Freddy's Frozen Custard & Steakburgers Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$785,936 - $2,753,566
Franchise Fee
$26,250
Total US Locations
550
Business Summary
Freddy's Frozen Custard & Steakburgers operates restaurants that specialize in selling steakburgers, hot dogs, and frozen custard. The restaurants use a unique system developed by the company for efficient management and operation, featuring a distinctive design, decor, color scheme, and specific standards for quality control, training, and advertising.
Corporate History
Freddy's Frozen Custard & Steakburgers began its journey when its affiliate, Freddy's Frozen Custard, L.L.C. (FFC), opened the first Freddy's Restaurant in Wichita, Kansas in 2002. The franchisor, Freddy's, L.L.C., was organized on October 17, 2003, and started offering Freddy's Restaurants franchises in 2004.
Financial Overview
Investment Range
$785,936 - $2,753,566
Franchise Fee (Low)
$26,250
Franchise Fee (High)
$35,000
Royalty %
4.5%
Marketing %
1.5%
Equipment Costs (Low)
$417,102
Equipment Costs (High)
$714,066
Working Capital
$40,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Freddy's Frozen Custard & Steakburgers' consolidated financial statements have received an unqualified audit opinion, indicating fair presentation in all material respects. The auditors evaluate the company's ability to continue as a going concern for one year, and no substantial doubt was raised in their judgment. However, management has recorded a valuation allowance against deferred tax assets due to uncertainty about realizing their benefits, based on current and projected future taxable income.
Financing Details
Freddy's Frozen Custard & Steakburgers does not offer any direct or indirect financing to franchisees. The company also does not guarantee any franchisee notes, leases, or other obligations.
Performance Metrics
Total US Locations
550
Franchised Units
514
Corporate Units
36
Avg Square Footage
2,867
Franchising Since
2004
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Freddy's Frozen Custard & Steakburgers has no litigation required to be disclosed in Item 3 of the FDD.
Bankruptcy History
Freddy's Frozen Custard & Steakburgers has no bankruptcy history required to be disclosed in Item 4 of the FDD.
Agreement Terms
Initial Term
15 years
Renewal Term
15 years
Renewal Conditions
To renew their franchise agreement, Freddy's Frozen Custard & Steakburgers franchisees must provide written notice of their intent to renew 12 to 18 months before the initial term ends. They must complete all required maintenance, refurbishing, renovating, and remodeling of the restaurant to the franchisor's satisfaction. All monetary obligations to Freddy's Frozen Custard & Steakburgers and their landlord must be current, and franchisees must not be in default of any agreement with the franchisor or its affiliates, having substantially complied with all terms during the initial term. Franchisees must sign the franchisor's then-current renewal license agreement, which may have materially different terms and potentially higher fees (though not less favorable than offered to new licensees). They also need to pay a renewal fee equal to one-third of the then-current initial license fee, sign a general release of claims (while retaining rights under applicable franchise laws), and ensure their managers and employees meet current qualification and training requirements.
Training & Support Program
Franchisor Assistance
Freddy's Frozen Custard & Steakburgers provides franchisees with assistance prior to opening and ongoing support after the restaurant is operational. Before opening, the franchisor grants rights to establish restaurants in an approved area under a development agreement, provides electronic access to a Construction Manual with site selection guidelines, and offers on-site evaluations for proposed sites if deemed necessary. It approves or disapproves the site and lease terms, and provides mandatory construction advisory services for the first restaurant. Franchisees receive electronic access to operations and management training manuals, specifications for required equipment and suppliers, and a pre-opening training program. A grand opening on-site training program is also provided for the first restaurant opened by the ownership group, with the franchisee covering staff travel and payroll expenses. After opening, Freddy's Frozen Custard & Steakburgers updates its manuals to reflect business changes, offers additional optional or required training (for a fee), and conducts inspections of restaurants and financial records. The franchisor maintains and administers a National Marketing Fund, approves franchisee-initiated advertising, and may designate geographic areas for advertising cooperatives. It also provides consent for restaurant relocation, requires periodic upgrades to maintain current public image, and grants or withholds consent for transfers of interest, debt incurrence, or private offerings of securities. A Franchisee Advisory Council, the 'Custard Council,' meets twice a year to discuss strategies and concerns.
Initial Training Hours
120
Training Location
Wichita, Kansas
Ongoing Support
After opening, Freddy's Frozen Custard & Steakburgers provides ongoing support by modifying and updating its operations manuals to reflect changes in the business, products, services, and procedures. The franchisor may offer or require additional training courses, programs, conferences, and seminars, for which franchisees may need to pay an additional fee. Freddy's Frozen Custard & Steakburgers conducts inspections of restaurants and financial records, evaluates services, and interviews employees and customers as deemed advisable. The company maintains and administers a National Marketing Fund for advertising purposes and must approve all franchisee-developed advertising materials. It can also designate geographic areas for advertising cooperatives. The franchisor provides consent for restaurant relocation and may require franchisees to upgrade their restaurant's decor and trade dress every five years to align with the current public image. Additionally, Freddy's Frozen Custard & Steakburgers grants or withholds consent for proposed transfers of ownership interests, incurrence of debt, and private offerings of franchisee securities. A Franchisee Advisory Council, called the 'Custard Council,' meets twice a year to review plans and discuss strategies, opportunities, and challenges with the franchisor.
Franchise Requirements
Ideal Candidate Profile
Freddy's looks for franchisees with strong personal and collective business skills and sufficient financial capacity. While a Freddy's franchisee or owner is not required to be involved in the daily operations, they must ensure a qualified general manager devotes full time to the Restaurant. The ideal Freddy's franchisee demonstrates strong management capabilities to uphold high standards of service, quality, cleanliness, and appearance, and to effectively supervise employees. If the franchisee is an entity, all owners of 5% or more must personally guarantee the obligations.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Supervisory
Territory Type
Limited
Territory Size Requirements
Freddy's Frozen Custard & Steakburgers defines its assigned territory for a restaurant based on its then-current standards. Typically, this territory is identified by a 2-mile radius from the specific restaurant location. Alternatively, it may be defined by a particular standard metropolitan statistical area, or by a city, county, or other political subdivision. The precise description of the territory can vary depending on factors such as population densities, business districts, and demographic trends in the specific franchise area.
Staffing Notes
Freddy's Frozen Custard & Steakburgers requires the franchisee to be ultimately responsible for the restaurant's operations, providing oversight and staying informed. However, the franchisee, or their chief operating officer, managing partner, or principal manager, is not required to be personally involved in day-to-day operations or direct on-site management if they designate a qualified general manager. This general manager, who may be an employee, must dedicate full-time attention to managing and operating the restaurant. If the general manager or managing owner no longer meets qualifications, the franchisee must promptly designate a replacement. Freddy's Frozen Custard & Steakburgers also specifies initial training for one general manager, one assistant manager, and three additional personnel (assistant managers or supervisors). The franchisee is solely responsible for all employment decisions, including hiring, firing, compensation, and supervision, and must clearly inform all workers that the franchisee, not Freddy's Frozen Custard & Steakburgers, is their employer to avoid any co-employer or joint employer obligations.