America is world-famous for its love of sandwiches, but few eateries have successfully captured that love. One of the top sandwich chains in the United States is Jersey Mike’s, with nearly 2,000 locations. With diverse franchise options available to investors, Jersey Mike’s has become a perfect “quick bite” choice for residents and tourists alike.
At the same time, if you are interested in Jersey Mike’s franchise cost, it seems you are looking for a business opportunity in the QSR industry. How do you decide which brand to invest in? When the numbers and information are misleadingly touted, who do you trust to give you unbiased information so that your money and efforts get the best opportunity to grow?
Before getting into the overcrowded yet conducive business of a QSR industry, you have to understand and evaluate the many options available. The franchise business could either make you or break you from the investment required to run it.
Hey, I’m Dan Rowe. As an expert at helping businesses find the right franchise, my company, Fransmart, is committed to providing you unbiased information and assistance for franchise investment. Our team will guide you through the investigation, evaluation, and purchasing process to help buy your franchise. Our comprehensive analysis of existing franchisee complaints, competitors’ proposals, and company research has seen many pitfalls of investing in Jersey Mike’s.
You need to be aware of the costs involved to make a better strategy. You should also check if there are available discount programs or deals with your franchisor to save on these costs.
Let’s start by first understanding what the costs of getting a Jersey Mike’s franchise are:
The brand that sells “A sub above” requires the following capitalization from its franchises:
- Liquid Capital—-$100,000
- Total Investment—-$ 177,943 – $ 783,233
- Franchise Fee—-$ 18,500
- Net Worth requirement—$ 300,00
- Royalty Fee—-6.5%
- Ad Royalty Fee—5%
| Type of Expenditure | Actual or Estimated Amounts | Method of Payment | When Due | To Whom Payment Is To Be Made |
| Total | $144,668 – $786,233 | |||
| Initial Franchise Fee | $18,500 | Lump-Sum | On Signing of the Franchise Agreement | Company |
| Real Estate and Construction Fee | $5,000 | Lump-Sum | On Signing Lease | Company |
| Rent/Lease CAM/Taxes/Lease
and Utility Security Deposits |
$0 – $38,250 | Monthly | Monthly | Landlord |
| Architectural Fees | $4,876 – $16,000 | As Incurred | As Arranged | Approved Suppliers |
| Leasehold Improvements | $62,299 – $349,838 | As Arranged | As Arranged | Landlord or Contractors |
| Equipment/Furniture/Small Wares | $11,255 – $101,677 | As Arranged | As Arranged | Designated and Approved Suppliers |
| Initial Inventory | $966 – $29,044 | As Arranged | As Arranged | Designated and Approved Suppliers |
| Insurance | $2,000 – $12,000 | As Arranged | As Arranged | Your Insurance Company |
| Training | $2,500 – $56,850 | As Incurred | As Incurred | Transportation, Hotels, Restaurants, Staff Salaries |
| Grand Opening Advertising | $12,500 | Lump-Sum | On Signing Lease | Company |
| Exterior Signage | $2,188 – $46,516 | As Arranged | As Arranged | Approved Suppliers |
| Interior Branding/Graphics | $2,689 – $16,000 | As Incurred | As Incurred | Approved Suppliers |
| Uniforms, Office Equipment, and Supplies, TVs/Stereo
System/Security System |
$2,260 – $25,361 | As Incurred | As Incurred | Designated and Approved Suppliers |
| POS System | $85 – $13,305 | As Incurred | As Incurred | Designated Suppliers |
| POS System Connection to Private Network | $2,000 | As Incurred | Before Opening | Company |
| Professional Fees (lawyer, accountant, etc.) | $525 – $12,642 | As Incurred | As Incurred | Accountant, Lawyer |
| Business Licences and Permits | $25 – $15,750 | As Incurred | As Incurred | Local Municipality, State |
| Additional Funds for three months | $15,000 | As Incurred | As Incurred | Approved Suppliers, Employees |
The total investments will vary depending on the fixed and operating costs of starting a Jersey Mike’s store. Some of the high initial costs are authentic estate costs, equipment, signage costs, license and permits costs, uniforms, insurance, and more.
So, How much does a Jersey Mike’s franchise owner make?
If we go back to the $783,000 investment made to start a Jersey Mike’s franchise, we need to investigate the ROI for a chance to recoup our money.
ROI is calculated by dividing the net profit in a business by its total assets. But various factors will affect the ROI in a given year, like the cost of equipment that could spread over several years.
