Risk Score
Pending analysis
Investment Range
$861,950 - $2,451,000
Total US Locations
3,365
Business Summary
Arby's Restaurants feature a variety of deli-inspired sandwiches and complementary side items and desserts. The brand focuses on 'Meatcraft' with high-quality proteins and innovative sides like curly fries and jamocha shakes. Arby's Fast Crafted® restaurant services blend quick-service speed with fast-casual quality and made-for-you care. Arby's offers two types of restaurants: Traditional Restaurants, which are full-menu, limited service in various locations like free-standing, convenience stores, or malls, mostly with drive-thrus; and Non-Traditional Restaurants, which are limited menu, smaller-sized restaurants typically in locations such as airports, military bases, or universities. Arby's also has arrangements to offer multi-brand locations with other restaurant concepts, where Arby's Restaurants operate alongside brands like Buffalo Wild Wings, Dunkin', Baskin-Robbins, Jimmy John's, and Sonic.
Corporate History
Arby's Franchisor, LLC was organized in Delaware on July 2, 2015, and has been offering Arby's Restaurant franchises since November 2015. Its predecessor, Arby's Restaurant Group, Inc. (ARG), previously offered Arby's franchises from May 2006 until November 2015. In November 2015, through a securitization financing transaction, ARG transferred all existing franchise agreements and related operations to Arby's Franchisor, LLC, establishing it as the primary franchisor. ARG continues to provide essential support and services to Arby's franchisees under a management agreement. Arby's Franchisor, LLC has maintained its focus exclusively on Arby's Restaurants, though its affiliates have historically operated other restaurant concepts, such as T.J. Cinnamon's, which concluded operations in 2019. Arby's is part of Inspire Brands, a larger global multi-brand restaurant company launched in February 2018, which includes other well-known brands like Buffalo Wild Wings, Dunkin', Baskin-Robbins, Jimmy John's, and Sonic. Additionally, Arby's is affiliated with numerous other franchise programs managed by private equity funds through Roark Capital Management, LLC.
Financial Overview
Investment Range
$861,950 - $2,451,000
Franchise Fee (High)
$37,500
Royalty %
4%
Marketing %
4%
Equipment Costs (Low)
$293,000
Equipment Costs (High)
$503,000
Working Capital
$66,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Arby's Franchisor, LLC shows stable but slightly decreasing revenues and net income, alongside decreasing total assets and member's equity in 2024 compared to 2023. The company's cash flow from operations is sufficient to cover its distributions. Arby's Franchisor, LLC guarantees significant long-term debt obligations related to securitization notes and appears to be in compliance with these debt covenants. The company also pays a considerable management fee to its affiliate, Arby's Restaurant Group, Inc. Arby's Restaurant Group, Inc., the predecessor, also experienced a decline in net income and sales in 2024. This entity reports a large stockholder's deficit, though it has improved, and carries substantial debt guarantees for its parent company, amounting to billions of dollars, in addition to other significant financial commitments. The independent auditors for both entities did not raise any concerns about their ability to continue as a going concern, nor did they indicate any impairment for goodwill or indefinite-lived intangibles during their audits.
Financing Details
Arby's does not offer any direct or indirect financing to its franchisees. Arby's also does not guarantee any franchisee notes, leases, or other obligations. Arby's franchisees will need to secure their own funding through external sources.
Performance Metrics
Total US Locations
3,365
Franchised Units
2,286
Corporate Units
1,079
Avg Square Footage
2,867
Franchising Since
2015
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
5
Litigation Summary
Arby's has disclosed five litigation cases involving its franchisor entity or its predecessor. Two cases are considered recent. One recent case, filed in September 2023, is a putative class action where a plaintiff alleges that Arby's misrepresented the quantity and quality of meat in its sandwich advertisements. Arby's denies liability and intends to vigorously defend itself. Another recent case, filed in July 2022, was a class action alleging false and deceptive practices in marketing its Wagyu Steakhouse Burger, claiming the beef was not entirely wagyu. This case was settled confidentially in August 2022, with Arby's agreeing to pay a total gross settlement amount of $155,000 to the plaintiffs and to include a disclaimer on all advertisements for 'wagyu' products stating the patty is a blend. Three older cases include two consolidated data security class actions filed in 2017. One, brought by consumers, alleged Arby's failed to safeguard customer credit and debit card data, leading to hacking. This case settled in June 2019, with Arby's agreeing to pay approved consumer claims up to $2,000,000, plus administrative and legal fees. The other, brought by financial institutions (credit card issuers), made similar allegations and settled in March 2020, with Arby's agreeing to pay approved claims up to $2,987,136, plus administrative and legal fees. Finally, in March 2019, Arby's entered into a multi-jurisdictional settlement with several states to resolve an investigation into the use of 'no-poaching' provisions in its franchise agreements. Arby's denied violations but agreed to remove these provisions from its agreements, not enforce them, and notify franchisees and employees. No monetary payment was made in this settlement. Arby's also noted litigation involving its affiliates, but these are separate and do not directly involve the Arby's franchisor.
Bankruptcy History
Arby's has no bankruptcy history to disclose.
