How Profitable is a Jimmy John’s Franchise? 2022 Costs & Profits

With more than 2,700+ stores in the US, Jimmy John’s is undeniably one of the most popular sandwich brand in the US. But is owning a Jimmy John’s franchise a profitable investment?

With a (mere) $513,650 investment cost and annual sales of $874,845, Jimmy John’s does sound like an attractive franchise for franchisees. Is this really true? Is this a profitable franchise?

In this article we’re looking at Jimmy John’s from a financial standpoint to assess whether the franchise is a good investment. Should you start a Jimmy John’s franchise? Are the profits worth the investment cost? Let’s dive in!

Jimmy John’s: key figures

Franchise fee	$35,000
Royalty fee	6.0%
Marketing fee	6.5%
Investment (mid-point)	$513,650
Average annual sales	$874,845
Investment to sales ratio	1.7x
Investment payback*	3.9 years (very good)
Minimum net worth	$300,000
Minimum liquid capital	$80,000

Jimmy Johns: a brief introduction

Jimmy Johns is a fast-growing American gourmet sandwich chain restaurant that serves made-to-order sandwiches, freshly baked bread, and other food and beverage products. Its founder, Jimmy John Liautaud, started the chain store in 1983 with his first store in Charleston, Illinois.

At first, Jimmy wanted to start a hot dog restaurant but later abandoned it as it was very costly. He partnered with his dad, sharing profits equally, but he later bought his dad out and became the sole owner of the business. And by 1993, he had established over 10 stores in the US.

In 1994, Jimmy Johns’ franchising journey began with its first franchise in Eau Claire, Wisconsin. And by 2001, it had reached 100 stores.

Today, Jimmy Johns has over 2,700 stores in 43 states in the US, and that number is still growing. Jimmy John SPV LLC and its parent company, Inspire Brands, headquartered in Champaign, Illinois own the Jimmy Johns franchise.

Jimmy Johns franchise: pros and cons

Although the chain store has been consistently successful, it still has pros and cons.

Pros:

• Great opportunity for growth: Today, the Jimmy Johns franchise has over 2,800 units, with 98% of them being franchise owned. The chain has a good growth record and gives franchisees a good investment opportunity.
• Proven business model: The Jimmy Johns franchise is known for its best-in-class sandwiches made from all-natural meats and vegetables that are hand-sliced in-house every day. And that’s not all. Their bread is also freshly baked all day, every day. Customers recognize the brand, love its food, and will connect with new restaurants.
• Strong franchise support: The success of a franchisee depends mostly on the support it gets from the parent company. Jimmy Johns franchise offers perfect support to her would-be franchisees. As a new franchisee, you get real estate, construction, marketing, operations, and purchasing training and support from franchise experts to help you operate the business efficiently.
• Superior brand recognition: The Jimmy Johns brand, known for its fresh and expertly prepared sandwiches, has grown tremendously in recent years. The brand has been able to compete in a crowded market of sandwich franchisors. Going into business, a new franchise can ride on the brand’s popularity to grow fast and make a good income.
• Simple but appealing menu: The Jimmy John sandwich menu is pretty simple and quite appealing to customers. This can attract customers and is less costly to the franchisees.
• Efficiency: The Jimmy Johns franchise prides itself on offering fast and efficient service. They serve made-to-order fresh sandwiches in under 30 seconds. They also provide deliveries to increase sales. This efficiency attracts a great range of customers.

Cons

• There is no exclusive territory protection. The Jimmy John franchise does not offer franchisees exclusive territory protection. New restaurants may face competition from franchises granted by the parent company or from competing sandwich makers controlled by the franchisor.
• No financing: Another downside of “the sandwich of sandwiches” maker is the lack of financing. Jimmy Johns does not offer direct or indirect financing to would-be franchisees. It also doesn’t guarantee a franchisee’s note, lease, or obligation.
• Higher franchise fee: To start a Jimmy Johns franchise, you need a franchise fee of at least $35,000 and $200,000 in liquid capital. This franchise fee is on the higher side as compared to its rivals like Panera Bread, and this can put off interested franchisees.
• Strict requirements: The Jimmy Johns franchise has some of the most stringent franchise requirements. For instance, they are very strict on the location of the restaurants and the uniforms for staff. This may not be appealing to would-be franchisees.

How much does a Jimmy Johns franchise cost?

The total investment necessary to open a Jimmy John’s franchise restaurant is $513,650, including the initial franchise fee of $35,000.

Of course, this amount is an average. It varies depending on various factors like the format of your restaurant, its location, its size, etc. As the latest FDD shows, the investment cost ranges from $355,900 to $671,400.

The investment you must pay for as the franchisee covers costs like the first month’s rent, leasehold improvement, furniture, equipment, opening inventory and supplies, grand opening event, training expenses, and an additional fund to cover the first 3 months’ losses.

Here’s a summary of the different costs you should pay for:

Type of cost	Investment amount
Initial franchise fee	$30,000 – $35,000
Formation costs	$255,900 – $532,400
Operating expenses	$70,000 – $104,000
Total	$355,900 – $671,400

What is the turnover of a Jimmy John’s franchise?

An average Jimmy John’s franchise makes $874,845 in sales per year.

This number is the median annual sales of both drive-thru and non drive-thru restaurants. Indeed, as the latest FDD, a with drive-thru restaurant ($1,034,000) generates more revenue than a non drive-thru restaurant ($834,000).

When it comes to the evolution of sales over time, they have been consistently increasing over the past 3 years.

Year	Drive-Thru	Non Drive-Thru	Total
2019	$752,372	$685,759	$711,460
2020	$836,748	$671,417	$729,442
2021	$1,034,580	$851,969	$874,845

How profitable is a Jimmy John’s franchise?

When it comes to costs, Jimmy John’s franchise disclosure document doesn’t give much details.

As per our analysis, we found out that the average store earned an average adjusted EBITDA of 26%. Note that this only includes COGS, labor costs, rent and royalty and marketing fees.

In absolute terms, the average Jinny John’s made $230,073 in profits per year (as in adjusted EBITDA as explained above).

Despite high royalty and marketing fees (6% and 6.5% of sales respectively) – on the high-end of similar fast food franchises, the rent is here quite low vs. other franchises ($63,000 per year only).

Profit-and-loss	Amount ($)	As % of sales
Sales	$874,845	100%
COGS	$(218,711)	25%*
Labor	$(253,705)	29%*
Rent	$(63,000)	7%
Royalty + marketing fees	$(109,356)	12.5%
Adjusted EBITDA	$230,073	~26%

Is a Jimmy John’s franchise a good investment?

EBITDA margin is a common financial metric that allows us to understand how profitable a business is. Unfortunately, EBITDA doesn’t include all expenses. Instead, we need to look at net profit.

As for the vast majority of franchises, Jimmy John’s doesn’t disclose any information when it comes to net profit. As per our own intelligence, we estimate Jimmy John’s to have net profit of $131,000 on average (15% of sales).

Now, to assess whether Jimmy John’s is a good investment from a financial standpoint, we need to look at the investment payback: how long does it take on average for a franchisee to recoup her/his initial investment of $513,650?

As per our calculations, the payback period for a Jimmy John’s is 3.9 years which is very good (anything below 5 years is considered very good). From that perspective, Jimmy John’s is indeed a very good investment. Think about it: it would take you 4 years to recoup your original investment.

How does it compare vs. other franchises?