Chili’s Franchise Cost & Fees

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Description

Year Business Began: 1975

Franchising Since: 1984

Headquarters: Dallas, Texas

Estimated Number of Units: 1,635

Franchise Description: The franchisor is Brinker International Payroll Company, L.P. Chili’s Grill & Bar restaurants are full service restaurants featuring a casual atmosphere and a varied menu of freshly prepared appetizers, chicken, beef and seafood entrees, hamburgers and other sandwiches, salads, barbecue ribs, fajitas and other southwestern and Mexican-style cuisine, flatbreads, desserts and a full service bar. Chili’s Restaurants are typically free-standing restaurants located in a metropolitan area or surrounding suburbs. Proximity to office buildings, shopping malls, shopping centers and other high traffic areas is desirable. Another format, Chili’s Special Venue, is an abbreviated format that typically is based upon reduced square footage and/or a reduced menu.

Training Overview: The Managing Owner or Operating Partner and up to five managers (if franchisees open only one restaurant) or 10 managers (if franchisees open two or more restaurants) must attend and complete initial management training program to the franchisor’s satisfaction. All new managers hired by the franchisee and any Managing Owner or Operating Partner later appointed by the franchisee must attend and complete the initial training program to the franchisor’s satisfaction. The initial training program will generally last 15 weeks. All required pre-opening training will be held at one of Brinker’s Certified Training Restaurants and must be completed to its satisfaction at least two months (but not more than five months) before the restaurant opens. The franchisor may require the franchisee’s personnel to attend supplemental training programs. In addition to required training programs, the franchisor may provide conferences for general managers in a designated area. The franchisor may also hold annual conferences for general managers and quarterly meetings for unit supervisors.Territory Granted: The Franchise Agreement grants franchisees the right to operate the restaurant only at the approved location. Franchisees may not relocate the restaurant without first obtaining written consent. There are no territorial rights granted with the Franchise Agreement. There is no requirement that franchisees achieve any specified sales volume or market penetration under the Franchise Agreement. Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls.Obligations and Restrictions: When franchisees sign the Agreements, they must designate an individual to serve as their “Managing Owner.” The same person must act as the Managing Owner under the Development Agreement and all Franchise Agreements between Brinker and the franchisee. If franchisees are an individual, they will be the Managing Owner. If franchisees are operating as a corporation, a partnership or other business entity, the Managing Owner must (i) own the largest percentage share of ownership, but in no event less than 10%, (ii) be authorized by to bind franchisees in any dealings with Brinker and authorized distributors, suppliers, and contractors, (iii) be authorized to direct any actions necessary to ensure compliance with the Agreements, and (iv) unless an Operating Partner is appointed, devote his or her full time and best efforts to the operations of the Restaurant and operations under the Development Agreement with no operational or management commitments to other businesses. The Managing Owner must also satisfy training requirements. Franchisees must use the restaurant premises solely for the operation of the Chili’s Restaurant and must keep the restaurant open and in normal operation for the hours and days specified in the manual or otherwise in writing. Franchisees must refrain from using or permitting the premises to be used for any other purpose or activity at any time without first obtaining the franchisor’s written consent. Franchisees must meet and maintain the highest applicable health standards and ratings. Franchisees must operate the restaurant in strict conformity with the methods, standards, and specifications Brinker requires.Term of Agreement and Renewal: The length of the initial franchise term begins on the effective date of the Franchise Agreement and, unless terminated sooner, will expire on the last day of last calendar month of the 20th year following the date on which the franchised restaurant is opened for business. The term of the successor franchise agreement will be 20 years, if requirements are met.Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee any notes, leases or other obligations franchisees may make to others. Investment Tables: Estimated Initial Investment Name of Fee Low High Initial Franchise Fee $40,000 $60,000 Leasehold Expense $5,000 $25,000 Pre-Construction $45,000 $300,000 Construction Costs $500,000 $1,400,000 Site Work $50,000 $550,000 Exterior Signage $15,000 $80,000 Furniture/Fixtures/Sound System/TVs $55,000 $120,000 Kitchen/Bar/Equipment $190,000 $400,000 Opening Advertising $5,000 $10,000 Initial Training $60,000 $250,000 Opening Team Costs $65,000 $100,000 Working Capital $12,000 $22,000 Inventory $8,000 $20,000 Bar/Kitchen Accessories $40,000 $60,000 Liquor License Varies Computer POS System/Kitchen Display System/Installation $40,000 $56,000 Additional Funds (3 months) $225,000 $600,000 ESTIMATED TOTAL $1,355,000 $4,048,000 *The estimated initial investment range covers from a Chili’s Special Venue up to a Chili’s Grill & Bar. Other Fees Type of Fee Amount Royalty Fee 1.25% of Gross Sales. Technical Services Fee 2.75% of Gross Sales. Advertising Production Fee 0.5% of Gross Sales. Local Advertising Program (LAP) Fee Minimum 2.5% of Gross Sales. Regional Advertising Program (RAP) Fee Maximum 4% of Gross Sales. National Advertising Program (NAP) Fee Currently, 2.84% of Gross Sales; Maximum – 4% of Gross Sales Supplemental Marketing Programs Currently, 0.10% of Gross Sales Replacement and Supplemental Training Currently, $3,500 plus costs of the franchisee’s personnel attending training. Product Testing Fee Approximately $1,500 per product annually typically charged to the supplier; additional product testing may be required due to specification noncompliance. Supplier Facility Inspection Currently, approximately $1,025 per day plus travel expenses normally charged to the supplier or distributor. Licensing Fees Currently, none. Restaurant Inspection Varies. Mandatory Sanitation and Food Safety Program (SAFE) Currently, approximately $170 per visit if franchisees do not receive a passing grade. There is no charge for a score of 92 or higher. Transfer Franchise/Development Agreements – $5,000 or any greater amount necessary to reimburse Brinker for its expenses, with a single transfer maximum of $25,000 Offering Franchise/Development Agreements – $10,000 Audit Cost of audit, including travel, lodging, wages, and legal and accounting costs. Interest Lesser of 18% per annum or maximum legal rate (the maximum legal rate in California is 10% per annum). Indemnification Franchise/Development Agreements – Will vary depending on loss. Enforcement Costs Franchise/Development Agreements – Will vary. Liquidated Damages for Failure to Meet Development Schedule $10,000/month; Maximum period: 1 year. Successor Fee 100% of the then-current Franchise Fee. Décor Items, Certain Furniture and Fixtures Currently, the prices that Brinker charges its company-owned restaurants for the items, including a 15% administration fee; prices are subject to change with prior written notice. Gift Cards Approximately $1,500 per year/per restaurant. Management Services10% of Gross SalesMandatory RemodelingActual costs franchisees incur .

