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Nathan's Famous Franchise ProfileRestaurant Franchises > Quick-Service Restaurants |
What Are the Initial Investment Requirements for a Nathan's Famous Franchise?
To open a Nathan's Famous franchise, you'll need to prepare for a significant financial commitment. The initial investment ranges from $82,200 to $2,032,610, depending on the location and size of the unit. An initial franchise fee of $30,000 is required, alongside a cash requirement of $30,000 to $225,000. It's essential to ensure you meet the net worth requirement, which falls between $500,000 and $1,000,000, to qualify for franchise ownership.
What Are the Ongoing Fees for Nathan's Famous Franchisees?
As a Nathan's Famous franchisee, you will be responsible for ongoing fees that include a royalty fee of 5.5% of your gross sales and a marketing fee of 2.5%. These fees contribute to the overall support and brand recognition that Nathan's Famous provides to its franchisees. It's crucial to budget for these expenses as part of your financial planning to ensure the long-term success of your franchise.
What Are the Revenue Expectations for a Nathan's Famous Franchise?
Nathan's Famous franchises can expect varying revenue figures based on location and operational efficiency. On average, annual revenue per unit is approximately $551,287, with a median figure reaching $1,000,000. The lowest recorded annual revenue is $82,200, while the highest can go up to $2,032,610. Understanding these revenue expectations can help you forecast your financial performance and set realistic goals for your franchise.
How Quickly Can You Expect to Break Even with a Nathan's Famous Franchise?
Franchisees of Nathan's Famous can anticipate a breakeven period of around 12 months, which is relatively quick compared to other franchises. This timeframe indicates the potential for a swift return on investment, with an investment payback period of about 24 months. Being aware of these timelines can help you plan your cash flow and operational strategies effectively as you establish your franchise.
Nathan's Famous Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Nathan's Famous Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2022 | 2023 | 2024 |
|---|---|---|---|
| Total Units | 83 | 76 | 75 |
| Net Change YoY | -7 | -1 | |
| Franchised Units | 79 | 72 | 71 |
| Net Change YoY | -7 | -1 | |
| Corporate Units | 4 | 4 | 4 |
| Net Change YoY | 0 | 0 |
Investment Overview
Nathan's Famous offers a diverse investment range for franchisees, with a low initial investment of $82,200 and a high of $2,032,610. The franchise fee is set at $30,000, while ongoing royalty fees are 5.5% of gross sales, complemented by a 2.5% marketing fee. To ensure financial stability, franchisees should have liquid cash available between $30,000 and $225,000, along with a net worth requirement of $500,000 to $1,000,000.
Revenue Potential
The average annual revenue per Nathan's Famous unit is approximately $551,287, with a median revenue reaching $1,000,000. This highlights the brand's strong market presence and potential for profitability. However, revenue can vary significantly, with some units reporting as low as $82,200 and others achieving as high as $2,032,610 annually.
Franchise Growth
Nathan's Famous has experienced a slight decline in franchised units, from 79 in 2022 to 71 projected in 2024. Despite this, the brand maintains a stable number of corporate-owned units, consistently holding at four. This indicates a strategic focus on optimizing existing locations rather than rapid expansion.
Financial Performance
The financial metrics for Nathan's Famous indicate a healthy business model, with total annual revenue around $126.9 million. The cost of goods sold (COGS) accounts for 59.9% of revenue, while operating expenses are 69.5%. This results in an EBITDA margin of 30.6%, showcasing the brand's ability to generate profit after covering essential costs.
Breakeven and Payback
Franchisees can expect to reach breakeven within 12 months of operation, providing a relatively quick return on investment. The investment payback period is estimated at 24 months, making Nathan's Famous an appealing option for aspiring entrepreneurs looking for a faster path to profitability.
Operational Expenses
Nathan's Famous units incur various operational expenses, including real estate rent ranging from $60,000 to $195,000 annually. Additional costs include insurance, utilities, professional fees, and grand opening advertising, leading to total annual expenses between $82,200 and $364,100. Understanding these costs is crucial for effective financial planning and management.
Frequently Asked Questions
The initial investment for a Nathan's Famous franchise ranges from $82,200 to $2,032,610, depending on various factors like location and size of the unit.