Risk Score
Pending analysis
Investment Range
$1,676,000 - $3,140,900
Franchise Fee
$5,000
Min Cash Required
$5,000
Total US Locations
3,461
Business Summary
Sonic operates a fast-food restaurant that offers a wide variety of specialty drinks, ice cream desserts, cheeseburgers, chicken entrees, hot dogs, onion rings, tater tots, and breakfast items. Sonic Drive-Ins are typically free-standing, one-story buildings with parking stalls and canopies, providing in-car service, often with carhops on roller skates delivering food. Most locations also include drive-thru service and patio seating, with some offering enclosed patios or indoor seating.
Corporate History
The Sonic brand originated in the early 1950s, and Sonic has been offering franchises since 1974 through its predecessors. Sonic Franchising LLC itself was formed on March 23, 2011, as a Delaware limited liability company. In 2018, an affiliate of Inspire Brands, Inc. acquired Sonic, making it part of a larger multi-brand restaurant company. Sonic Industries Services LLC handles franchising obligations and sales, while America's Drive-In Brand Properties LLC owns and licenses the Sonic trademarks and intellectual property. Inspire Brands is also affiliated with numerous other franchise programs through Roark Capital Management, LLC.
Financial Overview
Investment Range
$1,676,000 - $3,140,900
Franchise Fee (Low)
$5,000
Franchise Fee (High)
$45,000
Minimum Cash Required
$5,000
Royalty %
5%
Marketing %
5.9%
Equipment Costs (Low)
$330,000
Equipment Costs (High)
$570,000
Working Capital
$15,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Sonic Franchising LLC's financial statements are audited and show an unqualified opinion, indicating fair presentation of its financial position. The company reported net income of $5,971,000 in 2024 and has member's equity of $26,384,000. Its financial health is closely tied to its parent company, Inspire Brands, Inc., and its affiliates. Sonic Franchising LLC guarantees obligations under significant securitization notes (approximately $1.417 billion outstanding as of December 29, 2024), pledging substantially all of its assets. This means the franchisor's ability to meet its obligations is intertwined with the performance of the broader Sonic Co-Issuers under these securitization agreements. Additionally, Sonic Industries Services LLC (SIS), an affiliate providing many services to the franchisor, also presents audited consolidated financial statements, reporting a net income of $183,322,000 in 2024 and managing long-term debt of over $1.3 billion, with no going concern issues noted by their auditors.
Financing Details
Sonic does not offer any direct or indirect financing to franchisees. Sonic also does not guarantee any franchisee notes, leases, or other obligations.
Performance Metrics
Total US Locations
3,461
Franchised Units
3,144
Corporate Units
317
Avg Square Footage
1,375
Franchising Since
1974
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
6
Litigation Summary
Sonic has been involved in several legal matters. Two class action lawsuits stemmed from a 2017 customer data security breach: one from consumers, settled in 2019 for $4.325 million covered by insurance, and another from financial institutions, settled in 2022 for up to $5.73 million. Sonic also has a pending franchisor-initiated suit from 2024 to collect unpaid fees against Let's Shake LLC. Additionally, some of Sonic's affiliates, such as Arby's and Dunkin' Brands, faced past litigation regarding 'no-poaching' clauses in their franchise agreements, which were settled in 2019 without monetary penalties, leading to the removal of such provisions. Another affiliate, Dunkin' Brands, settled a lawsuit in 2020 with the New York Attorney General related to credential-stuffing cyberattacks, agreeing to pay $650,000 and maintain a security program.
Bankruptcy History
Sonic has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Sonic franchisees must provide written notice between 6 and 12 months before the current term expires. They must be in good standing, with all monetary obligations to Sonic and its affiliates satisfied. Franchisees will need to pay a renewal fee of $15,000 and sign Sonic's then-current franchise agreement, which may have different terms, including varied fees and protected area rights. Additionally, franchisees must complete any required remodeling, repairs, or redecorations to bring the restaurant and site up to current Sonic standards, sign a general release of claims against Sonic and its affiliates, and participate in any required retraining programs.
