For all potential investors in starting the Jersey Mike’s franchise, we have outlined how much this investment will cost, how much are royalties, and the potential profit that this Company’s restaurant can deliver to its owner per year.
Key Takeaways
- Jersey Mike is well- known U.S restaurant brand that has been presented in the market since 1956, and currently they have approximately 2000 franchised locations.
- Starting Jersey Mike’s franchise will cost investors in the range of $194,000 to $954,000.
- This franchisor charges an Initial Fee of $18,500 + a Grand Opening Advertising Fee of $12,500.
- The Jersey Mike’s franchise royalties are all combined 11.5% of Gross Sales( Royalty Fee 6.5% + Ad Fee 5%)
- The existing Jersey Mike franchised locations make, on average, $695,023 in gross sales per one location
- The owner of the average gross sale earning Jersey Mike’s franchise can expect an annual salary of approximately $69,000.
- To become a franchise applicant, an investor must have a Net Worth of $300,000 and a minimum of $100,000 in Liquid Assets.
How Much Does The Jersey Mike’s Franchise Cost
The Jersey Mike’s franchise cost ranges from $194,000 to $954,000. In this estimation about total necessary investment are included all fees and expenses that will occur before opening day.
The most significant starting expense will be associated with the leasehold improvements of the franchised restaurant location!
The leasehold improvement will cost from $75,000 to $480,000; this expense will be in the lower or the higher end of our estimation, depending primarily on the size of the facility.
A typical restaurant from this brand operates in a retail shopping center of approximately 1,000 to 2,000 square feet.
Suppose the potential investor wants to estimate how much is Jersey Mike’s franchise. In that case, the calculation must include the cost of architectural workers, permits, etc., for the U.S State in which the business will operate.
Jersey Mike’s franchise list of starting costs:
- Leasehold Improvements: $75,000 – $480,000
- Equipment/Furniture/ Small Wares: $45,000 – $124,000
- Initial Fee: $18,500
- Grand Opening Advertising: $12,500
- Initial Inventory: $6,000 – $30,000
- Real Estate and Construction Fee: $5,000
- Exterior Signage Package: $3,000 – $27,000
- Interior Branding /Graphics Package: $3,000 – $15,000
- POS System: $3,000 – $17,000
- POS System Connection to Private Network: $3,000
- Initial Training: $2,000 – $53,000
- Insurance: $2,000 – $13,000
- Rent/Lease and Utility Security Deposits: $0 – $46,000 – first three months
- Uniforms, Office Equipment and Supplies: $900 – $39,000
- Architectural Fees: $750– $30,000
- Professional fees (lawyer, accountant, etc.): $500 – $7,000
- Business Licenses and Permits: $300 – $16,000
- Working Capital for the first three months: $15,000
- Estimated Total Investment: $195,000 – $950,000
This franchisor, as a company, does not offer direct or indirect financing and does not guarantee its investor’s note, lease, or obligation. So potential franchisees will need to find third-party sources to cover initial investment costs!
Jersey Mike’s Franchise Fee
The Jersey Mike’s franchise system one-time initial fee is $18,500, ongoing monthly fees are Royalty one which is 6.5%, and two advertising fees that combined cost 5% of the gross receipts that the restaurant makes.
Investors must be aware that by signing a Franchise Agreement, except for paying the Company an initial non-refundable initial franchise fee of $18,500, they will need to pay the Grand Opening Advertising Fee, which is $12,500 + Real Estate / Construction Fee in the amount of $5,000.
When we add up all Jersey Mike’s franchise ongoing royalties together, we come to 11.5% of the gross receipts that the franchisee will need to pay. So potential investors must know that they will share a specific portion of the profit with the franchisor.
The Jersey Mike’s franchise agreement term has a duration of 10 years, and by signing it, the developer of the new location has an obligation to pay royalties and work according to the Company operational manual.
