For all those potential investors in opening franchised restaurants, we have prepared information about Arby’s franchise investment cost, ongoing fees, and profit, that is, the owner’s annual salary.
Key Takeaways:
- Arby’s initial franchise fee can go up to $50,000, with a total initial investment range cost between $628,950 and $2,306,000
- Arby’s franchisees pay from gross revenue that their franchised restaurant makes between 8,2% and 10,2% in total for franchisor ongoing royalties.
- An average earning Arby’s franchise makes approximately $1,300,000 in gross revenue annually with a 10% profit margin.
- The owner of the average-earning Arby’s franchise can expect o earn $130,000 in salary per year.
- The franchise applicants need to have a Net Worth of $1,000,000 and own min. $500,000 in Liquid assets(non-borrowed funds) to be approved as a new franchise owner.
How Much Does The Arby’s Franchise Cost
The total investment cost to start an Arby’s restaurant franchise is between $637,950 and $2,306,000 for a freestanding facility and between $628,950 and $1,167,000 for franchised locations that operate in buildings with other businesses.
If you opt for opening a freestanding location that will demand a franchise location that covers 30,000 to 40,000 sq. ft., with 100 to 180 ft. of street frontage, adequate parking place, and drive-thru; because of that starting cost is much higher than for locations that operate in smaller spaces.
So will be the cost of starting a new Arby’s franchise on the lower or higher end of our estimation depends on the size of the facility in which the business will be operating!
Leasehold improvements and equipment costs for these franchises range between $545,000 and $1,512,000 per location. So, the total cost is closely correlated with the amount of space that will need to be arranged following the requirements of this franchisor.
Arby’s franchise list of starting costs:
- Initial Fee: $0 – $37,500
- Development Fee: $6,250 – $12,500
- Fees and Expenses During Training: $5,000 – $23,400
- Site Costs: $0 – $451,000
- Landscaping: $0 – $63,000
- Architectural Drawings / Professional Fees: $40,000 – $219,000
- Zoning / Permitting Costs: $1,000 – $112,000
- Building Costs: $234,000 – $731,000
- Equipment: $183,000 – $262,000
- Computer Hardware and Software/ POS: $32,000 – $55,000
- Décor Package: $11,000 – $45,000
- Signage & Drive Thru: $44,000 – $88,000
- Pre-Opening Wages: $21,300 – $41,200
- Opening Inventory: $18,000 – $26,000
- Insurance: $8,400 – $14,400
- Additional Funds: $33,000 – $100,000 / Working capital for three first months
- Business Licenses, Health Permits, Utilities Deposits: $1,000 – $25,000
- ESTIMATED INITIAL INVESTMENT COST: $637,950 – $2,306,000 (excluding purchase/lease)
This estimation doesn’t include costs related to leasing real estate! Usually, 3 to 10 months pass between closing an agreement with the franchisor and opening day, so investors must include the landlord’s expense in their calculation of Arby’s franchise cost.
Options to Cover Initial Investment
This franchisor does not offer direct financing options. However, Arby’s franchises are qualified for expedited and streamlined SBA loan processing through the SBA’s Franchise Registry, which makes getting a loan much faster and simpler.
Arby’s Franchise Fees
One-Time Franchise Fee
Arby’s charges new franchise owners a one-time Initial Fee, which costs between $15,000 and $37,500, and a Development Fee that ranges from $0 to $12,500 depending on the type of the restaurant.
The smallest one-time fees will need to pay franchise applicants who opt to open a so-called “Non-Traditional Restaurant” for them, there is no Development Fee cost, and the Initial Fee is reduced to $15,000.
Non-traditional locations operate in smaller spaces inside bigger facilities such as military bases, hospitals, colleges, universities, etc.
Every investor must sign a Development Agreement regardless of the number of Arby’s Restaurants that plan to open!
Arby’s franchise list of one-time fees:
- Initial Fee: $15,000 – $37,500
- Development Fee: $0 – $12,500 per restaurant
Arby’s Initial Fee Discount Program
Veterans of the U.S army forces can benefit from some discounts regarding Arby’s franchise initial fees. Under the VetFran Program, they pay a development fee of $6,250 for each restaurant, and the Initial Fee is waived for them.
Also, it is possible to use the VetFran Program in combination with the other incentive programs that this franchisor offers!
This franchisor has launched the so-called “Market Development Incentive Program,” which is designed to increase the penetration and presence of the Arby brand in specific markets, which they consider to be underpenetrated.
The franchisor has waived the Initial Fee for investors from underpenetrated regions; they only need to pay the cost of the Development Fee.
The Initial Fee is free for investors from the following markets:
- Albany, NY
- Bakersfield, CA
- Bangor, ME
- Bend, OR
- Binghamton, NY
- Boston, MA-NH
- Buffalo, NY
- Burlington, VT-NY
- Chicago, IL
- Chico-Redding, CA
- Elmira, NY
- Eugene, OR
- Eureka, CA
- Fresno-Visalia, CA
- Hartford-New Haven, CT
- Honolulu, HI
- Los Angeles, CA
- Medford, OR
- Miami-Ft. Lauderdale, FL
- Monterey-Salinas, CA
- New York, NY
- Palm Springs, CA,
- Portland, OR
- Portland-Auburn,
- ME, Providence
- RI-MA, Rochester
- NY, Rockford, IL
- Sacramento, CA
- San Diego, CA
- San Francisco, CA
- Santa Barbara, CA
- Seattle-Tacoma, WA
- Springfield Holyoke, MA
- Syracuse, NY
- Utica, NY
- West Palm Beach, FL
- Washington, DC-MD
- Watertown, NY
- Yakima, WA
Ongoing Royalty Franchise Fee
The Arby’s franchise owners pay for the Royalty Fee 4% of Gross Sales for Traditional Restaurants and 6.2% of Gross Sales for Non-Traditional Restaurants.
