Bojangles Franchise Cost Worth It In 2024?
This article is based on its most recent FDD.
Bojangles is a regional fast-food chain that specializes in cajun fried chicken. It was founded by Jack Fulk in the 1970s and is now led by Jose Armario. They currently have 391 franchised and 263 company-owned locations.
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How is Bojangles Franchise Positioned in the Food and Beverages Industry?
The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people are employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x.
Bojangles competes in the Food and Beverages market against big brand companies such as KFC. Bojangles franchisees might also compete against other nearby Bojangles locations.
How Much is a Bojangles Franchise?
The initial Bojangles Franchise Fee is $10,000 in an existing market and $35,000 in a new market. You have to pay this upfront fee when opening a Bojangles franchise.
Bojangles Franchise Cost
The estimated total investment necessary to begin the operation of a Bojangles Franchise ranges from $1,906,400 to $3,020,750. The following costs are part of the upfront costs included in the initial investment for Bojangles.
Many of these are one-time fees that are needed to launch the franchise.
Review the chart below to see how much it costs to buy a Bojangles franchise in 2022.
Estimated Initial Investment
| Type of expediture | Amount | To Whom Payment Is To Be Made | |
|---|---|---|---|
| Low | High | ||
| Franchise Fee | $35,000 | $35,000 | Us |
| Insurance | $5,000 | $10,000 | Insurers |
| Pre-opening salaries, travel, living expenses during initial training | $98,000 | $149,000 | Employees, suppliers of food and lodging |
| Site selection | $100 | $10,000 | Suppliers |
| Building | $770,000 | $950,000 | Suppliers, contractors |
| Site work | $462,000 | $850,000 | Suppliers, contractors |
| Soft costs | $60,000 | $200,000 | Service providers; government authorities |
| Equipment, furniture, signage and fixtures | $440,000 | $600,000 | Suppliers |
| Initial Inventory | $13,800 | $28,750 | Suppliers |
| Utility deposits & business licenses | $2,500 | $13,000 | Utility Companies, Government Authorities |
| Additional funds (3 months initial phase) | $20,000 | $175,000 | Employees, insurers, suppliers |
| Total | $1,906,400 | $3,020,750 | |
This is significantly higher than the industry average of $466,000.
Bojangles Franchise Requirements
Requirements to be eligible for a Bojangles franchise:
- Development interest within our growth markets
- Minimum net worth of $1 Million and net liquid assets of $500,000 per development commitment
- Possess a successful operational background in restaurant management/ownership
- Or hire an operations partner
Take A Few Simple Steps And You’re On Your Way To Being A Franchise Owner
- Complete the Franchise Application
- Submit your Personal Financials for evaluation
- Download the FDD, Acknowledge Receipt & Review
- Complete the Business Plan Paperwork for Evaluation
- Complete ProForma for Evaluation
- Complete a Market Visit
- Attend Discovery Day at the Bojangles Support Center
- Sign & Submit your Development Agreement
Owning a Bojangles Franchise Requires Ongoing Fees
Royalty: 4% of monthly Gross sales
Marketing Fee: 3-4% of monthly Gross sales
Renewal: 50% of franchise fee
These are in the same ballpark as the industry.
How much do Bojangles franchise owners make?
AVERAGE GROSS SALES OF FULL-SIZE RESTAURANTS
| December 30, 2019 to December 27,2020 | December 28, 2020 to December 26, 2021 | ||
|---|---|---|---|
| Franchised | No. of Restaurants | 385 | 391 |
| Average Gross Sales | $1,967,505 | $2,111,968 | |
| Number & Percentage of Restaurants Above Average | 160 42% | 165 42% | |
| Median Gross Sales | $1,784,899 | $1,972,608 | |
| Range of Gross Sales | $565,713 to $5,570,073 | $589,891 to $6,003,148 | |
| Company-Operated | No. of Restaurants | 303 | 263 |
| Average Gross Sales | $1,725,314 | $1,818,592 | |
| Number & Percentage of Restaurants Above Average | 143 47% | 119 45% | |
| Median Gross Sales | $1,705,951 | $1,760,624 | |
| Range of Gross Sales | $726,119 to $3,379,557 | $670,510 to $3,826,315 | |
| Combined Franchise & Company-Operated | No. of Restaurants | 688 | 654 |
| Average Gross Sales | $1,860,843 | $1,993,989 | |
| Number & Percentage of Restaurants Above Average | 296 43% | 281 43% | |
| Median Gross Sales | $1,739,515 | $1,859,516 | |
| Range of Gross Sales | $565,713 to $5,570,073 | $589,891 to $6,003,148 |
2020 Bojangles Median Franchise Sales: $1,784,899
| Initial investment (midpoint) | %Profit margin of average franchise sales | Estimated Profits | Time to recoup investment |
|---|---|---|---|
| $2,463,575 | 10% | $178,489 | 15 years |
| 15% | $267,734 | 11 years | |
| 20% | $356,979 | 8 years |
2021 Bojangles Median Franchise Sales: $1,972,608
| Initial investment (midpoint) | %Profit margin of average franchise sales | Estimated Profits | Time to recoup investment |
|---|---|---|---|
| $2,463,575 | 10% | $197,260 | 14 years |
| 15% | $295,891 | 11 years | |
| 20% | $394,520 | 8 years |
Based on the median sales provided by Bojangles’s franchise locations, at an average of a 15% profit margin it will take around 11 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.
