The Habit Burger Grill Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$1,026,000 - $2,859,000
Franchise Fee
$10,000
Total US Locations
377
Business Summary
The Habit Burger Grill operates restaurants that serve premium hamburgers, sandwiches, salads, and related items. These menu items are prepared using specific recipes and procedures, with high-quality ingredients, including proprietary burger blends and other food products. Franchisees must operate their restaurants following the brand's business formats, methods, procedures, designs, layouts, standards, and specifications.
Corporate History
HBG Franchise, LLC, the franchisor, was organized in Delaware on February 13, 2013. It is a subsidiary of The Habit Restaurants, LLC (THR), which itself is a wholly-owned subsidiary of The Habit Restaurants, Inc. In March 2020, The Habit Restaurants, Inc. became wholly-owned by YUM! Brands, Inc. The business concept for Habit Burger Restaurants originated with THR's predecessor, which began operations in 1969. HBG Franchise, LLC started offering franchises for Habit Burger Restaurants in May 2013.
Financial Overview
Investment Range
$1,026,000 - $2,859,000
Franchise Fee (Low)
$10,000
Franchise Fee (High)
$35,000
Royalty %
5.5%
Marketing %
2%
Equipment Costs (Low)
$720,000
Equipment Costs (High)
$2,470,000
Working Capital
$105,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The franchisor's financial condition, as shown in its financial statements, raises questions about its ability to provide services and support to franchisees. This indicates a potential concern regarding The Habit Burger Grill's financial capacity.
Financing Details
HBG Franchise, LLC does not directly offer financing for the initial investment or ongoing operations of a Habit Burger Restaurant. However, its ultimate parent company, YUM! Brands, Inc., has an arrangement with a third-party lender, LS BDC Adviser, LLC. This lender may provide financing to qualified franchisee applicants, especially those in underserved communities. YUM! Brands, Inc. may, at its discretion, provide limited guarantees for these loans, covering up to 33% of the original principal or a maximum of $5,000,000. Franchisees must agree to the lender's terms, including loan amount, interest rate, and repayment. If a loan becomes over 30 days past due, the franchisee must notify YUM! Brands, Inc. In case of default, YUM! Brands, Inc. has the right, but not the obligation, to purchase the outstanding loan. Franchisees are required to reimburse YUM! Brands, Inc. for any payments it makes under the guaranty and related costs. Failure to comply with loan or letter agreement terms can lead to termination of the Franchise Agreement and Area Development Agreement.
Performance Metrics
Total US Locations
377
Franchised Units
61
Corporate Units
316
Avg Square Footage
2,600
Franchising Since
2013
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
The Habit Burger Grill has no litigation history to report for the franchisor or its key personnel.
Bankruptcy History
The Habit Burger Grill has no bankruptcy history to report for the franchisor or its key personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Habit Burger Grill franchisees must provide written notice between six and nine months before the initial term ends. They must also refurbish, repair, or replace equipment, and upgrade the restaurant to meet current brand standards. Franchisees and their affiliates must be in full compliance with all agreements, have no outstanding monetary obligations, and prove they have the right to occupy the restaurant's premises for the renewal term. Additionally, they must sign the then-current form of franchise agreement (which may have different terms, including higher fees), pay a renewal fee, execute a general release of claims against the franchisor, and meet current qualification and training requirements.
Training & Support Program
Franchisor Assistance
Before a Habit Burger Grill restaurant opens, the franchisor provides mandatory and suggested specifications for restaurant design, layouts, and equipment. They identify required products and approved suppliers, and grant electronic access to comprehensive Operations Manuals and training documents (approximately 346 pages). The franchisor trains the Managing Owner, District Manager, and at least six Restaurant Leaders on brand standards through a program lasting 10 to 20 weeks. Additionally, the franchisor coordinates the purchase and installation of certain Computer System components. After opening, the franchisor's representatives assist with the restaurant's launch and provide ongoing advice on operations based on reports and inspections. Support also includes guidance on standards, purchasing, advertising, employee training, and administrative procedures, delivered through manuals, electronic media, phone, and on-site visits. The franchisor continuously modifies System Standards, offers help desk and IT services, conducts inspections, and provides access to confidential information and trademarks. Refresher training courses and annual franchise owner meetings are also periodically offered.
Initial Training Hours
500
Training Location
A designated training facility of the franchisor's choice in California or another designated location, which may include an operating Habit Burger Restaurant.
Ongoing Support
After opening, Habit Burger Grill franchisees receive ongoing support including advice on restaurant operations, standards, purchasing, advertising and marketing materials, employee training on brand standards, and administrative procedures, provided through Operations Manuals, electronic media, phone consultations, and on-site visits. The franchisor continuously updates and modifies System Standards, which may require additional franchisee investment. Help desk and IT system services for the restaurant's computer system are also provided. The franchisor inspects restaurants to ensure compliance with standards and allows franchisees to use its confidential information and trademarks. Periodically, refresher brand standard training courses are offered (not more than four days per calendar year), and franchisees are required to attend an annual meeting of all franchise owners.
Franchise Requirements
Ideal Candidate Profile
The Habit Burger Grill requires the designated Managing Owner to complete training and dedicate full-time effort to managing and supervising the restaurant. The Managing Owner must also hold at least a 10% direct or indirect ownership interest in the franchisee entity. If a District Manager is not appointed, the Managing Owner must devote their full time and best efforts to supervising all Habit Burger Restaurants operated by them and their affiliates, without engaging in other businesses unless the franchisor provides written consent. The restaurant must be managed by at least four Restaurant Leaders, including a kitchen team leader, who have successfully completed the franchisor's management training and obtained ServSafe® Food Manager certification. At least one certified and trained manager must be on-site during all operating hours for every shift.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
full-time
Territory Type
non-exclusive
Territory Size Requirements
The Habit Burger Grill franchisees operating a single restaurant will not receive an exclusive territory and may face competition from other franchised or company-owned Habit Burger Grill outlets, as well as other distribution channels or competitive brands controlled by the franchisor. For Area Development Agreements, a Development Area is specified, which is typically a city or other political subdivision. The size of this Development Area is based on the number of Habit Burger Grill restaurants the franchisee agrees to develop, demographics, and site availability, and is negotiated with the franchisor. However, even with a Development Area, the franchisor does not grant exclusivity and retains the right to develop and operate other Habit Burger Grill restaurants or use other distribution channels anywhere inside or outside the Development Area without restriction.
Staffing Notes
Habit Burger Grill restaurants must be managed by at least four Restaurant Leaders, including a kitchen team leader, who have successfully completed the franchisor's management training program and received ServSafe® Food Manager certification. These managers are responsible for day-to-day supervision. Franchisees must ensure that each trained manager devotes their full working time to on-site management duties during operating hours, with at least one manager on-site for every shift. If a District Manager is not designated, the Managing Owner must dedicate their full time and best efforts to supervising the restaurants and cannot engage in other businesses without written consent. The franchisor may regulate staffing levels, employee training, dress, and appearance to meet brand standards.