Also, there is an ongoing cost of the Marketing/Advertising Fee, which this franchisor charge 4.2% of Gross Sales that franchised location makes per month/year.
Usually, similar brands charge fees for local marketing separately. This franchisor has incorporated that cost in their Ad/Marketing Fee, which means that its percentage will be spread nationally and locally.
So if you opt for starting Arby’s franchise, you can expect to pay from gross revenue that the restaurant makes between 8,2% and 10,2% in total for franchisor ongoing royalties.
There is also an annual fee for the ongoing maintenance and support for the POS system, ranging from $5,000 to $10,000 per year. So the future franchisee must include this expense in their list of operating costs.
List of Arby’s franchise ongoing royalty fees:
- Royalty Fee: 4% for Traditional Restaurants and 6.2% of Gross Sales for Non-Traditional Restaurants
- Ad/Marketing Fee: 4.2% of Gross Restaurant Sales
- POS System Support/Maintenance Fee: $5,000 to $10,000 per year
Arby’s Royalty Fee Discount Program
Veterans have rights to discounted royalty fee for the first year after opening; after that period pass, they pay franchisor royalties in the full amount.
How Much Cost Renting Space for Arby’s Franchise
If the restaurant is freestanding, the investor will need to rent a prime location covering 30,000 to 40,000 sq. ft., with 100 to 180 ft. of street frontage.
Building sizes generally range from 2,400 to 3,000 sq. ft, and commercial leasing costs vary considerably depending on the location. So the best option is for potential investors to research their territory’s real estate market conditions.
Except paying for the rent, there will be and expenses related to the taxes, insurance, maintenance, repairs, etc. So every Arby’s franchise applicant must be aware that one of their business’s highest operating costs will be property-related expenses.
Arby’s Franchise Profit/Owner Salary
The franchise owner of the average-earning Arby’s restaurant can expect to make a $130,000 per year salary. Arby’s franchises, on average, earn $1,300,000 in gross revenue annually with a 10% profit margin.
At the end of 2021, the lowest-earning Arby’s franchise has made $125,421 of gross sales, and the highest earning location has produced $4,209,291 in gross sales for their owner.
So investors must be aware that if they want to have profit in amount, as our estimation shows above, the franchised locations will need to produce at least the average gross sales that this franchise system has.
How We Calculate Arby’s Franchise Owner Salary
This franchisor has provided in their franchise disclosure document data regarding annual Gross Sales and EBITDAR margin that the existing restaurants in the system make.
From FDD data, we know that Arby’s franchises, on average, earn $1,300,000 in gross revenue with an EBITAR margin of 20.9%.
Arby’s franchise disclosure document financial statement reveal:
Freestanding location’s average gross sales: $1,300,000
- Lowest earning unit: $438,732
- Highest earning franchise: $4,209,291
- Restaurant EBITDAR: 20.9%
Non-Freestanding location’s average gross sales: $1,100,000
- Highest earning franchise: $3,028,131
- Lowest earning franchise: $125,421
EBITDAR margin doesn’t include interest, taxes, depreciation, amortization, and rent/real property costs, so the investor must know that the Profit Margin will be much lower than the EBITAR percentage above.
Usually, rent for this type of restaurant cost owners approximately 6% of the gross revenue!
So when we calculate all operating costs that will occur (including rent), the pretty objective estimation is that Arby’s franchise restaurant can deliver a 10% profit margin.
Arby’s Franchise Requirements
The franchise applicants need to meet Arby’s capital requirement; Net Worth of $1,000,000, and own min. $500,000 in Liquid Assets (non-borrowed funds) to be approved as a new franchise owner.
The franchise owner has no obligation to participate personally in the direct operation of the restaurant but must at all times employ three managers that will deal with everyday business operations.
Arby’s Franchise Agreement Duration
Arby’s franchise agreement duration is 20 years for Traditional Restaurants, and For Non-Traditional Restaurants, the term is usually signed for ten years.
After the first franchise agreement has expired, the owner has the right to sign an additional one for 20 years by paying a renewal fee which costs 10% of the initial fee price.
Who Owns Arby’s
Inspire Brands, Inc. is the owner of Arby’s. This company was launched upon completion of the merger between a parent of the Arby brand and a parent of the Buffalo Wild Wings brand in February 2018.
Under Inspire Brands also operate Baskin-Robbins, Buffalo Wild Wings, Dunkin’ Donuts, Jimmy John’s, Mister Donut, Rusty Taco, Sonic Drive-In.
This ammount of brands operating under the same owner makes them the biggest franchising concept in the world.
Summary
We have summarized all Arby’s franchise costs that you as an investor need to bear before opening day. Owning this franchise will not definitely make you a millionaire. However, it can provide secure and steady profit for franchisees in the long run.