Huddle House Franchise Costs $558K – $1.4M (+ 2024 Profits)

Huddle House, a cherished American diner-style franchise, has firmly established itself in the restaurant industry with a storied history dating back to its inception in 1964. Originating as a neighborhood gathering spot in Decatur, Georgia, it quickly became a beloved community staple, particularly after local football games, embodying a warm, familial atmosphere. 

By 1966, Huddle House had begun franchising, expanding its reach and becoming a regional favorite. This growth was fueled by its commitment to serving hearty, homestyle meals at reasonable prices, combined with exceptional service and the convenience of being oonring nights and weekends. 

With its headquarters now located in Atlanta, GA, Huddle House continues to grow and adapt, while still holding true to the original values that made it a community cornerstone.

Huddle House distinguishes itself in the competitive breakfast segment with a comprehensive menu that goes beyond breakfast, offering lunch, dinner, and late-night snacks all day long.

Type of Expenditure	Amount (Traditional Franchise)
Initial Franchise Fee	$35,000
Training Fee and Travel and Living Expenses While Training	$23,000 – $47,000
Real Estate – Rent for First 3 months	$16,600 – $25,000
Improvements	$160,000 – $723,000
Equipment and Seating	$170,000 – $300,000
Signs and Décor	$32,000 – $75,000
Site Engineering/Civil Plans	$8,000 – $21,000
Architectural/MEP Drawings	$5,000 – $30,000
Travel Expenses for Opening Guide Meeting	$0 – $750
Smallwares, Small equipment, Opening Inventory and Uniforms	$28,000 – $52,000
POS System	$15,500 – $25,000
Help Desk and Maintenance (total for first 3 months)	$735 – $825
Hardware and Software Components – Computer Security	$1,200 – $2,000
Other Computer and Technology Expenses (first 3 months)	$2,100 – $3,100
Grand Opening Promotion	$3,000 – $5,000
Miscellaneous Opening Costs	$4,000 – $8,500
Security Deposit	$7,500 – $15,000
Additional Funds-3 Months	$50,000 – $75,000
Total	$562,000 – $1,443,000

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 varies based on the franchise agreement type and duration. For Standard Units, the fee is $35,000 for a fifteen-year term. For Non-Traditional Units, the fee is set at $15,000 for a ten-year term. Discounts may apply for veterans and existing franchisees expanding their operations.

Royalty Fee

Franchisees are required to pay a weekly royalty fee equal to 4.75% of Net Sales. This fee compensates for the rights, licenses, and continuous services provided by the franchisor.

Advertising Fund-Marketing Contribution

Franchisees must contribute 3.0% of their Net Sales to the advertising fund on a weekly basis, aligning with the payment schedule of the royalty fee.

Transfer Fees

A transfer fee equivalent to 25% of the then-current Initial Franchise Fee applies if a franchise is sold or if there’s a transfer involving more than 51% ownership, with specific exceptions for approved transfers within the first year of the Franchise Agreement.

Renewal Fees

For franchise renewal, a fee equivalent to 25% of the then-current Initial Franchise Fee is applicable.

Training and Orientation Fees

Additional or refresher training programs may incur a fee, currently set at $300 per day but subject to change.

Franchise Pros and cons

Pros

• Solid support: Huddle House gives franchisees helpful and fundamental support and resources to develop and manage their restaurants successfully. Franchisees benefit from the brand’s proven concept, professional leadership advice, and network of successful franchise owners who have excelled in other locations, ongoing analysis, and operations reviews.
• Real estate and construction: The brand provides franchisees with valuable real estate expert support in establishing their restaurants. Franchisees get site selection help to identify the most convenient location in terms of traffic and future growth. It also helps them with lease negotiations and construction designs, so that they can incur the lowest costs.
• Management and team training: Huddle House provides quality management and team training to help franchisees establish and build successful restaurants. It equips its franchisees with the necessary culinary skills, business procedures, customer service, inventory handling, staff management, and best restaurant operations.
• Quality supply chain: The brand embraces an online, in-house supply chain. Franchisees can get all the supplies from a controlled distribution channel that maintains quality and efficiency. Also, franchisees can save on restaurant items such as food, uniforms, dishes, etc.
• Exclusive territory protection: Huddle House allows its franchisees an exclusive development market to establish and run their restaurants. The brand does not establish competitive brands or grant other franchises in the protected territory during the franchise terms.
• Flexible building options: The brand provides franchisees with different franchise options so that they can fit in any market and enjoy the best available real estate opportunities. Franchisees have flexibility such as freestanding, endcaps, interstate travel center locations, or blended locations that are also strategically located in hotels, convenience stores, and casinos.

Cons

• Not a passive investment: Huddle House does not provide its franchisees with absentee ownership opportunities. The franchisor requires the franchisees to be fully active in the day-to-day operations of the restaurant.
• No financing: The brand does not directly or indirectly finance its franchisees for franchise costs such as start-up, inventory, and equipment.
• Not a mobile unit: The franchise cannot be operated from a mobile unit or home. The franchisor requires its franchisees to have an office facility near the restaurants.

How to open a Huddle House Franchise

Opening a Huddle House 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 Huddle House franchise.

1. Initial Inquiry and Research

• Visit the Huddle House franchising website to learn about the franchise opportunity, including investment requirements and potential locations.
• Fill out an inquiry form on their website to express your interest and receive more detailed information.

2. Introduction Call

• After your inquiry, you’ll have an initial call with a Huddle House Franchise Development Representative.
• This call is to answer any immediate questions and to briefly discuss your qualifications and interest.

3. Exploratory Call

• A more in-depth call where both parties can further assess compatibility.
• You’ll learn more about the Huddle House franchise system, support, and expectations.

4. Complete Candidate Profile

• You’ll be asked to complete a more detailed profile, providing information about your financial status, background, and business experience.
• This step is crucial for Huddle House to evaluate your potential as a franchisee.

5. Franchise Disclosure Document (FDD) Review

• After your candidate profile is reviewed, you’ll receive the Franchise Disclosure Document which outlines important details about the franchise opportunity.
• A scheduled call will take place to go over the FDD, where you can ask questions and clarify any points.

6. Operational Interview

• An interview with Huddle House’s Brand President and/or Chief Operating Officer.
• This step is to ensure that your vision aligns with the brand’s values and operational standards.

7. Franchise Agreement

• Upon mutual agreement, you will receive the Franchise Agreement to review and sign.
• This legal document formalizes your commitment to owning and operating a Huddle House franchise.

8. Site Selection, Construction, and Training

• Once the agreement is signed, you’ll work closely with Huddle House to select a suitable location, begin construction, and undergo comprehensive training.
• Training covers all aspects of running a Huddle House franchise, from daily operations to local marketing.

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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