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Jimmy John’s Franchise Cost High For 2022 Franchise Profits

Written by: Dylan Tymkiw
Last Updated: January 25, 2022
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Jimmy John’s franchises sell gourmet sandwiches and also offer fresh baked breads and other food and beverage products. Jimmy John’s was founded in Atlanta, GA. 

It serves a niche market as it specializes in delivering to College students. There are currently over 2600 Jimmy John‘s across the country.

Paul J. Brown has been Chief Executive Officer of Jimmy John’s since 2018. Previously he was CEO of the successful Arby’s Restaurant Group so you know he will do a good job. Visit his Linkedin to learn more about him.   

You probably noticed that Jimmy John’s CEO is also Inspire’s CEO. Well, this is because Inspire has bought Jimmy John’s, becoming like that the largest restaurant company in the world. This is exciting since thanks to this acquisition you can be sure that Jimmy John’s is in the hands of a very successful company.

Competitors of Jimmy John’s include other franchises in the fast food industry such as McDonald’s, Subway, KFC, Burger King and other Jimmy John’s nearby. Nearby restaurants with healthier food options are also competitors.

You can open your own Jimmy John’s franchise for an estimated investment of $316,100 to $558,600.

We will analyze if the initial cost is worth the potential returns.

jimmy john's franchise cost

How Much is a Jimmy John’s Franchise?

The standard fee for a Jimmy John’s franchise is $35,000, this fee must be paid in full before beginning operations. If you are a franchisee in good standing, then an additional franchise fee is $30,000, otherwise $35,000. 

Jimmy John’s franchise cost:

The estimated initial investment for beginning operations of a Jimmy John’s franchise is between $316,100 and $558,600. This estimate includes real estate, so you could save some money if you already own it. 

Jimmy John’s Franchise Cost

Type of expenditureAmountMethod of paymentWhen dueTo whom payment is to be made
Initial franchise fee30,000 – 35,000Lump SumUpon signing Franchise, Agreement and, if applicable, Development Rights RiderUs
Real estate / Rent (1 month)2,500 – 8,000As agreedAs IncurredLandlord
Security deposit2,500 – 8,000As agreedAs IncurredLandlord
Leasehold Improvements97,500 – 166,000As agreedAs incurredOutside Suppliers
Furniture, Fixtures, Signage, and Equipment (including Computer/Point of Sale System)95,500 – 166,000As agreedAs incurredOutside Suppliers
Architect7,500 – 12,500As agreedAs incurredArchitect
Office Equipment1,100As agreedAs incurredOutside Suppliers
Utility Deposits1,000 – 2,000As agreedAs incurredUtility Companies
Opening Inventory and Supplies6,000As incurredAs incurredDesignated and Approved Suppliers
Grand Opening Event3,000 – 5,000As incurredAs incurredAdvertising Sources
Training Expenses (out-of-pocket costs for up to 3 people)6,000 – 15,000As incurredAs incurredThird Parties
Insurance11,500 – 15,000As incurredAs incurredInsurance Company
Miscellaneous Expenses2,000 – 10,000As incurredAs incurredAdvisors and Others
Additional Funds – 3 months50,000 – 75,000As incurredAs incurredEmployees and Suppliers
TOTAL ESTIMATED INITIAL INVESTMENT (excluding real estate purchase costs)316,100 – 558,600   

Ongoing costs and fees:

Royalty fee: 6% of weekly gross sales after first year of operations

Advertising: 4.5% of weekly gross sales

These are higher than other competitors in the food and beverage industry.

What do you need to open a Jimmy John’s Franchise?

Jimmy John’s is continuously looking for passionate individuals that want to operate new Jimmy John’s franchises. 

Jimmy John’s requires you to have a net worth of at least one million dollars. Aside from that, it does not have any major requirements, they just need you to be committed to their product and to be willing to open at least three stores!

jimmy john's franchise cost

How much do Jimmy John’s owners make?

 2020 Annual UVNumber% Exceeding AverageHighest Unit VolumeLowest Unit VolumeMedian Unit Volume
All 2020 Covered Restaurants$771,081706/44%1,903,720159,565734,005
2020 Franchised Covered Restaurants$766,166700/45%1,903,720159,565729,442
2020 Affiliate Owned Covered Restaurants$1,005,07215/45%1,674,251351,607909,274

2020 Jimmy John’s Median Franchise Sales: $729,442

The highest-earning franchise made around $1,903,720 million in revenue whereas the lowest-earning franchise made $159,565. These numbers indicate that potential earnings can vary significantly and it depends on factors such as locations and how well the business is run.