Jersey Mike’s list of the franchise fees:
- Initial Fee: $18,500 – one time expense
- Royalty Fee: 6.5% of the gross receipts – an ongoing expense
- National Media Fund Fee: 4.0% of gross receipts – an ongoing expense
- Advertising and Development Fund Fee: 1.0% of gross receipts – ongoing
- Software License and Support Package Fee: $395 per month ongoing expense
- Grand Opening Advertising Fee: $12,500 – must be spent during the first month of operation
- Real Estate and Construction Fee: $5,000 – a one-time expense
Investors who opt to sign Area Development Agreement have rights to certain discounts regarding initial fee cost! However, it is wise to first start with only one location. When more information about profitability is revealed, it is an excellent choice to scale the business to more locations.
Jersey Mike’s Franchise Profit
To reveal is Jersey Mike’s a profitable franchise, we must uncover its gross sales level per year and profit margin that new owners can expect!
The average earning of Jersey Mike’s franchise makes $695,023 in gross sales per year per location with a profit margin of 10%. So the owner can expect to make an annual salary of approximately $69,000.
How do we estimate Jersey Mike’s franchise owner salary per year?
In this company Franchise Disclosure Document is included the independent auditors’ report of Sub Above, LLC ( owner of this brand), so we extracted all information about Jersey Mike’s revenue per store from it!
In 2021 the franchisor earned $164,150,548 of revenue from service and royalty fees collected from franchisees. There were 2,102 franchised locations opened in that period, so when we divided the revenue number by the number of sites, we came to the number of $78,092.553.
Every Jersey Mike’s franchised location has paid the franchisor $78,092 for the royalties. When we know that this franchisor charges approximately 11% ( Royalty 6.5% + 5% Ad Fee) of royalties, we have multiplied $78,092 by 8.9 (89%), and we come to a number of $695,023.
10% of the profit margin is the standard for this type of franchised restaurant, so we can easily calculate that Jersey Mike’s franchise owner salary is $69,000 annually. Although this seems a small investor must be aware that this amount of profit is the standard one for the franchising industry.
According to Statista, Jersey Mike’s Subs generated in 2020 sales of around 1.6 billion dollars in the United States, and they have grown triple from 2014 (0.5 billion of sales). The Jersey Mike’s franchise owners can expect this brand to grow even more in the following years.
This our Jersey Mike’s franchise profit estimation is calculated according to the average sales. So the owner’s salary can be less or higher than our prediction; it will depend on the location and managerial skills of the franchisee.
Jersey Mike’s Franchise Requirements
The investors who want to be approved as a franchisee of the Jersey Mike’s must have a net worth of $300,000 and own a minimum of $100,000 in liquid assets. These are the two main financial requirements of this franchisor.
Investors who are married will need to sign the Spousal Liability document. The potential owners must be aware that this guarantee will place the investor and his spouse’s marital and personal assets, perhaps including the house, at risk if the franchise fails.
The franchisees of this Company are obligated to purchase all of the inventory & supplies necessary to operate a business from the franchisor, its affiliates, or from suppliers that the franchisor designates at prices that the franchisor or they set.
All Jersey Mike’s franchises must offer Pepsi beverages and Frito Lay snack line, so investors must be aware that because of this requirement, they will not have the right to sell Coca-Cola in their facilities.
Also, this franchising brand requires that investors use only real estate brokers approved by Company to locate a site for the restaurant, and they require that the franchisee can hire only general contractors who are approved by the Company.
Jersey Mike’s in Canada
At present, this franchising system has only two locations opened in Canada. However, new Canadian investors can apply to develop a new location, and for them, jersey mike’s franchise investment cost ranges in the similar investment outlay as paid U.S investors.
Who Owns Jersey Mike’s
Peter Cancro is the owner of Jersey Mike’s, and also he serves as the CEO of Sub Above, LLC this Company is a direct subsidiary of Jersey Mike’s Franchise Systems, Inc.
Summary
The typical time between the signing of the Franchise Agreement and the opening day is about nine months, so franchisees can expect that less than one year will be enough to start making a profit with Jersey Mike’s franchised restaurant.