Training & Support Program
Franchisor Assistance
Before a Sonic Restaurant opens, Sonic helps franchisees by evaluating and accepting proposed sites. It provides standard construction plans, specifications, and lists of approved suppliers for equipment and materials. Franchisees also receive access to confidential information and the Sonic Operations Manual, along with an initial training program for management. After opening, Sonic provides ongoing assistance by periodically updating the Operations Manual, administering the System Marketing Fund (SMF), Sonic Brand Fund (SBF), and Brand Technology Fund (BTF). Sonic advises and consults with franchisees on operational aspects like advertising, equipment, management, food preparation, and service. For major changes to the Sonic system, training, or funds, Sonic seeks input from a Franchise Advisory Council. Sonic also provides additional self-directed online training and webinars for management personnel at no cost, though franchisees cover salaries and expenses.
Initial Training Hours
96
Training Location
Various locations throughout the U.S., including Oklahoma City, Oklahoma, or virtually
Ongoing Support
After a Sonic Restaurant opens, Sonic provides ongoing support by periodically modifying the Operations Manual to reflect updated standards. It maintains and administers the System Marketing Fund, the Sonic Brand Fund, and the Brand Technology Fund to support brand-wide initiatives and technology. Sonic advises and consults with franchisees on operational matters, including advertising materials, new developments in restaurant equipment, management, food preparation, and service. For significant changes to programs or policies affecting all Sonic Restaurants, the franchisor seeks input and advice from a Franchise Advisory Council. Additionally, Sonic offers self-directed online training programs and webinars for management personnel, including station courses and advanced leadership classes, at no tuition cost.
Franchise Requirements
Ideal Candidate Profile
Sonic seeks individuals or business entities who are prepared for significant personal involvement and management of their restaurants. For multi-unit developers, strong financial and management capabilities are essential to oversee multiple Sonic restaurants within a defined geographic area. All franchisees or their designated Principal must dedicate their best efforts, sufficient time, and personal participation to the operation and promotion of the restaurant. This includes ensuring that at least one full-time, trained manager is present at all times and that management personnel provide direct on-premises supervision. Franchisees should be capable of operating a quick-service restaurant business that features a wide array of drive-in food and specialty drinks, often with unique service models like carhops.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
Yes
Operational Details
Location Type
retail
Owner Participation
hands-on
Territory Type
Non-Exclusive
Staff Count
61
Territory Size Requirements
Sonic defines its Protected Area based on population density and metropolitan statistical area (MSA) population. For areas with a population density greater than 125,000 people per square mile, the territory is a 0.75-mile radius from the restaurant. In areas with a population density less than 125,000 people per square mile, the radius varies: 1.5 miles for cities/MSAs with 75,000 or more people; 2 miles for cities/MSAs with populations between 25,000 and 75,000; and 3 miles for cities/MSAs with 25,000 or fewer people, or for locations outside a city or MSA. If multiple criteria apply, the smallest resulting area defines the Protected Area. Sonic reserves the right to adjust the Protected Area based on updated federal census data or other selected data. However, this 'Protected Area' explicitly excludes existing Sonic Restaurants, previously protected development areas, and Non-Drive-In or Non-Traditional locations, meaning Sonic franchisees will not receive an exclusive territory and may face competition from other franchisees or company-owned outlets.
Staffing Notes
Sonic requires that its restaurants always have at least one full-time manager on staff who has completed its current training program. If this trained manager leaves, the franchisee must promptly replace them with another trained individual. Additionally, all Management Personnel must provide direct on-premises supervision. For the first three Sonic Restaurants a franchisee operates, approximately seven members of a Franchisee Certified Training Team are required to complete a five-week certification training program at an approved Sonic Restaurant to then train the rest of the new restaurant crew. All Management Personnel must also be certified in ServSafe or a comparable food safety program, and all employees must complete the Sonic Safe Training Program. The typical staff count ranges from approximately 30 to 91 employees, including both management and team members.