteristics of those Restaurants are not materially different from the franchises that the franchisor offers for sale, except that they may incur greater marketing and promotional expenses (as a sponsor of Jacksonville Jaguars and other programs); and incur additional expenses to offer health insurance to all full-time employees.
- One company-owned Restaurant included in the range of $17,000+ 2019 sales chart operates a drive-thru window, which only some franchisees currently include but are able to do so if their site permits.
- Also, franchisees may offer products utilizing third-party delivery services at their option, including you. Most of the company-owned Restaurants (but not all) do so. The cost of using these services is reflected in the financial performance of Firehouse Subs’ company-owned Restaurants.
- Average Unit Weekly Sales Volume is weighted based on the number of operating weeks for each Restaurant.
- The sales information provided is unaudited.
- This sales summary does not reflect any expenses of Firehouse Subs Restaurants. Some of the expenses that are not reflected in this summary, but that you will incur and should take into consideration, are the following:
- franchise payments, including royalties;
- salaries, payroll taxes, and other employee benefits;
- rent and utilities;
- cost of equipment;
- cost of food and other product costs;
- financing costs (in addition to occupancy expense);
- accounting and legal expenses;
- debt repayment.
- These expenses will affect the net income and cash flow of a Firehouse Subs Restaurant. You should consider them and evaluate their impact on your operations.
2019 Weekly Average Unit Volume (Company-Owned Traditional)