Carl’s Jr. Franchise in 2024: Costs, Fee & FDD
Discover the investment potential of Carl’s Jr. with insights on franchise costs, support, and earnings. Learn about the brand’s unique appeal, competitive landscape, and what it takes to succeed as a franchisee in this iconic quick-service chain.
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Carl’s Jr. was founded in 1941 by Carl Karcher and his wife, Margaret, in Anaheim, California, starting as a humble hot dog cart before evolving into a prominent quick-service restaurant brand. Known for its bold flavors and hearty menu, Carl’s Jr. has carved a unique space in the fast-food industry, competing with other major brands by offering a West Coast-inspired take on burgers, charbroiled meats, and more. Today, it’s recognized for pioneering innovative, indulgent menu items that appeal to a wide audience.
The brand’s core offerings focus on burgers, chicken sandwiches, and breakfast items, along with sides like fries and onion rings. Signature items include the Western Bacon Cheeseburger and the Famous Star burger, catering to customers who appreciate large portions and robust flavors. Carl’s Jr. primarily serves young adults and working professionals seeking flavorful, filling meals, often appealing to customers looking for a bit more than a typical fast-food experience.
Carl’s Jr. operates over 1,000 locations worldwide, with a strong presence across the U.S. and in international markets like Mexico, Australia, and New Zealand. Owned by CKE Restaurants Holdings, Carl’s Jr. has grown its customer base globally, reaching millions daily. This extensive reach provides franchisees with the advantage of operating within an established brand network with a proven market demand.
Franchisees benefit from a robust support system, including comprehensive training programs that cover everything from operations and customer service to marketing strategies. Carl’s Jr. also offers ongoing support, site selection assistance, and access to marketing resources, ensuring that franchisees are well-equipped to operate successfully. The brand’s strong marketing campaigns and loyal following make it an appealing choice for potential franchisees.
Carl’s Jr Franchise Insights
- Known for bold and indulgent flavors, Carl’s Jr. attracts a loyal customer base who seek high-quality, flavorful burgers, which can drive repeat business and strong customer loyalty.
- Since starting to offer franchises in 2013, Carl’s Jr. has grown rapidly, supported by a well-structured franchise system and brand recognition.
- With a well-established brand identity and marketing campaigns that resonate with young adults, Carl’s Jr. provides franchisees with strong brand recognition and national advertising support.
Carl’s Jr Franchise Key indicators
Total U.S. Franchised Units
1,100
Sales-to-Investment ratio
0.8:1
How much does it cost to open a Carl’s Jr franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Carl’s Jr franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Carl’s Jr franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). you can see a breakdown of the costs to open a Carl’s Jr below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $15,000 | $35,000 |
| Opening Training Support Team Fee | $0 | $10,000 |
| Real Property | Variable | Variable |
| Building | $575,000 | $665,000 |
| Site Improvements | $250,000 | $415,000 |
| Soft Costs | $90,000 | $120,000 |
| Equipment | $357,000 | $410,000 |
| Signage | $75,000 | $110,000 |
| Point of Sale System | $35,000 | $45,000 |
| Initial Training | $20,000 | $60,000 |
| Pre-Opening Costs | $8,000 | $23,000 |
| Additional Funds - 3 months | $160,000 | $250,000 |
| GB Initial Training | $0 | $10,000 |
| GB Construction/Improvements | $4,500 | $9,000 |
| GB Equipment | $8,000 | $13,000 |
| GB Signage (exterior only) | $5,000 | $14,000 |
| GB Miscellaneous Opening Costs | $3,000 | $3,800 |
| GB Opening Inventory | $1,500 | $1,700 |
| TOTAL ESTIMATED INITIAL INVESTMENT FOR A DUAL CONCEPT RESTAURANT | $1,607,000 | $2,194,500 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
To open a Carl’s Jr franchise, the required capital involves both the initial investment costs and a net worth requirement set by Carl’s Jr. Let’s take a closer look below:
- Initial Investment As shown above, the total estimated initial investment ranges from $1,607,000 to $2,194,500. This includes all the startup costs such as the franchise fee, real estate, construction, equipment, initial inventory, and additional funds for initial operating expenses. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Many franchises in the quick-service restaurant industry require liquid assets between $250,000 and $500,000. This ensures that franchisees have sufficient cash on hand to cover initial and ongoing operating expenses.
- Net Worth Typical net worth requirements for similar franchises are in the range of $1 million to $2 million, which provides a financial safety net for both the franchisee and the franchisor.
How much does a Carl’s Jr franchise owner make?
Calculating the salary of a Carl’s Jr franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Carl’s Jr franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Carl’s Jr Revenue & Gross Sales
Based on the most recent data, Carl’s Jr franchises achieved a median gross sales of $1,451,612. This financial performance underscores the brand’s robust consumer demand and potential for lucrative returns for franchisees.
Which key factors impact the average revenue performance of Carl’s Jr franchisees?