As you plan your franchise business, you will need to know the approximate investment, the projected revenue, and the expected ROI. With the popular formulas of the breakeven analysis and the internal rate of return, you can easily find your Return on Investment (ROI) for your franchise business.
You can easily do this by applying specific focal or MS Office formulas. The video below discusses some basic economic concepts and procedures that will help you make an informed decision when choosing a franchise.
https://www.youtube.com/watch?v=Cn8z-twy3wY
Get An Opportunity Cost Of The Investments
It is vital to get a complete understanding of the risks associated with a company before investing in it. Comparing the opportunity cost of this company to other similar opportunities can help you make an informed decision. The opportunity cost of investment measures the value of the highest-earning alternative sacrificed when a given investment is made.
Franchise disclosure documents list out several obligations a franchisee might have. These obligations could include training, royalties, and advertising fees. To see how these compare to some other franchises on the market, let’s take a look at the comparative prices of some of the more popular QSR franchises:
This is how Jersey Mike’s stack up against the competition:
| Costs in $ | Jersey Mike’s | Culver’s | Popeyes Louisiana Kitchen | Subway | KFC | Chick-Fil-A | Dunkin Donuts |
| Franchise Fee | 18,500 | 55,000 | 50,000 | 15,000 | 45,000 | 10,000 | 40,000 – 90,000 |
| Initial Costs | 169,001- 804,045 | 2,349,000 – 5,356,000 | 385,500 – 2,620,800 | 150,000- 328,000 | 1,200,000- 2,500,000 | Zero start up cost | 228,621 – 1,692,314 |
| Net Worth | 300,000 | 500,000 | 1,000,000 | 80,000 -310,000 | 1,500,000- 2,500,000 | 0 | 500,000 |
| Liquid Assets | 100,000 | 200,000 | 500,000 | 40,000 | 750,000 | 0 | 250,000 |
As a popular fast-food restaurant, Chick-Fil-A falls in the middle of the investment graph. At one end, there are expensive franchises like Culver’s, and the other end is Chick-Fil-A, which requires very little investment and no minimum net worth.
It has been seen that on average, a Jersey Mike’s store makes $73,000 annually as against the investment of $ 169,001 -$804,045
What will you choose?
Franchising is a considerable investment. Many advantages and disadvantages are involved, but it’s not as risky as opening your own business. The income you can earn from your franchise investment depends on various factors, but there are some general benchmarks stated in FDD item 19 for every business.
For Making Billions
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Jersey Mike’s Franchise Business:
Some of the famous names in the industry require huge investments, and it takes many years for these brands to break even. Then there are brands like Jersey Mike’s that need much fewer assets than the top in the charts do, but then Jersey Mike’s has its share of problems and controversies that make its ROI relatively low in comparison.
Jersey Mike’s business does not have a better franchise model. It has been given a very average rating of 3.25 stars out of 5 in Better Business Bureau, which is also below the industry average of 3.74. The rating itself shows that the franchise business of Jersey Mike’s has earned less than the industry average.
Other brands like Halal Guys will give you 3-4X returns on your investment. The brand offers benefits and perks which otherwise are available only to big corporations. Exclusive territory and rapid expansion and growth are possible through Halal guys. Jersey Mike’s does not encourage multiple franchise locations from one owner, making the business not the best place to get rich.
Frequently Asked Question
Is owning a Jersey Mike’s Franchise profitable?
After looking at their estimated costs and income, it’s clear that the Jersey Mike’s franchise is a super high-risk investment. Only the most prepared and calculated risk-takers should sign up for this opportunity. There isn’t enough information provided by many franchisors to make an informed decision.
How much does a Jersey Mike’s owner make?
A Jersey Mike’s franchise owner operator can expect to earn an annual income of around $73,000; that estimate may be higher for those who open stores with professional help instead of opening it by themselves.
What should be the net-worth to open a Jersey Mike’s franchise?
Franchisors risk their name if they allow a franchisee to operate using their brand. That’s why they often look at an individual’s net worth. Not everyone can be a candidate. The net worth requirement for the Jersey Mike’s franchise is $300,000.
If you want to know more about the brand or other brands you would be interested in investing, call us now. We understand the franchise business and can take you through our analysis and evaluation to know the best place for your investments.
Sources:
https://waybackburgers.com/franchising/average-cost-of-a-franchise/
https://www.entrepreneur.com/franchises/jerseymikessubs/282476