Agreement Terms
Initial Term
20 years
Renewal Term
20 years
Renewal Conditions
To renew their Arby's franchise, Arby's franchisees must have substantially complied with the Franchise Agreement throughout its initial term and not have been in material default within the 12 months prior to expiration. Arby's franchisees are required to remodel their Franchised Premises to conform to the then-current image for new Arby's Restaurants. They must execute a new standard form Franchise Agreement and a General Release at least 30 calendar days before the current agreement's expiration. Additionally, Arby's franchisees need to comply with all then-current training requirements and any other conditions set for franchisees obtaining successor franchise agreements. For Traditional Restaurants, Arby's franchisees must apply for a new Franchise Agreement in writing at least 6 months but not more than 9 months prior to expiration and pay an administrative fee equal to 10% of the then-current standard Franchise Fee 180 calendar days before expiration. For Non-Traditional Restaurants, this administrative fee is the then-applicable standard Non-Traditional Franchise Fee. The renewal term granted will not exceed the period of time the franchisee is entitled to maintain possession of the Franchised Premises.
Training & Support Program
Franchisor Assistance
Arby's Franchisor, LLC provides its Arby's franchisees with comprehensive support both before and after their restaurant opens. **Pre-opening assistance** includes designating a geographic area or specific location for site selection, offering counseling and advice in site selection (including on-site visits and market analysis), and reviewing and accepting or rejecting proposed sites within 30 days. Arby's also approves proposed lease or financing arrangements, provides standard plans for the building/layout (including specifications for equipment, fixtures, furnishings, and signs), and requires approval of final working plans before construction. Arby's provides specifications and names of approved suppliers for opening inventory, supplies, and related materials. New Arby's franchisees participate in a 'New Franchisee Orientation' (NFO) program, which is a brief overview of the Arby's system and administrative corporate support. They also receive a 7-week 'Management Training Program' (MTP) conducted at Nationally Certified Training Restaurants (NCTRs). An electronic copy of the Arby's Operating Standards Manual is provided approximately 10 weeks before the Restaurant opens, with ongoing access to updates. Arby's also provides two people for 10 days to assist with pre-opening and post-opening crew training for the first restaurant, and one person for 6 days for the second restaurant. **Post-opening support** involves managing certain advertising and marketing programs, considering and approving new specifications and suppliers, and continuing to provide updates to the Manual. Arby's also approves proposed specifications for refreshes and upgrades to the franchised premises. Arby's remits the Advertising and Marketing Service Fee paid by franchisees to the AFA Service Corporation, a franchisee-administered organization responsible for developing and providing advertising and marketing services, including local and regional campaigns. Arby's also offers guidance for technology strategy, planning, investment, and vendor resolution matters. Additionally, Arby's provides ongoing training through its Cornerstone Learning Management System, which may include supplemental or refresher programs.
Initial Training Hours
336
Training Location
Initial training includes a New Franchisee Orientation (NFO) program conducted at the Arby's Support Center, their administrative office and worldwide headquarters in Atlanta, Georgia. The core 7-week Management Training Program (MTP) is conducted at Nationally Certified Training Restaurants (NCTRs) located across the country.
Ongoing Support
Arby's Franchisor, LLC provides its Arby's franchisees with ongoing support through various channels. Post-opening, Arby's manages certain advertising and marketing programs, and considers and approves new specifications and suppliers. Arby's also provides continuous access to updates for the Arby's Operating Standards Manual and approves proposed specifications for refreshes and upgrades to the franchised premises. The Advertising and Marketing Service Fee paid by franchisees is directed to the AFA Service Corporation, a franchisee-administered organization responsible for developing and providing advertising and marketing services, including local and regional campaigns. Arby's also offers guidance for technology strategy, planning, and vendor resolution. Additionally, Arby's provides ongoing training through its Cornerstone Learning Management System, which may include supplemental or refresher programs.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
absentee-allowed
Territory Type
limited
Territory Size Requirements
Arby's Restaurant territories are generally defined by a 1-mile radius from the specific location or by governmental boundaries such as streets, cities, or counties for Traditional Restaurants. There is no specific minimum size for these territories. However, for Non-Traditional Arby's Restaurants, the protected area is limited to the site-specific location, meaning there is no broader territory. Locations such as malls, college and university campuses, hospitals, service plazas, military bases, airports, casinos, theme/amusement parks, and sovereign nations are explicitly excluded from any protected area.
Staffing Notes
Arby's Restaurants have specific management staffing requirements. For the first two Arby's Restaurants operated by a franchisee, they must always employ three managers per restaurant who are certified in the Management Training Program (MTP) or an approved comparable training program. For the third and any subsequent Arby's Restaurants, the franchisee must always employ one MTP-certified manager per restaurant. The franchisee may serve as one of these certified managers if they participate directly in the restaurant's daily operation. Arby's retains the right to designate personnel qualifications, training standards, dress code, and appearance guidelines. However, the franchisee is solely responsible for hiring, firing, supervising, and disciplining their employees, as well as determining their wages and benefits. Franchisees are also required to create their own employee handbooks. For a franchisee's first Arby's Restaurant, the franchisor provides two individuals to assist with pre-opening and post-opening crew training for ten calendar days. For the second Arby's Restaurant, this assistance is provided by one person for six calendar days.