For all entrepreneurs interested in starting a Burger King franchise, we have composed a comprehensive review regarding the initial investment cost, fees, and profit that potential investors can expect by starting this company franchised location.
- Burger King started with business operations in 1954 in Miami, and since then, they have supervised the opening of more than 20,000 franchises in worldwide locations.
- More than 7,500 Burger King franchise restaurants operate in the United States, and approximately 12,500 restaurants operate outside of the U.S.
- The Burger King cost is between $230,000 and $4,194,700
- Interested investors will need to pay a Burger King Initial Fee, which is $50,000, and the ongoing Royalty Fee, which is 4.5% of the gross sales per month.
- The owner of the average earning Burger King franchise can expect a profit of $130,000 per year.
How Much Does The Burger King Franchise Cost
The total investment cost to buy a Burger King franchise is between $230,000 and $4,194,700. This financial prediction doesn’t include real estate costs, and all investors must know that.
The entrepreneurs have two options to become a Franchisee either by developing a new Burger King franchise or by purchasing an existing restaurant.
Investors are obligated under the franchise agreement to purchase all leasehold improvements and building components from franchisor-approved suppliers.
Sometimes, Burger King as a company offer to construct all leasehold improvements, and the cost of leasehold improvements, in that case, is reflected in the rent for the restaurant premises.
However, this type of deal between franchisee and franchisor happens in rare circumstances, so investors can’t rely too much on that this will be possible to negotiate with this franchising company.
Burger King franchise list of costs:
- Initial Fee: $2,500 – $50,000
- Initial Training Expenses: $7,500- $25,000
- Real Property / Occupancy Charge: $3,500 – $1,200,000
- Civil & Architectural Drawings / Professional Fees: $0 – $100,000
- Zoning Expenses: $0 – $25,000
- Real Estate Improvements: $0 – $1,600,000
- Landscaping: $0 – $60,000
- Work Equipment: $85,000 – $294,600
- Décor Package: $0 – $95,000
- Signage & Drive Thru: $0 – $166,000
- Pre-Opening Wages: $27,500 – $67,100
- Opening Inventory: $5,000 – $12,000
- Cash, Inventory Control and Order Taking System: $35,000 – $110,000
- Insurance: $14,000 – $25,000
- Licenses, Utility, Lease Deposits : $10,000 – $30,000
- 2-Story Interior Playground: $0 – $245,000
- Working Capital (first 3 months): $40,000 – $90,000
- Total Estimated Initial Investment: $230,000 – $4,194,700
How Much is Burger King Franchise Fee
The Burger King initial franchise fee for a 20-year Franchise Agreement term is $50,000 for Traditional Locations. Non Traditional locations can have lower initial fee costs, which depend mainly on how much the franchise agreement has a duration and the type of location that the franchisee opens.
Burger King Initial franchise fee by type of location:
- Traditional Restaurant locations – $50,000
- Non-Traditional Restaurant locations – minimum of $15,000
- Delivery Restaurant locations – $2,500
Also, the owner of the Burger King franchise will need to pay the franchisor a Royalty Fee of 4.5% of Gross Sales and an Ad Fund Fee of 4% of Gross Sales. So investors must be aware that 9,5% of the franchised restaurant revenue will go to the franchisor’s bank account for his ongoing service and marketing campaigns.
Investors who opt to open more than one franchise unit (Multi-Unit Development Agreement) have the right to a reduced royalty fee for six years. After that period, pass royalties are charged at a standard rate which is 4,5% of the Gross Sales that the restaurant makes.
Ad Fund Fee is paid to the franchisor for costs related to the advertising and promotion, including market research, sales promotions, public relations, media costs, etc. This Burger King fee is 4% of all restaurant sales, and the franchisee is obligated to pay it during the whole duration of the franchise agreement.
Some of the fees listed in the Burger King franchise cost are related to the initial training. Each Franchisee applicant must complete specific training before being approved by a franchisor to operate a Restaurant. The initial training will cost the investor $7,500 for the first trainee and $3,000 for each additional trainee.
Burger King franchise list of fees:
- Initial Fee: $2,500 – $50,000 – one time cost
- Royalty Fee: 4.5% of Gross Sales – an ongoing cost
- Ad Fund Fee: 4% of Gross Sales – an ongoing cost
- Service Desk Fee: $190-$240 per year
- Entity or LLC Fee: $1,000 – $5,000 – one time cost
- Background Check Fee: $280 – $15,000 – one time cost
- BK Foundation Scholarship Fee: $1,000 per restaurant per year
- Renewal Fee: $2,500 per year – it is paid when the Franchise Agreement term expires
Burger King Franchise Profit
The Burger King franchises, on average, make 1,300,000 gross sales per year with a 10% profit margin. So owners who operate a location that delivers this company’s average revenue can expect to make $130,000 per year of profit.
Burger King’s annual Gross Sales by type of the location:
- Traditional Locations: $1,470,138 (average) Gross Sales per year
- Non-Traditional Locations: $1,120,071 (average) Gross Sales per year
Non-Traditional Burger King Locations are:
- In-line facilities.
- Restaurants at locations such as airports, military facilities, colleges, schools, office buildings, retail stores, tourist locations, and turnpikes Conversion Restaurant facilities.
- Facilities with Drive-thru only.
- Mall location facilities.
- Mobile Restaurant units (buses/trailers).
- Fuel Co-Branded Restaurants.
- Delivery Restaurants.
Traditional Burger King franchised locations are all ones that do not fall in the category of Non-Traditional locations.
We have collected all information regarding average gross sales from Burger King FDD, which means that it represents the most accurate data that potential investors can find online.
Burger King Franchise Canada
The First Burger King franchise opened its door in Canada in 1969, and at present, they have more than 300 locations on the Canadian territory. Currently, this company is searching for new franchisees, so this can be one of the options for Canada-based investors.
The cost of opening a Burger King in Canada is between $400,000 and $2,500,000; the exact cost will depend on the type of location that investors choose.
Also, Canadian investors will need to pay ongoing franchisor royalties, which are 4.5%, and advertisement fees which are 4% of the gross sales franchised locations make per month.
Is Burger King Still Profitable
Yes, Burger King is still profitable; this company’s net income has had an upward trajectory every year since its foundation. The only exception is 2020; however, all businesses have experienced enormous drops in revenues that year.
According to Statista, Burger King as a company has reported a worldwide net income of 1.02 billion, which is its record year. This record year puts them on the list of the 150 largest companies worldwide.
Also, it is still profitable to buy a Burger King franchise. This brand franchised location has a high gross sales, so franchisees can benefit from the fact that a wide range of loyal customers will spend their money regularly in their restaurants.
Burger King is one of the giants of the franchising industry. Although this type of investment will demand a high start-up capital, the owner will return all initial costs and make a profit from its franchised restaurant in the long run.