Dave's Hot Chicken Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$616,000

-

$1,825,000

LOCATIONS

96

Emily

Updated

April 11, 2024

Is

Dave's Hot Chicken

a franchise?

Yes,
Dave's Hot Chicken
currently
accepts
franchise
applications

Dave's Hot Chicken, a sizzling franchise sensation in the world of spicy fast-casual dining, has taken the culinary world by storm with its mouthwatering offerings and rapid expansion. Founded in 2017 by Arman Oganesyan, Tommy Rubenyan, and Gary Rubenyan in Los Angeles, California, Dave's Hot Chicken has quickly become synonymous with the fiery flavors of Nashville hot chicken.

Headquartered in Los Angeles, this franchise has a relatively short but impressive history characterized by its commitment to delivering a unique and unforgettable taste experience.

Dave's Hot Chicken ventured into the world of franchising in 2018, opening the doors for entrepreneurs and spicy food enthusiasts to bring the fiery magic of Nashville hot chicken to their local communities. The franchise specializes in serving up spicy chicken tenders and sliders, ranging from mild to extra hot, and offers a variety of delectable sides to complement the heat.

What sets Dave's Hot Chicken apart from the competition is its dedication to the art of hot chicken, with an emphasis on authenticity, quality, and bold flavor profiles. The franchise's signature secret spice blend, coupled with its succulent and perfectly cooked chicken, has garnered a dedicated following of heat-seeking foodies and spice lovers alike.

How many

Dave's Hot Chicken

franchises

are there?

In 2022, there were
96
outlets in
the United
States, of which
78
are franchises, and
18
are corporate-owned.

What are the

Dave's Hot Chicken

franchise

fees?

Advertising fee

2.00%

Initial Franchise Fee

The Initial Franchise Fee is $40,000 for each Franchise Agreement, which is part of the Development Fee for the first Franchise Agreement​​.

Royalty Fee

The Continuing Royalty is set at 5% of Gross Sales​​.

Technology, Operations, and Marketing Fee (TOM Fee)

Franchisees must pay a weekly TOM Fee ranging from $170 to $500, depending on the number of terminals required, plus a one-time setup fee between $1,000 and $1,400​​​​.

Creative Fund Contribution

The franchisees are required to contribute 2% of their weekly Gross Sales to the Creative Fund, which may be increased to 4% of weekly Gross Sales.

Transfer Fee

For transferring a franchise, a fee equal to 50% of the franchisor's then-current initial franchise fee is required, along with any brokerage commissions, finder’s fees, or similar charges incurred due to the transfer​​​​.

Renewal Fee

A non-refundable renewal fee of $20,000 is applicable if the franchisee chooses to enter into a successor franchise agreement​​​​.

Note: The fees presented here can be found in the Item 5 of the Franchise Disclosure Document. For a complete list of all the fees borne by the franchisee, please consult the Franchise Disclosure Document.

How much does

it cost

to start a

Dave's Hot Chicken

franchise?

It costs between
$616,000
and
$1,825,000
to start a
Dave's Hot Chicken
franchise.
Type of Expenditure Amount
Initial Franchise Fee $40,000
Architect / Engineer $14,000 - $44,000
Business Licenses and Permits $1,000 - $10,000
Construction, Remodeling and Leasehold Improvements $275,000 - $800,000
Equipment $110,000 - $275,000
Furniture, Fixtures and Decorations $11,500 - $100,000
Smallwares $11,000 - $15,000
Signage $17,000 - $110,000
Graffiti and Artwork $30,000 - $70,000
Grand Opening Kit, Menu Boards $12,500 - $15,000
Drive-Thru, Loop Timers and Signage $0 - $40,000
Computer Equipment and Information / POS Systems $13,500 - $40,000
Office Supplies $1,000 - $3,000
Uniforms $1,500 - $4,000
Initial Inventory and Supplies $20,000 - $50,000
Insurance Deposits $1,500 - $4,000
Liquor Licensing $0 - $10,000
Pre-Opening Rent $5,000 - $20,000
Initial Training $10,000 - $20,000
New Restaurant Opening Fee $0 - $15,000
Pre-Opening Labor Expense $15,000 - $50,000
Pre-Opening/Grand Opening Advertising $8,000 - $12,000
Miscellaneous Opening Costs $1,000 - $20,000
Professional Fees $1,000 - $10,000
Additional Funds – 3 Months $16,300 - $48,000
Total $615,800 - $1,825,000

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Does

Dave's Hot Chicken

provide

training

to its

franchisees?

Yes,
Dave's Hot Chicken
provides
training

Training

Dave's Hot Chicken provides an extensive training program to ensure franchisees and their teams are well-equipped to operate their franchises efficiently. The training includes:

Initial Training Program

  • Location: Held at Dave's Hot Chicken's training facilities in Pasadena, California, or another specified location.
  • Participants: Mandatory for the franchisee (or Operating Principal if the franchisee is an entity) and up to three management personnel chosen by the franchisee.
  • Content: Covers Dave's Hot Chicken's system and operational methods, including food preparation, customer service, business management, and the use of proprietary technology.
  • Duration: The training duration varies based on the attendees' existing experience and skill levels.

Extra Practice Week and Online Training

  • An additional week of practical training (Extra Practice Week) is required for the franchisee's Operating Principal and Director of Operations, ideally 60 days before the restaurant's opening.
  • Online training modules complement the in-person sessions, providing flexibility and ongoing learning opportunities.

Ongoing and Remedial Training

  • Dave's Hot Chicken may require franchisees, their managers, and other employees to attend refresher or additional training courses periodically.
  • Remedial training might be mandated if an inspection reveals non-compliance with franchise agreement standards, focusing on addressing operational deficiencies.

Does

Dave's Hot Chicken

provides

territory

protection?

Dave's Hot Chicken offers a territory protection option to its franchisees. The franchise agreement specifies whether a franchisee receives "No Territorial Rights" or is assigned a specific area described in Attachment A as their "Territory."

If "No Territorial Rights" is selected, the franchise rights are limited to the specific location at the designated street address, and the franchisee acknowledges having no territorial protection.Conversely, if a Territory is defined and described in Attachment A, Dave's Hot Chicken and its affiliates agree not to open or operate any restaurants, nor to license others to do so, within that geographic area during the term of the agreement.

However, if the franchisee is also part of an Area Development Agreement, the designated Territory will not extend beyond the development area described in that agreement​​​​​​​​. The franchise agreement may allow for some overlap between territories, especially in cases where multiple franchises operate within close proximity.

Can a

Dave's Hot Chicken

franchise

be run as

a passive

investment?

Dave's Hot Chicken's franchise system is designed to ensure active involvement from the franchisee in the day-to-day operations of the franchised location. The franchise agreement requires the Operating Principal and all managers to successfully complete the franchisor's training program.

This requirement underscores the importance of hands-on management and operation of the franchise, indicating that Dave's Hot Chicken may not accommodate a purely passive investment model.

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