How Much Five Guys Franchise Owners Really Make Per Year
We cover Five Guys pretty thoroughly over here at Mashed, and for good reason. The popular burger and fries chain is growing at a rapid rate, not just in its home country of the U.S., but also in the U.K., too (via Voxburner). Considering just how popular its burgers are and their commitment to using never-frozen beef and slicing their own potatoes, owning one has to be a solid investment, right?
The short answer would be — yes. If you happen to be a Five Guys franchise owner, then you can expect to make a very healthy income. The tricky part, though, is getting the franchise.
Franchise owners make six figures
Five Guys makes it pretty clear to franchise owners that the company won't pinpoint an exact number on what owners can expect to make based on previous sales history, but that doesn't mean some of the data isn't out there (via Franchise Business Review). A franchisee who is on top of things can expect their store to make a nice amount of sales — up to $1.18 million annually.
Of course, sales don't equal income, and operators have to account for all those overhead costs like keeping the lights on and paying staff to sweep up peanut shells a hundred times a day. Five Guys also takes a gross sales royalty of 6 percent. The median income for a food franchise owner is around $126,866 a year, so we can reasonably expect a Five Guys franchisee to be somewhere around that.
Before owners can make that kind of money with Five Guys, though, they first have to convince them that they're worthy of sitting at the table.
You'll need big cash if you want to open a Five Guys
Buying a Five Guys franchise — or really any fast food franchise — isn't cheap. Opening one doesn't cost as much as a Wendy's or McDonald's, but it's still a pretty penny.
The franchise fee is $25,000, and franchisees can expect to make an initial investment between $306,000 to $641,000. This cost has only gotten more expensive as the chain's popularity has skyrocketed. In 2012, the franchise fee was $5,000 less, however, those who were interested were expected to already have a hefty net worth (at least $1.5 million) and liquidity of around $500,000 (via Forbes). Oh, and Five Guys doesn't help with financing.
Franchisees operate more than 900 of Five Guys' restaurants, and that number is expected to keep growing as more applications are flowing in every day. While it does cost a lot to open one, the pay off is pretty good.
Franchisees don't just run a single Five Guys restaurant
Five Guys sold out of all its North American franchise rights shortly after opening the franchise doors and people have been clamoring to get one ever since. If you have the funds and a serious love of burgers, a Five Guys might be right for you. Just know that you won't be running a single store, but five at the very minimum.
The company also has some pretty hefty terms in its franchise contracts. "I don't know if I would ever sign it," company founder Jerry Murrell told Inc. "We can get out of the deal a million ways, but they are stuck." Aside from taking a sales cut, the company also regularly puts its franchised stores through weekly secret shopper and safety checks.
Five Guys was initially against franchising
Considering just how wildly popular Five Guys has become, it's almost hard to believe that its U.S. takeover might not have ever happened. For a fast food restaurant to really grow, franchising is almost a necessity, but Five Guys was initially against it. Murrell had worked incredibly hard to get his burger restaurants running and profitable in northern Virginia, and the idea of turning it over to outsiders was a risky move he wasn't sure he was ready for.
"I just wasn't sure I could get strangers to buy into our concept," he told Forbes in 2012. "Everyone came in with their own opinions about what should be on the menu." Murrell was reluctant, but his son Matt, who was helping him run the business, was wise enough to see the potential and bought his father a copy of Franchising for Dummies. The book was co-written by Wendy's founder Dave Thomas, and gave Murrell the push he needed to welcome franchise investors into the fold.
It only took three days to sell out of franchise rights in Virginia — and the rest is pretty much burger history.