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Zaxby's Franchise ProfileRestaurant Franchises > Quick-Service Restaurants |
What Are the Initial Investment Requirements for a Zaxby's Franchise?
To open a Zaxby's franchise, you should be prepared for a significant initial investment, ranging from $1,406,700 to $3,323,200. This includes a franchise fee of $35,000. Additionally, Zaxby's requires a cash reserve of $950,000 and a net worth between $1,000,000 and $2,500,000. These financial prerequisites ensure that franchisees have the necessary resources to successfully launch and operate their units.
What Are the Ongoing Fees Associated with a Zaxby's Franchise?
Franchisees of Zaxby's must pay ongoing fees that include a royalty fee of 6% of gross sales and a marketing fee of 4%. These fees contribute to the overall brand support and advertising efforts that help drive customer traffic to your location. Understanding these costs is crucial for managing your franchise's financial health and ensuring sustainable profitability.
What Is the Average Revenue and Profitability for a Zaxby's Franchise?
Zaxby's franchises average annual revenue of approximately $2,721,224, with a median revenue of $2,651,111 per unit. The cost of goods sold (COGS) is around 32.9%, leaving a gross profit margin of 67.1%. With operating expenses averaging $1,113,125, franchisees can expect an EBITDA of about $720,161, representing 26.5% of revenue. This financial performance indicates a potentially lucrative opportunity for franchisees willing to invest time and resources.
How Quickly Can You Expect to Break Even with a Zaxby's Franchise?
Franchisees can anticipate a breakeven period of approximately 12 months after opening a Zaxby's unit. With an investment payback period of around 36 months, this timeline suggests that if managed effectively, franchisees can recoup their initial investment relatively quickly. This aspect makes Zaxby's an attractive option for those looking to enter the fast-casual dining market.
Zaxby's 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:
Zaxby's Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2021 | 2022 | 2023 |
|---|---|---|---|
| Total Units | 908 | 911 | 941 |
| Net Change YoY | 3 | 30 | |
| Franchised Units | 762 | 765 | 796 |
| Net Change YoY | 3 | 31 | |
| Corporate Units | 146 | 146 | 145 |
| Net Change YoY | 0 | -1 |
Initial Investment
The initial investment to open a Zaxby's franchise ranges from $1,406,700 to $3,323,200. This includes the franchise fee of $35,000 and other startup costs. Prospective franchisees should prepare for a cash requirement of $950,000 and a net worth of between $1,000,000 and $2,500,000 to ensure they meet the financial criteria for ownership.
Revenue Potential
Zaxby's franchises show promising revenue potential, with an average annual revenue of $2,721,224 per unit. The median annual revenue is slightly lower at $2,651,111, while the annual revenue can vary significantly, with the lowest reported at $786,417 and the highest at $5,989,909. This variability highlights the importance of location and management in driving sales.
Franchise Fees and Royalties
Franchisees are required to pay a royalty fee of 6% on gross sales and a marketing fee of 4%. These fees contribute to the ongoing support and marketing efforts provided by Zaxby's, helping franchisees enhance their brand visibility and operational effectiveness in their local markets.
Breakeven and Payback
Zaxby's franchises typically reach breakeven within 12 months of operation, reflecting a strong potential for profitability. The investment payback period is estimated at 36 months, allowing franchisees to recover their initial investment relatively quickly compared to many other franchise opportunities.
Franchise Growth
The Zaxby's franchise system has been steadily growing, with the number of franchised units increasing from 762 in 2021 to 796 in 2023. This growth trend indicates a healthy demand for Zaxby's offerings and a commitment to expanding the brand's presence in the market.
Corporate Structure
Zaxby's operates a mix of franchised and corporate-owned units. As of 2023, there are 796 franchised locations and 145 corporate units. This structure allows for a balance between franchisee independence and corporate oversight, ensuring brand consistency while empowering individual franchise owners to operate their businesses.
Frequently Asked Questions
The initial investment for a Zaxby's franchise ranges from approximately $1,406,700 to $3,323,200. This includes the franchise fee, equipment, and other startup costs.