1- Based on a midpoint investment of $437,350 with estimated profits of $72,944 at a 10% profit margin it would take about 8 years to recoup your investment.

2- Based on a midpoint investment of $437,350  with estimated profits of $109,416 at a 15% profit margin it would take about 7 years to recoup your investment.

3- Based on a midpoint investment of $437,350  with estimated profits of $145,888 at a 20% profit margin it would take about 5 years to recoup your investment.

Is Jimmy John’s Franchise Profit Worth the Franchise Cost?

After a few years in the business, when you go to sell your franchise based on the median multiple of .34 and net sales of $729,442 it would sell for about $248,010. This is about 56% of the midpoint initial investment of $437,350.

The median multiple franchises selling more than $5 million is .86. If you had 10 Jimmy John’s franchises (about $7,294,420 in sales), assuming that every location has the same initial investment would have you spend $4,373,500. You could sell for $6,273,201, therefore making a big profit. 

jimmy john's franchise cost

 

Jimmy John’s Cash Flow Statement:

Jimmy John’s Income Statement

 Fiscal Year Ended January 3, 2021October 18,2019 through December 31,2019January 2,2019 through October 17,2019Fiscal Year Ended January 1,2019
Cash flows from operating activities    
Net (loss) income$(117,735,565)$14,718,480$58,450,285$77,177,120
Adjustments to reconcile net (loss) income to net cash provided by operating activities    
Amortization27,127,4514,521,24223,977,47230,200,000
Loss on impairment180,000,000   
Change in assets and liabilities    
Accounts receivable(2,748,230)1,528,510(1,430,212)(13,734)
Accounts payable6,250   
Deferred training revenue(8,450)(11,750)(41,350)(57,851)
Deferred franchise revenue840,002270,478(441,518)(543,865)
Due to affiliated companies and related parties(1,178,585)3,025,149(1,847,099) 
Net cash provided by operating activities86,302,87324,052,10978,667,578106,761,670
Cash flows from investing activities    
Other investing activities   44,527
Net cash provided by investing activities   44,527
Cash flows from financing activities    
Distributions to member(89,865,099)(27,899,401)(71,975,204)(108,268,901)
Net cash used in financing activities(89,865,099)(27,899,401)(71,975,204)(108,268,901)
Net (decrease) increase in cash and cash equivalents(3,562,226)(3,847,292)6,692,374(1,462,704)
Cash, cash equivalents, and restricted cash at beginning of period14,959,05718,806,34912,113,97513,576,679
Cash, cash equivalents, and restricted cash at end of period11,396,83114,959,05718,806,34912,113,975

Jimmy John’s is highly profitable, with a cash flow of over 10 million dollars over the last 3 years. The company saw a lot of growth in 2018-2019 but growth seems to be stagnated most likely due to the COVID-19 pandemic. The Cash flow statement also shows that the company lost 180 million in impairment, which is something to keep in mind when you decide to invest in a franchise. 

How Many Units Have Opened and Closed?

System-wide Outlet Summary

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised201827002750+50
201927502738-12
202027382658-80
Company-Owned201855550
20195552-3
20205243-9
Total Outlets201827552805+50
201928052790-15
202027902701-89

The number of units saw a big increase in 2018. But then it started to go down in 2019 and really took a hit during 2020. The 2020 decline is probably due to schools going remote and since Jimmy John’s specializes in delivering to college students, franchisees were in big trouble. However, the decline in 2019 could be an indicator that franchisees are not doing that well.

jimmy john's franchise cost

Conclusion

Jimmy John’s is a declining restaurant chain in the fast food industry in America. People love fast food and will always consume it but there is a TON OF COMPETITION. 

Jimmy John’s also serves a market like college students who tend to consume unhealthy amounts of fast food.

If you open a Jimmy John’s franchise you can recoup your investment in 5 to 8 years depending on profitability. Which is a lot faster than other franchises in the food and beverage industry. However, if you want to make a profit when selling your franchise, you have to be prepared to open multiple locations.

Something to keep in mind is the decline in number of units. Even though most of it is due to the pandemic and schools going remote, the decline started in 2019 when COVID was not yet in everyone’s mouth. 

Our suggestion is to speak to at least one Jimmy John’s franchise owner before making a decision.

If you think Jimmy John’s is the right franchise for you, or you would like to explore other franchise opportunities, check out our listing page on the Vetted Biz website for thousands of franchises available for your investment. 

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