Year Business Began: 1986
Franchising Since: 2002
Headquarters: Lorton, Virginia
Estimated Number of Units: 1,600
Franchise Description: The franchisor is Five Guys Franchisor, LLC. The franchisor offers the right to establish and operate a restaurant under the terms of a single unit franchise agreement. The franchisee may be an individual, corporation, partnership or other form of legal entity. Five Guys restaurants are fast casual dining restaurants which specialize in the sale of hamburgers, French fries, and related accompaniments in accordance with the franchisor’s recipes and ingredients, and other food items that the franchisor’s comprehensive and unique system. Five Guys restaurants are typically located in retail shopping centers and other urban locations which are acceptable to the franchisor. Other sites such as train stations, sports arenas, airports, university campuses or other captive market spaces are considered on a case-by-case basis. Each restaurant will typically range between 2,000 and 3,000 square feet, and will offer a menu selection featuring food items prepared according to the specified recipes and procedures.
Training Overview: The Operating Principal, general manager, and one assistant manager must attend and complete, to the franchisor’s satisfaction, the initial training program. This training will be conducted at the franchisor’s corporate headquarters or at another location it designates. The initial training program will generally last about two weeks. However, up to six weeks training may be required. The franchisor or its desginee will provide instructors and training materials for the initial training of the franchisee’s Operating Principal, general manager, and one assistant manager at no additional charge to franchisees. Franchisees may also have additional personnel trained by the franchisor or its designee for the restaurant, although it may charge $1,500 per person for that training. For the opening of the franchisee’s first restaurant, the franchisee will provide one of its trained representatives. The trained representative will provide on-site pre-opening and opening training, supervision, and management assistance for 10 days. If the franchisee reasonably requests or as the franchisor deems appropriate, it will, during the term of the Franchise Agreement, subject to the availability of personnel, provide the franchisee with additional trained representatives who will provide on-site remedial training to restaurant personnel. Any additional training the franchisor considers necessary must be attended by the franchisee (if an individual), the general manager, and at least one assistant manager.
Territory Granted: The Franchise Agreement grants franchisees the right to operate a restaurant at a single location that the franchisee selects within the assigned area and that the franchisor approves (Primary Area of Responsibility). The franchisor will determine the Primary Area of Responsibility before the Franchise Agreement is signed based on various market and economic factors such as an evaluation of market demographics, the market penetration of the franchise system and similar businesses, the availability of appropriate sites and the growth trends in the market. During the term of the Franchise Agreement, if the franchisee is in compliance with the Franchise Agreement, the franchisor will not establish a restaurant or authorize any other person or entity to establish a restaurant within the Primary Area of Responsibility. In the event the Primary Area of Responsibility is limited to only the specific physical space occupied by the restaurant, franchisees will not be receiving an exclusive territory.
Obligations and Restrictions: If franchisees are an individual, they must perform all obligations of the Operating Principal. If franchisees are a corporation, partnership or other form of entity, the Operating Principal must be one of the “Controlling Principals” and must continue to hold ownership interest in the franchise or any entity that directly or indirectly controls the franchise. Franchisees must retain at all times a general manager and the other personnel as are required to operate and manage the restaurant. The general manager must satisfy the franchisor’s educational and business criteria as provided in the manuals or other written instructions, and must be individually acceptable to the franchisor. Franchisees must comply with all standards and specifications relating to the purchase of all food, food products and beverage items, ingredients, supplies, materials, fixtures, furnishings, equipment (including electronic cash register, computer hardware and software), utensils and other kitchen items and products used or sold at the restaurant. Franchisees must sell or offer for sale all menu items, food products, and other products and services the franchisor requires, in the manner and style it requires, including dine-in and carry-out, as expressly authorized by the franchisor in writing.
Term of Agreement and Renewal: The length of the initial franchise term is for 10 years from the date of the Franchise Agreement unless terminated earlier. The Agreement may be renewed at the franchisee’s option for additional consecutive five-year terms, if requirements are met.
Financial Assistance: The franchisor does not offer, either directly or indirectly, any financing arrangements to franchisees. The franchisor does not guarantee a franchisee’s notes, leases or other obligations.
|Name of Fee||Low||High|
|Initial Franchise Fee||$25,000||$25,000|
|Development Fee||$50,000||$125,000 ( in Alaska, Hawaii & Puerto Rico)|
|Lease Payments and other rental expenses||$7,500||$20,000|
|Electronic Cash Register System with Modem||$15,000||$25,000|
|Travel, lodging and meals for initial training||$100||$5,000|
|Business Supplies (stationery, business cards, menus, gift cards, paper and other materials)||$4,000||$8,500|
|Business licenses, permits, utility deposits, etc. (for first year)||$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|
|ESTIMATED TOTAL for Alaska, Hawaii & Puerto Rico||$381,200||$716,250|
|Type of Fee||Amount|
|Royalty Fee||6% of Gross Sales. If the Restaurant is located in Alaska, Hawaii or Puerto Rico, the Royalty Fee is 8% of Gross Sales.|
|Creative Fund||Up to 2% of Gross Sales (Currently 2%).|
|Bread Products||Varies, depending on franchisee’s bread product needs.|
|Local Advertising||Not less than 2% of Gross Sales.|
|Cooperative Advertising||Maximum – 1.5% of Gross Sales, which will be credited towards Local Advertising.|
|Interest||The lesser of (i) 10% per annum or (ii) the maximum rate allowed by applicable law.|
|Advertising and Promotional Materials||Varies, depending on franchisee’s advertising needs.|
|Prohibited Product or Service Fine||$250 per day of use of unauthorized products or services.|
|Initial Training of Additional or Replacement and Successor Personnel||$1,500 per person.|
|Additional Assistance||If franchisee requests additional assistance, he or she must pay the current per diem charge for Five Guys employees used to provide the assistance and our associated costs. Current per diem is $500.|
|Cash Register Upgrades||Approximately $5,000.|
|Transfer Fee||$5,000 to reimburse Five Guys for reasonable costs and expenses in reviewing the transfer application.|
|Public Offering||$5,000 to reimburse Five Guys for reasonable costs and expenses in reviewing the proposed securities offering.|
|Additional or Remedial Training||Cost in providing the training (Currently $1,500).|
|Inspection and Testing||Cost of inspection or testing (Currently estimated at $5,000).|
|Vendor/Equipment Approval Fee||$5,000 to reimburse Five Guys for reasonable costs and expenses in reviewing and approving vendor equipment.|
|Audit Fee||Cost of audit (Currently estimated at $5,000).|
|Late Payment or Reporting Fee||$50 per day the franchisee is late.|
|Site Evaluation Fee||A reasonable amount to be determined (Currently $500).|
|Relocation Fee||$7,500 to reimburse Five Guys for its time, costs and expenses in reviewing the relocation application as well as the current and future sites.|
|Gift Card Program||Varies|
|Time Extension Fee||$10,000 per Time Extension.|
The above information has been compiled from the FDD of Five Guys. Year of FDD: 2019.
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