Five Guys Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$256,000

-

$591,000

LOCATIONS

1477

Emily

Updated

May 2, 2024

Is

Five Guys

a franchise?

Yes,
Five Guys
currently
accepts
franchise
applications

Five Guys, a well-known fast-casual restaurant chain specializing in hamburgers and French fries, was established in 1986 and started its franchising journey in 2002. The company is headquartered in Lorton, Virginia. Five Guys franchises are typically situated in retail shopping centers and other urban areas that meet the company's site selection criteria, which could also include non-traditional locations like train stations, sports arenas, airports, and university campuses, subject to approval.

Five Guys sets itself apart with a commitment to quality, using fresh, never frozen beef, and offering a wide array of toppings, allowing for extensive customization of their menu items.

Franchisees are granted the right to operate in a specified location within an assigned area approved by the franchisor, known as the primary area of responsibility. This area is generally defined as the contiguous property controlled by the landlord where the restaurant is located, but it may be limited to the specific physical space occupied by the restaurant, meaning that franchisees may not receive an exclusive territory.

How many

Five Guys

franchises

are there?

In 2022, there were
1477
outlets in
the United
States, of which
899
are franchises, and
578
are corporate-owned.

What are the

Five Guys

franchise

fees?

Advertising fee

5.50%

Initial Franchise Fee

The initial Franchise Fee is $25,000, payable upon signing the Franchise Agreement. This fee is considered fully earned and non-refundable when paid, except under certain conditions where a portion may be refundable.

Royalty Fee

The Royalty Fee is 6% of Gross Sales, payable weekly. For Restaurants located in Alaska, Hawaii, or Puerto Rico, the Royalty Fee is 8% of Gross Sales.

Advertising Fee

The Creative Fund fee is up to 2% of Gross Sales, currently set at 2%, and is due weekly.

Local Advertising

Franchisees must spend not less than 2% of Gross Sales on local advertising annually.

Site Evaluation Fee

A Site Evaluation Fee of a reasonable amount, currently $500, may be charged for additional on-site evaluations or for evaluations related to subsequent Restaurants.

Relocation Fee

A Relocation Fee of $7,500 may be incurred to cover the costs of reviewing a relocation application and the associated sites.

Time Extension Fee

A Time Extension Fee of $10,000 per extension may be applied to the Development Schedule upon approval.

Additional Training Fees

For additional personnel training beyond the initial included training, a fee of up to $1,500 per person may be charged.

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

Five Guys

franchise?

It costs between
$256,000
and
$591,000
to start a
Five Guys
franchise.
Type of Expenditure Amount
Initial Franchise Fee $25,000
Leasehold Improvements $100,000 - $300,000
Lease Payments and other rental expenses $7,500 - $20,000
Equipment $55,000 - $105,000
Signage $6,500 - $20,000
Initial Inventory $10,000 - $15,000
Architectural/ Engineering $7,000 - $25,000
Electronic Cash Register System with Modem $15,000 - $25,000
Facsimile Machine $350 - $500
Travel, lodging and meals for initial training $100 - $5,000
Business Supplies $4,000 - $8,500
Business licenses, permits, utility deposits, etc. $5,000 - $15,000
Delivery and catering expenses $0 - $1,000
Insurance deposits and premiums $750 - $1,250
Additional Funds for first 3 months $20,000 - $25,000
Total $256,200 - $591,250

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

Five Guys

provide

training

to its

franchisees?

Yes,
Five Guys
provides
training

The franchisor provides comprehensive training for franchisees, covering various aspects of restaurant operation and management. The training program includes:

  • Initial Training: Conducted at the franchisor's corporate headquarters or another designated location, this program is anticipated to be offered 5 or 6 times a year and generally lasts about 2 weeks, with the possibility of extending up to 6 weeks. The program covers a wide range of topics essential for running the restaurant and is provided to the Operating Principal, general manager, and one assistant manager without additional charges. Additional personnel may also be trained for a fee.
  • On-site Training: Before the opening of the first restaurant, the franchisor provides on-site pre-opening and opening training, supervision, and management assistance by a trained representative. This service is provided at no additional expense for the first restaurant, with the possibility of a per diem fee for additional assistance or for training at subsequent restaurants.
  • Ongoing and Remedial Training: The Operating Principal, general manager, and other designated personnel must attend additional training programs and seminars deemed necessary by the franchisor. The franchisor provides instructors and training materials for these sessions. While there is no fee for mandatory training, the franchisor reserves the right to charge for additional training requested by the franchisee.
  • Web-Based Training and Training Video Series: The franchisor may develop and require participation in internet-based training programs and provide training videos. These resources are considered confidential and are part of the franchisor's efforts to maintain high standards of operation.

Does

Five Guys

provides

territory

protection?

The franchisor does offer territory protection to franchisees, but the extent of this protection can vary based on specific terms outlined in the franchise and development agreements. For instance, during the term of the Franchise Agreement, provided a franchisee complies with the terms, the franchisor commits not to establish or authorize another entity to set up a Restaurant within the franchisee's Primary Area of Responsibility.

This area is typically defined as the contiguous property controlled by the landlord where the Restaurant is located, such as a shopping mall, strip mall, university campus, or hospital, and may be limited to the specific physical space occupied by the Restaurant.

However, it's important to note that while there is some level of territorial protection, it does not necessarily grant an absolute exclusive territory free from any competition. The franchisor retains certain rights, such as advertising and selling products or services within the franchisee's territory, offering collateral products under the brand's marks from any location, and selling food and beverage services at temporary or seasonal facilities within Reserved Areas.

Can a

Five Guys

franchise

be run as

a passive

investment?

The Five Guys franchise system requires active participation from franchisees in the day-to-day operations of their restaurants. The Operating Principal, who must be a Controlling Principal if the franchisee is an entity, is expected to either serve as the General Manager of the Restaurant or designate a qualified individual as the Management Designee, subject to the approval of the franchisor.

This individual is required to devote substantially all of their time and best efforts to the supervision and conduct of the Restaurant, ensuring hands-on management and operational oversight.

To maintain operational standards and the quality of the brand, the franchise agreement stipulates that the Operating Principal or the Management Designee must be involved in the daily management of the restaurant.

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