Schlotzsky Austin Eatery Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$575,185 - $1,904,550
Franchise Fee
$6,250
Min Cash Required
$39,000
Total US Locations
317
Business Summary
Schlotzsky's operates quick casual restaurants featuring premium sandwiches, pizzas, calzones, soups, salads, and complementary food and beverages. Franchisees are typically required to also operate a Cinnabon Express franchise inside their Schlotzsky's restaurant.
Corporate History
Schlotzsky's Franchisor SPV LLC was organized in Delaware on February 2, 2017, and operates under various names including 'Schlotzsky's.' It has offered Schlotzsky's franchises since April 2017. Its predecessor, Schlotzsky's Franchise LLC (SFL), a Georgia limited liability company, offered Schlotzsky's franchises from November 2006 to April 2017. SFL became affiliated with GoTo Foods in November 2006. Schlotzsky's Franchisor SPV LLC is an indirect, wholly-owned subsidiary of GoTo Foods LLC, which is the indirect parent company of seven franchisors in total, including brands like Cinnabon and McAlister's.
Financial Overview
Investment Range
$575,185 - $1,904,550
Franchise Fee (Low)
$6,250
Franchise Fee (High)
$35,500
Minimum Cash Required
$39,000
Royalty %
6%
Marketing %
4%
Equipment Costs (Low)
$435,860
Equipment Costs (High)
$1,614,750
Working Capital
$55,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Schlotzsky's Franchisor SPV LLC's direct parent and guarantor, GoTo Foods Systems LLC, reports strong financial health with consistent positive net income and member's equity. Its indirect parent, GoTo Foods LLC, also shows positive net income and total assets, though it has a member's deficit and over $1.2 billion in long-term debt from securitized financing. Auditors issued an unqualified opinion for both entities, with no going concern qualifications mentioned, indicating that both companies are considered financially stable.
Financing Details
Schlotzsky's Franchisor SPV LLC does not offer any direct or indirect financing to franchisees for purposes such as trade fixtures, opening inventory, or any other needs. The franchisor may refer franchisees to unaffiliated leasing or financing companies, but it does not receive any fees or financial benefits from these referrals and will not guarantee any loans or obligations. Schlotzsky's Franchisor SPV LLC participates in the SBA's Franchise Directory, which can help franchisees access SBA loan programs.
Performance Metrics
Total US Locations
317
Franchised Units
295
Corporate Units
22
Avg Square Footage
1,575
Franchising Since
2006
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
4
Litigation Summary
Schlotzsky's Franchisor SPV LLC's predecessor, SFL, had one concluded legal action related to alleged tortious interference and breach of contract with a former franchisee. This case was filed in 2014 and settled in 2016 for $250,000, with Schlotzsky's denying any wrongdoing. Additionally, three other legal actions are disclosed involving affiliated brands within the GoTo Foods portfolio, such as Arby's and Dunkin'. These cases, settled between 2019 and 2020, primarily concerned 'no-poaching' clauses in franchise agreements or data security issues, resulting in agreements to modify clauses or pay penalties. Schlotzsky's Franchisor SPV LLC was not directly involved in these affiliate cases, and the FDD states they do not impact the Schlotzsky's brand. No other litigation is required to be disclosed.
Bankruptcy History
Schlotzsky's Franchisor SPV LLC has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
20 years
Renewal Conditions
To renew, Schlotzsky's franchisees must have substantially complied with their current agreement and any other agreements with the franchisor or affiliates. They must request renewal in writing 6 to 12 months before the initial term expires and submit an application. If approved, franchisees must agree to make significant capital expenditures for a Remodel within six months of the renewal term, sign the franchisor's then-current franchise agreement (which may have different terms), pay a renewal fee equal to 20% of the current Initial Franchise Fee, sign a general release of claims, and secure the right to operate at the current location for the renewal term or relocate if the site doesn't meet new standards.
Training & Support Program
Franchisor Assistance
Before opening, Schlotzsky's Franchisor SPV LLC assists franchisees with site selection review, ensuring the chosen location meets criteria, and reviews the site agreement. The franchisor provides sample layouts and specifications for the restaurant, reviews architectural plans, and accepts the general contractor. It identifies and works to ensure Approved Suppliers can fulfill orders for necessary goods. Initial management training is provided, and the franchisor approves grand opening advertising plans and authorizes the restaurant's opening. After opening, ongoing support includes continuing to identify Approved Suppliers, reviewing proposed unapproved suppliers or goods, managing the advertising fund, updating operational standards and manuals, and reviewing franchisee advertising. The franchisor also offers various support services on-site, off-site, or by phone, and reviews proposed relocations and remodeling plans.
Initial Training Hours
250
Training Location
Classroom training is conducted online, and on-the-job training takes place at Certified Training Locations specified by Schlotzsky's Franchisor SPV LLC.
Ongoing Support
After opening, Schlotzsky's Franchisor SPV LLC continues to identify Approved Suppliers and evaluates new suppliers or products proposed by franchisees. It manages the advertising fund and updates operational standards and manuals. The franchisor reviews franchisee advertising and provides general support services, which can be delivered on-site, off-site, or remotely by phone, depending on personnel availability. Additional consulting or on-site support can also be requested for a fee. Franchisees' Primary Contacts, Managers, and supervisory personnel are required to attend any mandated conferences, conventions, programs, webinars, teleconferences, or additional training sessions, and Managers must re-certify annually through an electronic learning management system.
Franchise Requirements
Ideal Candidate Profile
Schlotzsky's Franchisor SPV LLC seeks qualified individuals or business entities. Candidates must successfully pass a financial credit check and may undergo an English competency test, an operations interview, and a criminal background check. The Primary Contact for the business must be accepted by the franchisor, directly supervise operations, and hold at least a 5% ownership interest (or have an agreement to reach 5%). This individual, along with all managers, must complete required training. While owners are not strictly required to be involved in day-to-day operations, the franchisor advises against an absentee management approach. Managers typically need six to twelve months of restaurant management experience.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
limited
Staffing Notes
Schlotzsky's Franchisor SPV LLC requires each Schlotzsky's restaurant to employ at least two full-time Managers who have successfully completed the Management Training Program and are dedicated to the restaurant. These Managers are responsible for day-to-day operations and on-premises supervision. The franchisor may also require franchisees operating four or more restaurants to appoint one or more Directors of Operations to supervise multiple locations. Managers must meet any minimum standards for their position and complete additional training as specified.