Here's How Much It Really Costs To Open A Burger King Franchise
Though you probably assume that the fast food restaurant location which you frequent most often is owned entirely by the company, you might be surprised to find out that a large portion of America's fast food joints are actually franchises. While franchises bring a large amount of money for the company, they're actually owned by an independent, individual owner. This is typically a regular Joe, for example, who has paid the company a franchising fee (in addition to meeting other qualifications) to open his own branch of a McDonald's, Wendy's, or Domino's Pizza. This concept goes back to the 1800s but was popularized in the fast food world by Ray Kroc, founder of McDonald's (via Eater).
Subway, for example, operates primarily franchise locations, and they're the country's largest fast food chain. The same can be said for Burger King, which according to The Motley Fool, reduced its number of corporate-owned restaurants from 1,000 to just 52 locations in 2010.
Each restaurant has different requirements for what it takes to open up your own franchise location. And they can certainly be costly.
The dollar cost behind opening your own Burger King
The franchise fees to open a fast food restaurant vary but tend to be in the range from $10,000 to $100,000 (via Business Insider). The real difference occurs when it comes to startup costs and how much is paid to the corporation in monthly fees. Depending on the company, this number can slide anywhere from 5 percent to 50 percent. Chik-fil-A, for example, only requires a $10,000 franchise fee but also charges 15 percent of gross sales as well as 50 percent of pretax profits.
Burger King requires a $50,000 franchise fee from the franchise owner, as well as requiring them to pay for all the costs associated with starting a new fast food restaurant. Perhaps this is why the company requires all new franchise owners to have at least $500,000 in liquidity as well as a net worth of at least $1.5 million (via Franchise Help). All told, the cost to start up a Burger King can range from $1.9 million to $3.3 million. In the case of Burger King, the ongoing fees that are part of the deal include an advertising fee of 4 percent of gross sales and a royalty fee of 4.5 percent of gross sales is charged.
However, if you have the financial backing, opening your own location of a Burger King can be quite lucrative. Estimated yearly sales are estimated at around $1.4 million.