About Jersey Mike’s Franchising Business
Americans love sandwiches, but their tastes can be complicated to satisfy. Jersey Mike’s Subs is one of the major sandwich chains that has managed to satisfy this seemingly simple craving.
Jersey Mike’s Subs was founded in 1956 in Point Pleasant, New Jersey. The current company CEO, Peter Cancro, fell in love with the company and bought them in 1972. The company started franchising in 1987 and has since grown its franchise stores to 1942 locations in addition to the 31 directly-owned units.
Entrepreneur ranked Jersey Mike’s number four in its top 500 franchise listing attesting to its proven franchising business.
The Cost of Buying a Jersey Mike’s Franchise
Buying a Jersey Mike’s franchise ranges from $178,523 to $746,342. The total sum includes the following:
- Initial Franchise Fee – $18,500
- Initial Investment – $178,523 – $746,342
- Royalty Fee – 6.5%
- Ad Royalty Fee – 5%
The franchise agreement term lasts 10 years and is renewable after the initial franchise term expires. This is subject to the franchisees’ adherence to the franchisor’s guidelines during the initial franchise term.
If you wish to learn more about starting a franchise, Fransmart’s team of professionals is eager to get you started on your franchising journey. Fransmart, the leading franchise development firm for emerging brands, has an extensive portfolio, including The Halal Guys and Taffer’s Tavern, and can help connect you with the ideal franchise for your goals.
How To Finance Your Jersey Mike’s Franchise
Jersey Mike’s Subs has established relationships with third parties that offer to finance qualified franchisees. The financing will cover franchise fees, startup costs, equipment, inventory, accounts receivable, and payroll.
Apart from the available financing Jersey Mike’s offers, franchisees are required to have a net worth of at least $300,000.
The liquid cash requirement at Jersey Mike’s franchise is an estimated $100,000. Only when the financial requirements stated under Jersey Mike’s franchise are fulfilled, do you stand a chance at getting their franchise agreement.
Jersey Mike’s Franchise Support System
Jersey Mike’s provides excellent support to its franchisees in various ways, including marketing, ongoing support and training. Here’s a breakdown of the support that Jersey Mike’s franchisees should expect:
Ongoing Support: The ongoing support Jersey Mike’s franchisees can expect includes site selection, proprietary software access, meetings, conventions, field operations, online support, and security/safety procedures. Jersey Mike also has a grand opening ceremony at every store that it launches.
Marketing Support: Jersey Mike’s supports its franchisees by helping them market their franchise. Some of the ways franchisees benefit from their marketing support include cooperative advertising, loyalty programs, national and regional media advertising, social media advertising, ad templates, website development, and email marketing.
Training: All Jersey Mike’s franchisees undergo 40 hours of training and 400 hours of on-the-job training. Franchisees are expected to complete both pieces of training before they can begin running their franchise. An employee range of about 10 to 15 staff members is expected to be trained during this process.
Advantages And Disadvantages of Buying a Jersey Mike’s Franchise
Several distinctive features of Jersey Mike’s franchise make it an excellent investment. However, there are aspects where the franchise model falls short. In this section, the disadvantages and advantages of buying a Jersey Mike’s franchise are discussed. Advantages include:
Absentee Ownership
Jersey Mike’s permits absentee ownership. This allows investors not necessarily available physically to operate their franchise. Comparatively, many major brands such as Domino’s and McDonald’s do not permit absentee ownership. This may be attractive for you if you would love to run other businesses alongside your franchise and have trusted operators run your franchise.
Great Brand Support
Several major brands do not offer the level of support Jersey Mike’s offers its franchisees. It offers a range of ongoing support, including marketing and training. Franchisees can request additional training if needed. The franchisee’s meetings and conventions serve as an excellent means of learning from peers and management.
The following are the disadvantages of buying a Jersey Mike’s franchise:
Low Returns on Investment
For a fast-food franchise that requires up to $746,342 for the initial investment, the profit margin on the franchise is relatively low. Yearly profits range around $73,000 showing a considerable gap from the initial investment. Comparatively, other brands in the fast-casual segment like Savannah Seafood Shack, Rise Southern Biscuits & Righteous Chicken, or Brooklyn Dumpling Shop offer a minimum of double returns on your investment.
Single Franchise Ownership Policy
Jersey Mike’s discourages the purchase of multiple franchises under its franchising business model. Investors who seek to expand after the success of their first store may find it challenging to get a franchise agreement for their proposed new opening.
Changing Consumer Tastes
With the high calorie, sodium, and fat content of many of its subs, Jersey Mike’s may have a hard time attracting consumers that are more wellness-focused.
Conclusion
While Jersey Mike’s has many benefits for potential franchisees, its low profits and high initial investment costs are a big deterrent. Emerging brands like Ike’s Love & Sandwiches, Duff’s Cake Mix, and Slapfish, could be smarter, and more strategic investments. Contact Fransmart today to review your franchise options to find the right franchise for you.