Carl’s Jr. Franchise Costs $1.3M – $3.4M (+ 2024 Profits)

Carl’s Jr., a prominent name in the fast-food industry, was founded by Carl Karcher and his wife Margaret on July 17, 1941. The couple started their venture with a modest hot dog cart in Los Angeles, which they purchased using a combination of their savings and a loan against their car. This small enterprise laid the groundwork for what would become a vast network of quick-service restaurants. The brand, initially known as Carl’s Drive-In Barbecue before evolving into Carl’s Jr. in 1956, has been at the forefront of the quick-service restaurant sector for over 75 years.

Carl’s Jr. is renowned for its innovative and premium menu offerings, including the famous Western Bacon Cheeseburger®, the Super Star® hamburger, and the plant-based Beyond Famous Star with Cheese®. The menu also features a variety of other items like Hand-Breaded Chicken Tenders and Made From Scratch™ Biscuits, catering to a broad range of tastes and preferences.

The franchise started its journey into franchising in 1984, expanding its reach and allowing entrepreneurs to be part of the growing Carl’s Jr. family. The brand’s headquarters is now located in Franklin, Tennessee, after moving from its original base in Anaheim, California. This relocation was part of the brand’s ongoing evolution and its efforts to adapt to the changing dynamics of the fast-food industry​ (Wikipedia)​​ (Carl’s Jr.)​.

Type of Expenditure	Amount
Fees to CJR: Initial Franchise Fee	$25,000
Opening Training Support Team Fee	$30,000 – $70,000
Building	$500,000 – $1,200,000
Site Improvements	$100,000 – $850,000
Soft Costs	$50,000 – $150,000
Equipment	$300,000 – $500,000
Signage	$75,000 – $150,000
Point of Sale System	$45,000 – $65,000
Initial Training	$20,000 – $60,000
Pre-Opening Costs	$8,000 – $23,000
Additional Funds – 3 months	$160,000 – $250,000
Total Estimated Initial Investment	$1,303,000 – $3,436,000

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Franchise Fee

The Initial Franchise Fee is $25,000, with a reduction to $10,000 for restaurants developed under a Development Agreement.

Royalty Fee

A non-refundable and continuing Royalty Fee of 4% of Gross Sales is payable within 10 calendar days after the end of each fiscal week. This is in addition to any taxes, fees, or assessments imposed on the franchisor for acting as franchisor or licensing the Proprietary Marks.

Advertising Fee

The Advertising Fee aligns with the Royalty Fee and is the same percentage of Gross Sales.

Digital Tech Fee

As of May 2023, the Digital Tech Fee is $80 per 4-week accounting fiscal period, subject to change with prior notice. This fee covers access to various digital services and technologies.

Renewal Fee

The Renewal Fee is $5,000 for a term of 5 years or less, or $10,000 for a term greater than 5 years but no more than 10 years.

Franchise pros and cons

When starting a Carl’s Jr. franchise, first find out its advantages and disadvantages.

Pros

• Recognized brand: Carl’s Jr. is not a new name for burger enthusiasts. It is a brand known for its signature menu of breakfast, lunch, and dinner products. It is a fast-growing franchise and enjoys an international presence. New franchisees can enjoy a huge flow of customers, and the franchise offers a great opportunity for growth and profitability.
• World-class support: To help new franchisees establish and run their restaurants successfully, Carl’s Jr. offers substantial training and support. The franchisor offers site selection, restaurant design, equipment ordering, and construction. They also offer franchise business consultations, operations, equipment, procedure optimization, marketing, and advertising support. All this is meant to give franchisees training and business ideas to succeed.
• Proven business model: The brand has been in business for over 80 years. They have penetrated new markets, including international ones, and continued to wow their customers with quality, made-to-taste foods. Their business strategy has been successful, and they can pass on to new franchisees a strong business culture that is known to work and has propelled them to success and profitability.
• Marketing support: Another benefit of operating a Carl’s Jr. franchise is its solid marketing support. Carl’s Jr. offers new franchisees assistance with their strategic advertising and local store marketing.
• Growth potential: if you’re an investor looking for a business with a lot of growth potential, then Carl’s Jr. is a good opportunity. It has stores in both the United States and around the world and is still rapidly expanding. With plans to expand in existing and new markets, new franchisees will find it easy to market and grow their businesses with less effort and advertising costs.

Cons

• No franchise financing: The franchise does not offer any direct or indirect financing to its franchisees. It also does not guarantee any lease, grant, or note concerning its franchisees’ financing.
• No exclusive territory protection: Carl’s Jr. does not offer exclusive territory protection to its franchisees. The franchisor may grant franchises to other restaurants in the location occupied by its franchisees. Franchisees also face competition from businesses operated and controlled by the parent company.
• No absentee ownership: Carl’s Jr. is not a perfect match for those looking for a passive investment. It requires owners to actively work in the restaurant business and be involved in its day-to-day operations.

How to apply

Opening a Carl’s Jr. franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Carl’s Jr. franchise.

1. Initial Application

• Begin by completing and submitting the Carl’s Jr. franchise application.
• Review the Franchise Disclosure Document provided by Carl’s Jr. to understand the brand, operations, and legalities.
• Supplement your application with additional documentation as required.
• Submit proof of your assets and undergo a credit check and initial financial review.

2. Business Plan Development

• Select your preferred territory for the Carl’s Jr. franchise.
• Develop a detailed business plan tailored to the selected territory and Carl’s Jr.’s operational model.

3. Financial and Operational Review

• Undergo background checks as part of the franchise vetting process.
• Present your business plan to Carl’s Jr.’s Franchise Development team for review.
• Submit legal entity documentation relevant to your franchise application.
• Complete a comprehensive financial review based on your submitted business plan.
• Attend a discovery day to gain deeper insights into the Carl’s Jr. franchise system.

4. Approval and Training

• Upon receiving approval, start the franchisee training program offered by Carl’s Jr.
• Select a site for your restaurant and submit it for Carl’s Jr.’s approval.
• Secure the necessary financing for your franchise investment.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

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