Alamo Drafthouse Cinema Franchise Costs, Fees & Owner Salary (2023)

Alamo Drafthouse Cinema is a distinguished name in the movie theater industry, known for its unique blend of cinema and dining experience. Founded in 1997 by Tim and Karrie League, the franchise started in a warehouse district building in Austin, Texas, that was previously used as a parking garage. This inaugural location set the stage for a new way to enjoy movies, combining second-run films with an innovative food and drink service directly to patrons' seats, setting it apart from traditional movie theaters.

The Alamo Drafthouse quickly became known for its distinctive programming, offering not just films but a thematic experience that could include silent movies with live musical accompaniment, food-themed movie nights with matching dinners, and special events featuring film retrospectives and director talks. This approach to cinema, focusing on the overall experience rather than just the screening, played a significant role in its expansion.

The franchise began in 2003, with the first location outside of Austin opening in Houston, Texas. Over the years, Alamo Drafthouse has expanded to numerous locations across the United States, earning a reputation for its strict no-talking and no-texting policy during screenings, high-quality food and beverage service, and curated pre-show entertainment. This policy, along with its unique events and programming, has garnered national attention and acclaim, distinguishing Alamo Drafthouse in the competitive cinema industry.

Alamo Drafthouse has been recognized for its innovative approach to cinema, earning accolades such as "Best Theater Ever" by Time Magazine and "The Coolest Theater in the World" by Wired. The franchise continues to grow, maintaining its commitment to providing a memorable movie-going experience that combines the enjoyment of films with high-quality dining in a theater setting.

Initial Franchise Fee

The initial franchise fee is $125,000 for the right to establish a single Venue under a Franchise Agreement, payable in full upon signing the Franchise Agreement. This fee is the same for all franchisees and is non-refundable.

Design/PIP Review Fee

A $7,500 design/PIP review fee is charged when submitting plans for the construction or refurbishment of the premises for your Venue. This fee is non-refundable once paid.

Initial Training Fees

A $5,000 initial training fee is required for the Operating Principal and each of the initial Managers who travel to Austin for initial training, with an anticipated total of between $15,000 and $40,000, depending on the number of persons sent for training. These fees are non-refundable once paid.

Continuing Services and Royalty Fee

A continuing services and royalty fee of 5% of Gross Sales is charged monthly, with amounts due withdrawn by electronic fund transfer (EFT) from the designated bank account. The due date for this payment may be modified by the franchisor.

Marketing Fund Fee

Currently, a marketing fund fee of 0.5% of Gross Sales is charged monthly, with a maximum of 1% of Gross Sales. This fee is also withdrawn by EFT from the designated bank account.

Transfer Fee

A transfer fee of $25,000 plus reasonable costs and expenses associated with the transfer, including training costs, legal and accounting fees, and referral fees paid to franchise brokers, is charged before the transfer. No fee is charged if you transfer your rights to an entity controlled by you.

The franchisor provides various types of training to franchisees, which include:

Initial Training

• Before the Venue commences operations, the franchisee's Principal Correspondent and all other Managers and Assistant Managers must attend and complete the franchisor's initial training program to the franchisor's satisfaction.
• The training is conducted by the franchisor or its designee in Austin, Texas, or another designated location if the Franchised Venue is the first Venue developed by the franchisee.
• An initial training fee of $5,000 times the number of persons attending the training program is payable in advance by the franchisee.

Opening Assistance

• For the opening of the franchisee's or its Affiliates' first Venue, the franchisor provides opening assistance with 12 to 24 trained representatives.
• These trained representatives offer on-site pre-opening and opening training, supervision, and assistance, ranging from two weeks before to two weeks after opening.
• The franchisee is responsible for reimbursing the franchisor for all incurred costs, including travel, lodging, meals, and wages of the personnel.

Additional and Remedial Training

• The franchisee's Principal Correspondent, Managers, and other designated personnel must attend any additional training programs offered by the franchisor if required.
• The franchisor provides the instructors and training materials for these programs, which may be operational in nature and occur at the headquarters or a certified training Venue in Austin, Texas, or another designated location.
• The frequency, duration, and mandatory nature of the additional training vary, and the franchisor reserves the right to charge a reasonable fee for these programs.

The Alamo Drafthouse Franchise does not offer exclusive territories in the traditional sense. Instead, it provides a form of territorial protection by agreeing not to establish or authorize another venue within the immediate vicinity of a franchisee's location. This vicinity, referred to as the "Territory," can vary but is defined in the franchise agreement, potentially extending up to a 3-mile radius from the franchisee's venue.

While this agreement limits direct physical competition from other Alamo Drafthouse operations within the Territory, it does not restrict the franchisor's ability to engage in other forms of sales, such as online or direct marketing, within the same area.

The Alamo Drafthouse Franchise Disclosure Document (FDD) does not explicitly advocate for passive investment by franchise owners. The franchisor expects a significant level of involvement from the franchisee or their designated managers. 

The franchisee's responsibility for site selection, development, and the operational success of the franchised venue. while the transfer of interest by the franchisees is permissible, they are subject to franchisor approval. All this suggests that some level of control and involvement is expected from franchisees or their designated operators.