 Disclaimer: The above information has been compiled from the FDD of Chili’s. Year of FDD: 2018

 

Other Fees
Type of Fee Amount
Royalty Fee 1.25% of Gross Sales.
Technical Services Fee 2.75% of Gross Sales.
Advertising Production Fee 0.5% of Gross Sales.
Local Advertising Program (LAP) Fee Minimum 2.5% of Gross Sales.
Regional Advertising Program (RAP) Fee Maximum 4% of Gross Sales.
National Advertising Program (NAP) Fee Currently, 2.84% of Gross Sales; Maximum – 4% of Gross Sales
Supplemental Marketing Programs Currently, 0.10% of Gross Sales
Replacement and Supplemental Training Currently, $3,500 plus costs of the franchisee’s personnel attending training.
Product Testing Fee Approximately $1,500 per product annually typically charged to the supplier; additional product testing may be required due to specification noncompliance.
Supplier Facility Inspection Currently, approximately $1,025 per day plus travel expenses normally charged to the supplier or distributor.
Licensing Fees Currently, none.
Restaurant Inspection Varies.
Mandatory Sanitation and Food Safety Program (SAFE) Currently, approximately $170 per visit if franchisees do not receive a passing grade. There is no charge for a score of 92 or higher.
Transfer Franchise/Development Agreements – $5,000 or any greater amount necessary to reimburse Brinker for its expenses, with a single transfer maximum of $25,000
Offering Franchise/Development Agreements – $10,000
Audit Cost of audit, including travel, lodging, wages, and legal and accounting costs.
Interest Lesser of 18% per annum or maximum legal rate (the maximum legal rate in California is 10% per annum).
Indemnification Franchise/Development Agreements – Will vary depending on loss.
Enforcement Costs Franchise/Development Agreements – Will vary.
Liquidated Damages for Failure to Meet Development Schedule $10,000/month; Maximum period: 1 year.
Successor Fee 100% of the then-current Franchise Fee.
Décor Items, Certain Furniture and Fixtures Currently, the prices that Brinker charges its company-owned restaurants for the items, including a 15% administration fee; prices are subject to change with prior written notice.
Gift Cards Approximately $1,500 per year/per restaurant.
Management Services 10% of Gross Sales
Mandatory Remodeling Actual costs franchisees incur