Industry News | September 4, 2013

Togo's Lures In Franchisees With Reduced Royalties

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Togo’s Eateries, a “West Coast Original” since 1971, announced a royalty incentive for new multiunit franchise agreements. Franchisees who sign a new deal for three or more locations will receive reduced royalty fees for the first two years for each new restaurant.

Franchisees will pay a 3 percent royalty during the first year of operation, followed by 4 percent in year two and 5 percent in the third year and beyond.

The royalty incentive will allow franchisees to invest additional funds into local marketing to help grow sales at each new restaurant. 

The brand is targeting new market growth in Washington, Oregon, Idaho, Utah, Colorado, Nevada, and Arizona. The new incentive only applies to development agreements within these seven states. 

“As part of Togo’s plan to grow the brand to 400 restaurants along the West Coast, we’re offering an attractive incentive to encourage multiunit development and introduce our big, fresh, meaty sandwiches to guests in new markets,” says Tony Gioia, chairman and CEO of Togo’s Holdings. “Through reduced royalties, franchisees can invest more dollars into local marketing, allowing them to connect with even more guests and raving fans of the brand.”

Togo’s, which has experienced 12 consecutive quarters of same-store sales increases, is seeking qualified multiunit franchisees that have a passion for the brand and deep connection to their community.

Both new and existing Togo’s franchisees will benefit from $10 million for remodels and transfers, as well as $5 million to build new restaurants in the state.

At Togo’s, traditional restaurants experienced average unit sales in excess of $633,000, with 50 percent averaging more than $799,000 and 25 percent averaging more than $930,000.

To become a part of the Togo’s team, candidates should possess liquidity of $150,000 for a single restaurant and a net worth of $300,000. Area developers looking to develop three or more restaurants should have liquidity of $450,000 and net worth of $900,000.

Special incentives are available for qualified franchisees interested in opening three or more restaurants.