Pho Hoa Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$333,000

-

$680,000

LOCATIONS

21

Emily

Updated

April 11, 2024

Is

Pho Hoa

a franchise?

Yes,
Pho Hoa
currently
accepts
franchise
applications

Pho Hoa Noodle Soup, a renowned name in the Vietnamese fast-casual dining sector, has carved a niche for itself with its health-conscious approach to traditional Vietnamese pho. Founded in 1983 in California, Pho Hoa has established itself as a leader in the Vietnamese food industry by offering a healthy version of the classic pho noodle soup. Their unique selling point lies in their broth, made with top-grade meats that are lower in calories and cholesterol, ensuring a robust flavor profile that remains true to traditional pho while catering to health-conscious consumers.

With over three decades of experience, Pho Hoa has expanded its footprint globally, operating in 6 countries and earning a spot in Entrepreneur Magazine's Top 500 ranking and the #2 rank in the Asian food category on Entrepreneur’s Top Food Franchises List. This international recognition is a testament to the brand's commitment to quality, consistency, and simple operations, which have been the cornerstone of its success.

Pho Hoa offers a flexible franchising model with both standalone and co-branded options, the latter in partnership with Jazen Tea, allowing franchisees to cater to a wider demographic. This adaptability extends to their business model, which can fit spaces ranging from 800 to 4,000 square feet, making it accessible for various types of investors. Their franchise system is designed to support franchisees from site selection to grand opening, with comprehensive training provided at their flagship location in Northern California.

How many

Pho Hoa

franchises

are there?

In 2022, there were
21
outlets in
the United
States, of which
18
are franchises, and
3
are corporate-owned.

What are the

Pho Hoa

franchise

fees?

Advertising fee

2.00%

Initial Franchise Fee

The initial franchise fee is$30,000,  payable in full upon execution of the franchise agreement. This fee is fully earned when paid and is non-refundable under any circumstance, except as specified in the agreement.

Royalty Fee

Franchisees are required to pay a royalty fee equal to 4% of the aggregate gross sales of the franchised restaurant. This fee is due monthly, payable on or before the 10th day of each calendar month, based on the aggregate gross sales of the previous month.

Marketing Fee

A marketing fee is not currently imposed, but the franchisor reserves the right to begin collecting a marketing fee equal to 2% of gross sales, with 30 days written notice. Once imposed, marketing fees will be due and payable in the same manner and for the same period as royalty fees.

Security Deposit

A security deposit of $6,000 is required on or before the opening date. This deposit may be charged by the franchisor if the franchisee fails to pay royalty fees, marketing fees (once imposed), or any other payments due under the franchise agreement.

Renewal Fee

The renewal fee is 25% of the then-current initial franchise fee, payable when the franchisee exercises the renewal option, at least 6 months but not more than 9 months before the expiration of the current term.

Transfer Fee

For transferring the franchise, a fee of 25% of the then-current initial franchise fee is charged. If the buyer is another existing franchisee, the transfer fee is reduced to 15% of the then-current initial franchise fee. A qualified transfer incurs a fee of $2,500.

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

Pho Hoa

franchise?

It costs between
$333,000
and
$680,000
to start a
Pho Hoa
franchise.
Type of Expenditure Amount
Initial Franchise Fee $30,000
Personal Expenses during our Initial Training Program $2,000 - $5,650
Real Estate Costs Payable Before Opening $28,750 - $113,850
Real Estate Costs Payable After Opening During the Initial Phase $17,250 - $37,950
Leasehold Improvements $95,000 - $225,000
Restaurant Equipment, Furniture and Signs $75,000 - $130,000
Point-of Sale ("POS") and Other Software, Computer Hardware and Business Equipment $8,600 - $14,730
Opening Inventory $15,000 - $20,000
Tableware, Smallware and Supplies $5,000 - $10,000
Professional Fees $15,000 - $35,000
Other Security Deposits and Pre-Paid Expenses $9,000 - $11,000
Grand Opening Advertising $2,000
Additional Funds (for first 3 months of operations) $30,000 - $45,000
Total $332,600 - $680,180

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

Pho Hoa

provide

training

to its

franchisees?

Yes,
Pho Hoa
provides
training

The franchisor provides a comprehensive training program for franchisees, which includes various modules and continuous learning opportunities:

Basic Training Program

Pho Hoa's initial training program, known as the Basic Training, consists of two main modules: Management Training and Opening Training. The company provides the content and objectives of this training through their Manual and other materials, and they reserve the right to modify the Basic Training program at any time.

Management Training

This part of the Basic Training includes 36 hours of classroom instruction and 60 hours of on-the-job training, mainly conducted at the company's home office and nearby locations in or around San Jose, California, or Sacramento, California.

Continuing Training

Pho Hoa may periodically offer continuing training programs at designated locations, which could be at operating Pho Hoa restaurants or other specified sites. These sessions may cover new Proprietary Products, recent changes in the Pho Hoa System, industry trends, customer relations, personnel administration, advertising programs, and local restaurant promotions.

Does

Pho Hoa

provides

territory

protection?

Pho Hoa offers territory protection with specific conditions based on the location of the Pho Hoa restaurant. If a Pho Hoa restaurant is located in a Metropolitan Urban Core Area (as defined by the U.S. Office of Management and Budget based on census data), it will not be assigned an exclusive territory. Examples of such areas include the Borough of Manhattan, downtown Chicago, or downtown San Francisco.

In these areas, franchisees may face competition from other franchisees, company-owned outlets, or other distribution channels controlled by Pho Hoa. If a Pho Hoa restaurant is located outside of a Metropolitan Urban Core Area, it will be assigned its own territory as part of the franchise rights. This territory will typically be an area with a 3-mile radius from the front door of the Pho Hoa restaurant, defined by roads or other geographical or political boundaries.

Pho Hoa agrees not to open or award a franchise for another Pho Hoa restaurant within this designated territory. Even with a designated 3-mile territory, franchisees do not have exclusive or superior rights to serve customers within this territory. There are no sales quotas or market penetration contingencies associated with these territorial rights.

Can a

Pho Hoa

franchise

be run as

a passive

investment?

The Pho Hoa franchise system requires active involvement from franchisees in the day-to-day operations, although it does not mandate full-time personal management by the franchise owner. The franchise must always be under the direct supervision of one or more Certified Managers at all times.

To mitigate the risk of personnel turnover, it is recommended that franchisees employ at least two management-level supervisors at any time who each qualify as a Certified Manager​​. Franchisees or their owners are not required to personally devote full-time attention to managing and supervising all administrative and operational activities of their Pho Hoa® franchise.

However, if franchisees or their owners choose not to handle these responsibilities, they must be assigned to a senior manager. This senior manager must have ongoing restaurant-level supervisory duties, successfully complete the Basic Training program, and be certified by ServSafe.

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