The performance of U.S. franchisee median gross sales for Carl’s Jr. this past year likely benefited from several key factors. Increased consumer spending in the quick-service sector, driven by a growing preference for convenient, affordable meals, likely boosted sales. Additionally, Carl’s Jr.’s focus on innovative menu offerings and limited-time promotions may have attracted both new and returning customers, helping to increase traffic. Another factor is the brand’s strong marketing campaigns, which target its core audience effectively. Rising food and labor costs, however, may have put pressure on net margins, though Carl’s Jr.’s established supply chains likely helped mitigate these impacts for franchisees.
Carl’s Jr Franchise Operational Costs
Here are some key ongoing operational costs to consider for a Carl’s Jr. franchise:
- Inventory and Food Supplies Regular costs for ingredients, packaging, and other consumables, with price fluctuations depending on supplier agreements and market prices.
- Labor Costs Wages, benefits, and payroll taxes for employees, which can be a significant portion of monthly expenses, especially in areas with higher minimum wage requirements.
- Utilities Expenses for electricity, water, gas, and waste management, particularly important in high-traffic quick-service locations.
- Maintenance and Repairs Ongoing upkeep of kitchen equipment, dining areas, and the drive-thru to ensure smooth operations and a clean, functional environment.
- Local Marketing and Promotions Budget for local advertising, community sponsorships, and promotional activities to increase customer engagement and loyalty.
These costs will vary depending on location, customer volume, and management practices.
Franchise Fees
When considering a Carl’s Jr. franchise, it’s essential to be aware of ongoing fees beyond general operational expenses. Here are some relevant fees based on the information provided:
- Royalty Fee 4% of gross sales, due weekly within 10 calendar days after the end of each fiscal week.
- Advertising and Promotion Obligation (APO) Currently 6% of gross sales (up to 7%), due on the same schedule as the royalty. This fee is divided between a Production Fund and a DMA Fund to support marketing efforts.
There might also be additional fees depending on specific circumstances outlined in the franchise agreement.
Carl’s Jr Franchise Earnings
The most recent data for a Carl’s Jr. franchise shows median gross sales of $1,451,612, with estimated owner-operator earnings of $217,742. These figures highlight the potential for strong returns, particularly for those actively involved in the daily operations. With Carl’s Jr.’s established brand presence and appealing menu, franchisees can benefit from a steady customer base, which supports reliable revenue.
How to Open a Carl’s Jr Franchise
Becoming a Carl’s Jr franchisee is a rigorous process that involves financial scrutiny, extensive training, and thorough evaluation. However, it offers the potential for a lucrative business opportunity backed by a globally recognized brand and comprehensive support system.
The full process for how to open a Carl’s Jr franchise is outlined below:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Application Submission Once initial contact is made, you’ll complete a detailed franchise application, providing information on your financial background, experience, and suitability for the role of a franchisee.
- Review and Approval The Carl’s Jr. team reviews your application and, if you meet their criteria, they’ll initiate further discussions. This may include an interview or an initial phone call to answer your questions and ensure alignment.
- Discovery Day You may be invited to a Discovery Day at Carl’s Jr. headquarters, where you’ll meet key team members, tour facilities, and gain an in-depth understanding of the brand’s operations and culture.
- Signing the Franchise Agreement If both parties decide to move forward, you’ll sign the franchise agreement and pay any required fees. This step formalizes your commitment as a Carl’s Jr. franchisee.
- Site Selection and Build-Out With guidance from the Carl’s Jr. real estate team, you’ll select an ideal location. The franchisor assists with site approval, lease negotiation, and planning for the build-out to ensure it meets brand standards.
- Training Program Carl’s Jr. provides a comprehensive training program covering operations, customer service, and management to equip you with the skills to run the franchise.
- Pre-Opening Marketing and Setup Before opening, you’ll work with Carl’s Jr. on pre-launch marketing to build excitement and attract initial customers. You’ll also complete final setup tasks for the restaurant.
- Grand Opening and Operations Finally, you’ll open your doors to the public, with support from the Carl’s Jr. team to ensure a smooth launch. From here, you’ll begin daily operations as a Carl’s Jr. franchise owner, with ongoing support as needed.
Pros & Cons
Pros
Established Brand: Carl’s Jr. is a well-known name in the quick-service industry, with a loyal customer base and strong brand recognition, which can attract steady foot traffic.
High-Profit Potential: Carl’s Jr. has shown consistent gross sales and owner-operator earnings, which indicates strong revenue potential when well-managed.
Marketing and Advertising Support: Franchisees benefit from national advertising campaigns and a dedicated marketing fund, helping drive brand visibility and customer engagement.
Cons
High Initial Investment: With a total investment ranging from $1,607,000 to $2,194,500, Carl’s Jr. requires a significant upfront commitment, which may be a barrier for some investors.
Competitive Market: The quick-service burger market is highly competitive, with big players like McDonald’s and Burger King, making it challenging to gain market share in certain locations.
Hands-On Management: Carl’s Jr. requires active involvement from franchisees, making it less suitable for investors looking for a passive investment.
