Lee's Sandwiches Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$209,830 - $1,679,500
Franchise Fee
$40,000
Total US Locations
50
Business Summary
Lee's Sandwiches International, Inc. offers franchises for three types of independently owned and operated businesses: Baguette Factory Production Units, Production Units, and Non-Production Units. Baguette Factory and Production Units offer a full line of Lee's Sandwiches products and produce dough for baguettes to supply their own needs and other Lee's Sandwiches businesses. Non-Production Units also offer the full product line but are smaller and do not produce baguettes. These units are typically located in strip malls, freestanding locations, or food courts, offering a variety of Asian and European sub-style sandwiches, baked goods, beverages, and desserts to the general public.
Corporate History
Lee's Sandwiches International, Inc. was incorporated in California on June 11, 2002, and began offering franchises on August 19, 2004. The company franchises the right to operate different types of Lee's Sandwiches businesses, including Baguette Factory Production Units, Production Units, and Non-Production Units, all offering a full line of products like Asian and European sub-style sandwiches, baked goods, beverages, and desserts. The company became a wholly-owned subsidiary of LCJJ Holdings, Inc. in 2016. Lee's Sandwiches International, Inc. also has two affiliates, Lee Bros. Foodservices, Inc. and LQNN, Inc., which operate similar businesses or act as suppliers. Notably, there are 12 non-affiliated Lee's Sandwiches businesses in Northern California, founded by members of the founder's immediate family in 1983, operating under an oral agreement not to compete in each other's markets.
Financial Overview
Investment Range
$209,830 - $1,679,500
Franchise Fee (Low)
$40,000
Franchise Fee (High)
$75,000
Royalty %
6.9%
Equipment Costs (Low)
$100,000
Equipment Costs (High)
$1,200,000
Working Capital
$40,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Lee's Sandwiches International, Inc.'s financial health is impacted by several joint borrowing agreements with a bank, shared with its parent company and other affiliates. These agreements require the combined entities to meet specific financial requirements. As of December 31, 2024, the compliance with these requirements had not yet been determined due to incomplete combined financial statements. Failure to meet these requirements could lead to the bank demanding immediate repayment of significant outstanding balances, which could severely impact Lee's Sandwiches International, Inc.'s operations, cash flow, and overall financial position. Additionally, the company is owed a $255,430 settlement from a former franchisee lawsuit but has not recognized it as income due to collection uncertainties. The company is not currently subject to state-imposed impound or deferral requirements regarding franchisee fees.
Financing Details
Lee's Sandwiches International, Inc. does not offer any direct or indirect financing options to its franchisees. The franchisor also does not guarantee any lease agreements or other financial obligations for its franchisees.
Performance Metrics
Total US Locations
50
Franchised Units
45
Corporate Units
5
Avg Square Footage
3,667
Franchising Since
2004
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
1
Litigation Summary
Lee's Sandwiches International, Inc. was involved in a significant lawsuit and arbitration with a former Nevada franchisee, Goldland Capital, Inc., along with its shareholders and guarantor. The dispute, filed in May 2018, concerned the franchisee's failure to pay over $500,000 in past due royalties and product purchases. After an agreement to pay from sale proceeds fell through, Lee's Sandwiches International, Inc. initiated court action and subsequently arbitration. The franchisee filed a cross-complaint alleging territory violations and issues with USDA product actions. In June 2021, the arbitrator ruled in favor of Lee's Sandwiches International, Inc., awarding the franchisor and its affiliate over $700,000 in damages and attorneys' fees. The franchisee appealed this decision, but the appeal was dismissed in May 2023. Additionally, the franchisee filed for Chapter 7 bankruptcy in June 2022, which concluded in December 2022. Funds from the escrow agent were released to Lee's Sandwiches International, Inc. in June 2023.
Bankruptcy History
Lee's Sandwiches International, Inc. has no bankruptcy history to report for the franchisor or its key management personnel.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise, Lee's Sandwiches International, Inc. franchisees must have fully complied with the existing Franchise Agreement, maintain the right to possession of an approved location, make necessary capital expenditures to align with the current System standards, satisfy all monetary obligations to the franchisor and its affiliates, not be in default of any agreement, provide timely written notice of intent to renew (9-12 months prior to term end), sign the franchisor's then-current Franchise Agreement (which may have different terms but no new franchise fee), comply with current training requirements, and sign the franchisor's then-current form of general release.
Training & Support Program
Franchisor Assistance
Lee's Sandwiches International, Inc. provides extensive support to its franchisees. Before opening, the franchisor assists with site selection, territory designation, lease review, and provides specifications for remodeling and equipping the location. Franchisees receive an initial training program for up to 3 people, including the designated owner, conducted at an affiliate's location in Garden Grove, California. They also get on-site assistance and guidance around the opening. After opening, Lee's Sandwiches International, Inc. offers ongoing advice via telephone, email, and newsletters, conducts periodic consultation visits, and provides ongoing training and updates to the System and Confidential Operations Manual. The franchisor also approves all local advertising materials and may develop a system-wide marketing fund or cooperative advertising programs. Furthermore, Lee's Sandwiches International, Inc. requires and supports specific computer and POS systems, including an annual support fee, and mandates a store surveillance system.
Initial Training Hours
179
Training Location
Garden Grove, California
Ongoing Support
After opening, Lee's Sandwiches International, Inc. provides ongoing support through various channels. This includes advice and general guidance via telephone, email, facsimile, and newsletters, covering operational methods, accounting, authorized products, and marketing strategies. The franchisor also conducts periodic, announced or unannounced, visits to franchised businesses to offer consultation and assistance, preparing written reports with suggested improvements. Ongoing training programs are made available as deemed necessary, and franchisees receive modifications and additions to the Confidential Operations Manual and the System as they are developed. The franchisor also approves local and grand opening advertising materials and retains control over Internet marketing and required mobile payment systems.
Franchise Requirements
Ideal Candidate Profile
Lee's Sandwiches seeks franchisees who are capable of operating an independently owned and operated business. Ideal candidates must be able to designate an owner who will provide direct, full-time, day-to-day supervision of the franchised business and successfully complete the initial training program. This designated owner must hold at least a 5% ownership interest in the franchised business, and any owners with 5% or greater interest must personally guarantee the performance of all franchise obligations. Franchisees must also be diligent in identifying and complying with all applicable federal, state, and local laws and regulations, including those related to food service, labor, zoning, and environmental standards. The ability to maintain competent and conscientious personnel, and to use best efforts to promote and increase sales and recognition, are also expected qualities.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Full-Time
Territory Type
Protected
Territory Size Requirements
Lee's Sandwiches International, Inc. defines its protected territories based on various factors, including population, median population age, proximity to competitors and other Lee's Sandwiches businesses, lease requirements, traffic patterns, visibility, vehicular and pedestrian access, available parking, and natural, physical, or political boundaries like zip codes, city limits, or waterways.
Staffing Notes
Lee's Sandwiches International, Inc. requires franchisees to maintain competent and conscientious personnel, training all staff as necessary to meet System standards and prudent business practices. Franchisees are solely responsible for all employment-related matters, including hiring, firing, wages, scheduling, and compliance with labor laws. The franchisor explicitly states that it does not control or dictate labor or employment policies for franchisee employees, emphasizing the franchisee's independent contractor status.