A&W Restaurants Franchise Cost & Fees

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Description

Year Business Began: 1919Franchising Since: 1925Headquarters: Lexington, KentuckyEstimated Number of Units: 1,000Franchise Description: A&W Restaurants, Inc. is the franchisor. A&W is a wholly owned subsidiary of A Great American Brand, LLC. Currently, the franchisor operates restaurants and grants licenses to operate restaurants under the A&W and A&W All American Food trademarks. The Restaurants offer A&W draft Root Beer and food products such as hamburgers, hot dogs and fries. The Restaurants are usually located in an area with high traffic volume and typically are open for lunch, dinner and evening business. The franchisee will operate a quick-service restaurant featuring A&W Root Beer and other approved items in a freestanding restaurant, a restaurant connected to or in line with another retail space, a restaurant in a “captive” location or a restaurant in a co-brand format.Training Overview: Within six months before the Restaurant opening for business, the RestaurantManager and one other manager devoted to the full-time, day-to-day direct operation of the Restaurant will be required to attend and complete the Training Course to the franchisor’s reasonable satisfaction. The Training Course is provided by the franchisor at a location it designates (currently Lexington, Kentucky), and may last between 8 and 10 days. The Training Course is otherwise available to any other member of the franchisee’s organization they wish to attend. The franchisor is currently providing the Training Course for up to three individuals free of cost. Restaurant on-the-job training may use a rotation schedule to ensure that time is spent in each of the Restaurant’s stations. Non-guest related activities, such as station opening, closing, root beer dispensing, maintenance and the production of A&W Root Beer may also be scheduled as part of the rotation. Additional training classes may be offered or required for restaurant management teams and above store managers. Franchisees may request on-site training or assistance at any time in accordance with guidelines the franchisor specifies in the Operations Manual or otherwise.Territory Granted: Franchisees may operate their Restaurant from only one site. The site means a location the franchisee selects and the franchisor approves, where the franchisee will operate the Restaurant. If franchisees operate a Freestanding or Inline Restaurant, the Franchise Agreement will designate a trading area consisting of the smaller of (a) a 1.5 mile radius around your Restaurant and (b) whatever radius around the Restaurant includes a combined number of 30,000 residing and working people, within which the franchisor will not, so long as they are in compliance with the Franchise Agreement, establish or grant a franchise for A&W Restaurants that are not located at so-called “CaptiveLocations.” If franchisees operate a Co-Brand Restaurant or a Captive Restaurant, they will not receive a trading area.Obligations and Restrictions: Franchisees are not required to actively supervise the operation of the restaurant on premises, although active on premises supervision is strongly encouraged. If franchisees are an individual, franchisees must either serve as or designate a Restaurant Manager. An entity franchisee must designate a Restaurant Manager. The Restaurant Manager, who will have day-to-day management responsibility for the Restaurant, must exercise on-premises supervision and personally participate in, and be devoted to the full-time, day-to-day direct operation of the Restaurant. Franchisees are required to offer for sale all of the menu items specified in the Operations Manual and/or the Franchise Agreement, prepared from ingredients, meeting A&W’s specifications, and purchased from approved sources. Items not listed in the Operations Manual are not permitted to be sold unless authorized in writing.Term of Agreement and Renewal: The length of the initial term for Freestanding, In-line and Co-Brand Restaurants is generally 20 years. The initial term of the franchise agreement for Captive Restaurants is 10 years. If franchisees operate a Freestanding, In-line or Co-Brand Restaurant, are in good standing, and satisfy the renewal criteria in the Franchise Agreement, they may renew for two additional renewal terms of five years each. There is no renewal or extension for a Captive Restaurant.Financial Assistance: The franchisor does not offer, directly or indirectly, any arrangements to franchisees for financing the initial investment or the continuing operation of their A&W business. The franchisor does not guaranty a franchisee’s note, lease or obligation. Investment Tables: Estimated Initial Investment Name of Fee Low High Real Estate Not included Professional Fees, Licenses & Permits $5,000 $80,000 Building Costs including Site Work $50,000 $525,000 Signs $5,000 $41,000 Furnishings, Fixtures & Equipment $143,000 $325,000 Initial Franchise Fee $15,000 $30,000 Grand Opening Promotion Deposit $2,500 $5,000 Training Course Expenses $500 $8,000 On-Site Training Expenses $6,000 $25,000 Miscellaneous Opening Costs $6,000 $10,000 Opening Inventory $3,500 $12,000 Additional Funds – 3 Months $30,000 $150,000 Estimated Total* $266,500 $1,211,000 *The estimated initial investment range covers from Captive Restaurants up to Freestanding Restaurants, including Co-Brand, Conversion and Inline Restaurants (Retail Space, Gas Station, and Convenience Store). The range does not include real estate costs. See FDD for more details. Other Fees Type of Fee Amount Royalty Fee 5% of net sales. Advertising Fee 5% of net sales for Freestanding, Inline, or Co-Brand A&W Restaurants; 2% of net sales for Captive A&W Restaurants Training Courses Additional and subsequent trainee charge: $200 per person per day. Training Materials and Fees Actual costs for training materials. On-Site Training or Assistance Fee $200 per day. Interest on Late Payments Lesser of 18% per annum or highest legal rate allowable under state law. Renewal Fee $2,500 Transfer A $5,000 fee is payable in connection with an approved transfer of each Franchise Agreement for an A&W Restaurant. Audit All costs of audit and underpaid fees plus 18% interest on underpayment from date due. Insurance $4,000 – $10,000 (estimate). Supplier Approval The franchisor’s actual costs Indemnification Will vary under circumstances. Inventory Replacement Will vary depending upon sales level. Food Standards and Safety Review Audit The franchisor may cause a third party vendor to conduct food standards consultations of the Restaurant. The franchisor currently does not charge franchisees any fees for initial inspections, but it may do so in the future. The franchisor reserves the right to charge franchisees for any subsequent inspection that is necessary due to a failed initial inspection or franchisee’s failure to allow an initial inspection. The above information has been taken from the FDD of A&W Restaurants. Year of FDD: 2018Franchise Direct’s Disclaimer

Other Fees
Type of Fee Amount
Royalty Fee 5% of net sales.
Advertising Fee 5% of net sales for Freestanding, Inline, or Co-Brand A&W Restaurants; 2% of net sales for Captive A&W Restaurants
Training Courses Additional and subsequent trainee charge: $200 per person per day.
Training Materials and Fees Actual costs for training materials.
On-Site Training or Assistance Fee $200 per day.
Interest on Late Payments Lesser of 18% per annum or highest legal rate allowable under state law.
Renewal Fee $2,500
Transfer A $5,000 fee is payable in connection with an approved transfer of each Franchise Agreement for an A&W Restaurant.
Audit All costs of audit and underpaid fees plus 18% interest on underpayment from date due.
Insurance $4,000 – $10,000 (estimate).
Supplier Approval The franchisor’s actual costs
Indemnification Will vary under circumstances.
Inventory Replacement Will vary depending upon sales level.
Food Standards and Safety Review Audit The franchisor may cause a third party vendor to conduct food standards consultations of the Restaurant. The franchisor currently does not charge franchisees any fees for initial inspections, but it may do so in the future. The franchisor reserves the right to charge franchisees for any subsequent inspection that is necessary due to a failed initial inspection or franchisee’s failure to allow an initial inspection.