What is a franchise fee?
May 18, 2018
The money that franchisees invest in the proprietary franchising system is what is known as the franchise fee. The fee essentially grants entrepreneurs the rights to operate an independent location of that franchise at a certain location under the brand name. Paying the upfront franchise fee unlocks the door to the franchisors’ proprietary business systems and more.
Franchising fees in the fast casual and casual dining segment vary widely and can range from around $25K to upwards of $50K. Russo’s New York Pizzeria franchise fee is $39,500 for a single unit or discounted to $29,500 per location in an area development. Or in some cases, a franchisor may offer a Master Franchise or Area Development, which allows a franchisee to license more than one location. Franchisees typically pay an initial franchising fee to cover upfront transfer of proprietary materials and to get the business started. Once the business is launched, franchisees may also pay an ongoing royalty fee which is payment to the franchisor for continued use of proprietary materials, the investment in research and development, new business strategies, and continued national and regional marketing materials.
The franchise fee amount even within one casual dining segment can vary depending on the kind of model the entrepreneur is looking to buy from a low footprint model to a higher end experience.
A few franchisors might dangle the promise of decreased franchise fees as way of luring franchisees into signing on the dotted line but in franchising, as in everything else, you get what you pay for. Russo’s franchise fee is $49,500 and in turn franchisees get to a part of the best restaurant franchise.
The Russo’s franchise fee, which varies between $29,500 and $39,500, covers a whole assortment of valuable services that help businesses get on the right track. Russo’s franchise fees includes help with site selection, access to marketing materials and proprietary recipes, extensive training onsite and off, front-of-house (FOH) and back-of-house (BOH) operations and staffing and additional valuable business strategies.
Russo’s is leading the Italian dining category by creating a business model that offers:
A smaller footprint (1,500-3,500 sq. ft.) for less overhead
A low-cost entry into the restaurant business with an initial investment starting around $454,350 in select markets
Average food costs and labor costs are 20.7% and 25.2% respectively*
Average sales volume per franchised unit is $ $988,401*
You get what you pay for when it comes to franchising
The Italian restaurant franchise has been tweaking its recipes and procedures for more than 30 years. Additionally, Russo’s franchisees are our partners and are like family, and by buying into the system, they bring an additional degree of commitment to building the brand from the ground up.
- The Russo’s franchise fee includes:
- Access to marketing materials, recipes, handboooks
- Help with site selection and lease negotiation
- Business advice
- Architect consultant for buildout
- Lists for furnishing, decor, lighting, kitchen ordering, and inventory
- Help with developing soft and grand opening timelines
- Extensive training at home office and on-location training for two weeks once the new restaurant is built
- Training in 100+ year old recipes, the “secret sauce” of Russo’s product
- FOH & BOH operations and staffing
- Assistance with benchmarking and consultation on business plan
- Help with grand opening marketing and PR plan
Investing into a ground-floor opportunities is one of the most exciting aspects being a Russo’s franchisees. The owners are investing in great food, and also in the potential to have a prominent seat at the table as the restaurant franchise makes rapid inroads into new territories in the near future. Being a part of an emerging brand like Russo’s is a great way for passionate entrepreneurs to channel their expertise into a venture that’s slated for rapid growth.
Franchise fees that go above and beyond
With the franchise fees, franchisees access extensive suite of marketing materials, recipes and handbooks. Site selection is an important component of business success and Russo’s experienced real estate team goes out, tours the area, reviews and approves the franchisee’s site. Because the Italian restaurant franchise has decades of experience with these procedures, Russo’s helps franchisees hone their business specifically for their market.. Russo’s also helps with lease negotiation and analyzes demographic trends in the area so franchisees can fine tune their business strategies.
With Russo’s, franchisees also get training on every aspect of the restaurant business from front-of-house to back-of-house operations to marketing and public relations. The Italian restaurant franchise supports its franchise partners with every kind of material and training and ongoing support needed to truly build a successful location. Given that the cost of consultants for each aspect of routine business operations is extremely steep, the Russo’s franchise fee is a true bargain as it gives franchisees a proven formula and access to consulting and strategies to make the system work.
Hot concept in demand
Equally important, the demand for a pizza franchise like Russo’s is skyrocketing. The fast-casual concept that Russo’s is based on is growing at a steady clip. A Technomic report showed that the industry grew by 8.1 percent in 2016. Of that, pizza is currently the largest sector at 37 percent.
The Russo’s Italian restaurant franchise is spearheaded by experienced team members who know what it takes to win a significant slice of the industry. Rex Street, Director of Operations, Kyle Dennis, Sous Chef Trainer, and Lynn Zeller-Aldana, Sr. Director of Training and Development, are just few of Russo’s staff who routinely share their expertise for franchisee success.
At the end of the day, you get what you pay for when it comes to franchising. Russo’s franchising fees cover every aspect of the fast-casual restaurant business and gives its franchisee partners a comprehensive arsenal of tools to ensure long-lasting success in a market where demand for quality food continues unabated.
Visit Russo’s Restaurants to learn more about what it means to become a franchisee.
* These figures represent the average restaurant revenue of six (6) U.S. domestic Company-operated Russo’s New York Pizzeria locations of various designs and sizes for fiscal year ending December 31, 2016, along with average Food Costs and Net Income for the six (6) U.S. domestic Company-operated Russo’s New York Pizzeria outlets only. Actual results could vary substantially from unit to unit and Franchisor cannot estimate the results of any particular franchise