Also, include another year which is the time it takes for the franchise to get set up and off the ground.
Is the Bojangles Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Bojangles franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems like Anytime Fitness where more transaction data is available.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales – 0.44
$1 Million – $5 Million Net Sales
- Estimated Selling Price = Net Sales – 0.34
Over $5 Million Net Sales
- Not Applicable
When you go to sell a Bojangles franchise based on the median multiple of .44 and net sales averaging between 2020 and 2021 of $1,878,753, it would sell for $826,651. This is significantly lower than the midpoint investment of $2,463,575.
Therefore, selling your multiunit franchise system would amount to $826,651. The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Bojangles Income Statement
Bojangles Income Statement
| (dollars in thousands) | December 26, 2021 | December 27, 2020 |
|---|---|---|
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $18,404 | $22,199 |
| Accounts receivables, net of allowance of $69 and $110, respectively | 4,839 | 3,549 |
| Vendor receivables | 2,381 | 2,564 |
| Inventories, net | 3,828 | 3,504 |
| Prepaid and other current assets | 608 | 909 |
| Total current assets | 30,060 | 32,725 |
| Property and equipment, net | 45,619 | 44,186 |
| Goodwill, net | 244,250 | 290,750 |
| Brand | 340,500 | 340,500 |
| Franchise rights, net | 41,528 | 43,061 |
| Right of use | 227,624 | 236,060 |
| Other noncurrent assets | 702 | 538 |
| Total assets | $930,283 | $987,820 |
| Liabilities and Member’s Equity | ||
| Current liabilities | ||
| Accounts payable | $8,560 | $8,781 |
| Due to BRI | 4,708 | 7,812 |
| Accrued expenses | 7,817 | 7,826 |
| Current operating lease liabilities | 28,186 | 26,823 |
| Current maturities of finance lease obligations | 511 | 764 |
| Current deferred revenue | 460 | 352 |
| Total current liabilities | 50,242 | 52,358 |
| Operating lease liabilities, less current portion | 226,640 | 237,307 |
| Finance lease obligations, less current maturities | 1,497 | 2,358 |
| Deferred revenue, less current portion | 7,965 | 4,422 |
| Total liabilities | 286,344 | 296,445 |
| Commitments and contingencies | ||
| Member’s equity | 643,939 | 691,375 |
| Total liabilities and member’s equity | $930,283 | $987,820 |
Bojangles Income Statement
Bojangles Income Statement
| (dollars in thousands) | Year Ended December 26, 2021 | October 6,2020 to December 27, 2020 |
|---|---|---|
| Revenues | ||
| Company-operated restaurant revenues | $522,221 | $133,777 |
| Franchise royalty revenues | 35,783 | 7,946 |
| Property and equipment rental revenues | 7,919 | 323 |
| Other franchise revenues | 510 | 82 |
| Total revenues | 566,433 | 142,128 |
| Restaurant operating expenses | ||
| Company-operated restaurant food and packaging costs | 158,129 | 39,469 |
| Company-operated restaurant labor costs | 156,954 | 39,142 |
| Company-operated restaurant operating costs | 137,124 | 33,705 |
| Company-operated restaurant depreciation and amortization | 14,499 | 3,334 |
| Costs associated with property and equipment rentals | 6,662 | 252 |
| Total restaurant operating expenses | 473,368 | 115,902 |
| Operating income before other operating expenses | 93,065 | 26,226 |
| Other operating expenses | ||
| General and administrative | 19,753 | 4,386 |
| Depreciation and amortization | 36,281 | 8,633 |
| Gain on restaurant refranchising | (14,502) | – |
| Gain on disposal of property and equipment and other | (472) | (359) |
| Total other operating expenses | 41,060 | 12,660 |
| Operating income | 52,005 | 13,566 |
| Interest income | 5 | – |
| Interest expense | (213) | (42) |
| Net income | $51,797 | $13,524 |
Bojangles (Franchisor) Income Statement Key Insights:
Bojangles almost quadrupled in net income between 2020 and 2021 at a 390% rate of growth. As such, it is a very profitable franchise.
How many Bojangles units have opened and closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Changes |
|---|---|---|---|---|
| Franchised | 2019 | 437 | 434 | -3 |
| 2020 | 434 | 432 | -2 | |
| 2021 | 432 | 496 | +64 | |
| Company-Operated | 2019 | 319 | 312 | -7 |
| 2020 | 312 | 326 | +14 | |
| 2021 | 326 | 277 | -49 | |
| Total Outlets | 2019 | 756 | 746 | -10 |
| 2020 | 746 | 758 | +12 | |
| 2021 | 758 | 773 | +15 |
Over the last three years, the company has been expanding. While franchising units have increased, company-owned outlets are closing down.
Conclusion
Bojangles offers people the opportunity to be a part of a business that has high gross annual sales and a reliable franchisor that claims to have mastered cajun fried chicken.
While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in the Food and Beverages Industry.
