Sonic Drive-In Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$699,000

-

$3,371,000

OPERATING PROFIT

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Emily

Updated

February 20, 2024

Is

Sonic Drive-In

a franchise?

Yes,
Sonic Drive-In
is a franchise and
currently
accepts
franchise
applications

Founded in 1953 and formally incorporated in 1990, Sonic Drive-In is a renowned American drive-in fast food chain restaurant. Currently, this iconic brand is part of the Inspire Brands family, with headquarters in Atlanta, Georgia.

At Sonic Drive-In, the menu is a delightful ensemble of French fries and hamburgers, complemented by an array of mouthwatering offerings, including chili dogs, corn dogs, onion rings, refreshing soft drinks, indulgent milkshakes, delectable sundaes, and more.

The company proudly operates a network of 3,545 outlets throughout the United States, although it has yet to venture into international territories.

How many

Sonic Drive-In

franchises

are there?

In 2022, there were
3552
outlets in the United States, of which
3232
are franchises, and
320
are corporate-owned.

What are the

Sonic Drive-In

franchise

fees?

Initial franchise fee

$45,000

Royalty fee

5.0%

Advertising fee

4.15%

Initial Franchise Fee ($45,000)

The standard initial license fee for a Traditional Drive-In location and for Non-Drive-In location is currently $45,000, and for a Non-Traditional Location, it is currently $22,500 (or $2,250 multiplied by the number of full or partial years in the term, up to 10 years). This fee is payable as a lump sum upon signing the License Agreement.

Royalty Fee (5.0% of Gross Sales)

Franchisees are required to pay a monthly royalty fee equal to five percent (5.0%) of the Restaurant’s Gross Sales. This fee is payable monthly on the 10th day of the next month.

Advertising (0.90% of Gross Sales for Brand fee/SBF contribution + 3.25% of Gross Sales for Advertising cooperative fee/SMF contribution)

A portion of the monthly Gross Sales, 0.90%, is allocated towards the Brand fee/SBF contribution, and 3.25% is allocated towards the Advertising cooperative fee/SMF contribution. These fees are payable monthly on the 10th day of the next month.

Rent (Varies)

The rent is variable and is agreed upon in the lease agreement if the property is leased from Sonic Drive-In.

Technology Fee (Variable)

The technology fee is set at a flat amount equal to .25% of 2020 Gross Sales divided by 12 from the April 2021 payment through the March 2026 payment for Sonic Drive-Ins open the full calendar year 2020. The technology fee will continue for Gross Sales incurred on or after March 1, 2026, only upon the approval of 67% of the licensees of all Sonic restaurants.

How much does

it cost

to start a

Sonic Drive-In

franchise?

It costs between
$699,000
and
$3,371,000
to start a
Sonic Drive-In
franchise.

The estimated initial investment required to start a Traditional Sonic Drive-In franchise ranges from $1,714,200 to $3,370,900. This includes an initial license fee of $45,000 that must be paid to the franchisor or affiliate.

Here are some details regarding the estimated initial investment:

Type of Expenditure Amounts
Initial license fee $45,000
Travel and living expenses during training $8,200 to $93,600
Certified Training Team expenses $15,200 to $42,500
Prepaid expenses $2,000 to $125,000
Real property/occupancy charge Variable/ see Note (6)
Building costs $800,000 to $1,100,000
Site work $450,000 to $1,200,000
Restaurant equipment $175,000 to $260,000
Point-of-sale system “POS”, digital menu housings “POPS” & other technology $105,000 to $160,000
External Signage $50,000 to $150,000
Beginning Inventory $20,000 to $50,000
Advertising funds $2,000 to $5,000
Insurance premiums $10,000 to $20,000
Payroll $26,800 to $94,800
Additional funds (3 months) $5,000 to $25,000
Total $1,714,200 to $3,370,900

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

Sonic Drive-In

provide

training

to its

franchisees?

Yes,
Sonic Drive-In
provides training to its franchisees.

Sonic Drive-In has a comprehensive training program in place to ensure that franchisees are well-equipped to operate their franchises efficiently.Here's a breakdown of the training process:

Before the restaurant opens, a designated Franchisee Certified Training Team from the franchisee's side is required to undergo a certification training that spans about 5 weeks. This training covers a variety of on-the-job topics including restaurant set-up, crew station training, and enhancing the guest experience.

While there's no tuition fee for the certification training, the franchisee must cover the salaries, travel, and living expenses for all individuals attending the training, along with any required training materials.

Additionally, Sonic provides self-directed ongoing training programs, online training, and webinars for management personnel at no cost. These include station courses and additional manager leadership classes.

Does

Sonic Drive-In

provides

territory

protection?

Franchisees are granted the right to operate a Sonic Drive-In Restaurant within a defined area referred to as the "Protected Area." Within this Protected Area, they are obligated to develop and operate the Franchised Restaurants. However, while there are some territorial rights associated with the Protected Area, these rights do not guarantee exclusivity.

Specifically, franchisees do not have the right to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing, to make sales within or outside of their Protected Area. Moreover, Sonic and its affiliates may use these channels of distribution to make sales within the Protected Area using the Proprietary Marks without compensating the franchisee.

Can a

Sonic Drive-In

franchise

be run as

a passive

investment?

Sonic Drive-In requires the franchisee or a designated principal to be actively involved in the day-to-day operations of the restaurant.

The franchise agreement specifies that either the franchisee (if an individual) or the Principal (if the franchisee is an entity) must diligently and fully exploit the rights in the License Agreement by personally devoting best efforts to and personally participating in the operation of the Restaurant, and devoting sufficient time and effort to the management of the Restaurant.

The "Principal" is defined as an individual approved by Sonic Drive-In who owns more than 50% of the ownership interests in the franchisee entity, has the authority under the organizational documents to direct and control the management and policies of the franchisee, and devotes sufficient time and attention to the promotion and operation of the Restaurant.

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