June 19, 2013

Franchising | July 2012 | By Daniel P. Smith

2012’s Best Franchise Deals

These 10 brands stand out in a crowded franchise field.

Let’s talk deals.

For the third consecutive year, QSR is taking a stab at spotlighting the quick-service industry’s best franchise deals. From dozens of submissions, we’ve narrowed it down to 10 brands, taking into consideration favorable sales-to-investment ratios, unique market niches, positive sales trends, and formidable corporate support.

While this year’s list includes some repeat honorees—Subway, Popeyes, Bojangles’, and Saladworks appear for a second or third time—there’s also plenty of new blood entering the ranks.

Read on to find out which 10 brands distinguish themselves best in a competitive franchise marketplace.

Bojangles’ Famous Chicken ‘n Biscuits

Total U.S. Unit Count: 506 / 310 franchised

Franchise Fee: $25,000

Total Start-Up Costs: $357,000–$553,750

Royalty: 4% of gross sales

Renewal Fee: $12,500

Marketing Fee: 1% of gross sales

With AUV of $1.6 million in 2011 and start-up costs maxing out around $550,000, Bojangles’ boasts a virtually unrivaled sales-to-investment ratio near 3:1.

Three full dayparts continue to drive Bojangles’, which saw its systemwide sales inch toward $770 million in 2011 as same-store sales grew for a fifth consecutive year. Breakfast accounts for about 40 percent of business, while the brand’s breaded, never-frozen chicken drives its lunch and dinner business.

Bojangles’ executive vice president of development Eric Newman says the brand’s success is rooted in its food quality and unique positioning. “[Bojangles’] has continued to develop operational processes, systems, new products, support, and store design,” Newman says, adding that the company’s recent successes make it “a better deal today than it was even one year ago.”

An Outside View: David Omholt, CEO of Texas-based Entrepreneur Authority, says Bojangles’ story keeps getting better. “It’s very rare to see ROI like theirs in the [quick-serve] space,” Omholt says, adding that the company’s “obvious bias for quality” has heightened its upward trajectory.

Bruegger’s

Total U.S. Unit Count: 301 / 105 franchised

Franchise Fee: $30,000

Total Start-Up Costs: $359,600–$448,600

Royalty: 5% of gross sales

Renewal Fee: 25% of then-current franchise fee

Marketing Fee: 1.5% of gross sales

Bruegger’s supports both traditional locations in the 1,500–2,500-square-foot range and scaled-down bakery layouts ideal for airports or office buildings. Franchisees also benefit from regional operations consultants who provide ongoing support, as well as a dedicated marketing team that builds local awareness. These factors helped push 2011’s AUV near $725,000 and spark a sales-to-investment ratio that approaches 2:1.

Since the menu features boiled, hearth-baked bagels, along with salads, soups, and sandwiches, Bruegger’s vice president of franchise development Chris Cheek says, sales are almost evenly distributed between breakfast and lunch. Though Bruegger’s does not have dinner hours, most franchisees relish the normal working hours that bring a quality of life rare in the restaurant industry.

An Outside View: Omholt says Bruegger’s healthy culture and “solid” unit economics propel systemwide success. Its appearance on Franchise Business Review’s most recent annual franchisee satisfaction survey, meanwhile, provides empirical evidence that Bruegger’s is as focused on having a compelling product as it is on maintaining productive relationships with franchisees, he says.

Next: Dickey’s Barbecue