What is the range of the estimated total initial investment for a Carls restaurant?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
u should review these figures carefully with a business advisor before making any decision to purchase the franchise. We do not offer any direct financing for any part of the initial investment.
YOUR ESTIMATED INITIAL INVESTMENT TO DEVELOP A NEW FRANCHISED RESTAURANT New Format (1)
| Type of Expenditure | Low Amount | High Amount | Method of Payment (2) | When Due | To Whom Payment Is To Be Made | |
|---|---|---|---|---|---|---|
| Fees to CJR: | ||||||
| Initial Franchise Fee (3) | $25,000 | $25,000 | Lump sum | See Item 5 | CJR | |
| Opening Training Support | $30,000 | $74,000 | As incurred | See Item 5 | Vendors, CJR | |
| Team Fee (3) | ||||||
| Total Fees to CJR | $55,000 | $99,000 | ||||
| Build-Out Costs: | ||||||
| Real Property (4) | Variable | |||||
| Building (5) | $577,500 | $808,935 | Progress payments | As arranged | Contractor | |
| Site Improvements (6) | $110,000 | $605,000 | Progress Payments | As arranged | Contractor | |
| Soft Costs (7) | $55,000 | $236,500 | As arranged | As required | Architect, City/County Utilities, etc. | |
| Equipment (8) | $385,000 | $594,000 | As arranged | As incurred | Vendors | |
| Signage (9) | $55,000 | $104,500 | As arranged | As incurred | Vendors | |
| Point of Sale System (8) | $60,500 | $79,200 | As arranged | As incurred | Vendors, CJR | |
| Total Build-Out Costs | $1,243,000 | $2,428,135 | ||||
| Preliminary Operating | ||||||
| Expenses: | ||||||
| Initial Training (10) | $20,000 | $60,000 | As arranged | As incurred | Third parties | |
| Pre-Opening Costs (11) | $8,000 | $23,000 | As arranged | As incurred | Vendors | |
| Additional Funds - 3 months | $160,000 | $250,000 | As arranged | As incurred | Vendors, CJR | |
| (12) | ||||||
| Total Preliminary | $188,000 | $333,000 | ||||
| Operating Expenses | ||||||
| TOTAL ESTIMATED | $1,486,000 $2,860,135 | |||||
| INITIAL INVESTMENT | ||||||
| FOR A CARL’S JR. | ||||||
| RESTAURANT (13) |
NOTES
- (1) The table above reflects a low-high range of costs for each of the major costs categories of the initial investment for a new Franchised Restaurant located in a freestanding building that is approximately 2,200 square feet with a drive thru and full menu kitchen. The ranges listed are our best information to date but may vary depending on changes in market conditions, including availability of building materials, and the geographic area in which the Franchised Restaurant will be located.
- (2) Costs paid to CJR are not refundable. Whether any costs paid to third parties are refundable will vary based on the practice in the area where your Franchised Restaurant is located.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 31–36)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the total estimated initial investment to open a Carls restaurant ranges from $1,486,000 to $3,176,500 for the traditional format and $1,486,000 to $2,860,135 for the new format. This investment includes fees paid to CJR, build-out costs, and preliminary operating expenses. The build-out costs encompass real property, building expenses, site improvements, soft costs, equipment, signage, and the point of sale system. Preliminary operating expenses cover initial training, pre-opening costs, and additional funds for the first three months of operation.
Specifically, fees paid to CJR include the initial franchise fee of $25,000 and an opening training support team fee ranging from $30,000 to $74,000. Build-out costs include building expenses ranging from $577,500 to $808,935, site improvements from $110,000 to $605,000, soft costs from $55,000 to $236,500, equipment from $385,000 to $605,000 (traditional) or $594,000 (new), signage from $55,000 to $104,500, and a point of sale system from $60,500 to $79,200. Preliminary operating expenses include initial training costs ranging from $20,000 to $60,000, pre-opening costs from $8,000 to $23,000, and additional funds for three months ranging from $160,000 to $250,000.
Prospective franchisees should note that the cost of real property is variable and depends on whether the land is leased or purchased. The FDD indicates that purchasing unimproved property may range from $650,000 to $1,100,000 or more, while rent may range from $4,000 to $15,000 or more per month. These figures are estimates and can vary based on market conditions, availability of building materials, and the geographic location of the franchise. The document advises franchisees to carefully review these figures with a business advisor before making a decision.
Carls does not offer direct financing for any part of the initial investment. Franchisees may be able to lease or finance a portion of the furniture, fixtures, and equipment through a third party, but should expect to make a down payment of up to 25%. The FDD also notes that CJR will reimburse up to $5,000 for grand opening advertising expenditures made within a specified timeframe, provided the expenditures are pre-approved and comply with the franchise agreement.