Starting a business isn’t all fun and games. You need to do the hard work of researching the business opportunities and the feasibility of success in any given area. Another important factor is the cost of establishing and scaling your business. These challenges are perhaps one more reason why most investors would rather choose an established franchise over starting a business from the ground up.
If you’ve always wished to tap into the American food industry, especially by providing quick-serve services to customers, owning one of the numerous Jack in the Box burger franchises may be the way to go. As an investor, business owner, or entrepreneur, you know too well the importance of financial planning when making such a decision. Find out more about the financial implications of opening a Jack in the Box burger franchise.
What is Jack in the Box Franchise?
Jack in the Box is an American fast food restaurant offering franchise opportunities to interested businesses, investors, and entrepreneurs. Asides from the good food, the franchise is known for its popular mascot, Jack the clown.
Owning a part of this business gives you the requisite license to produce some great-tasting food on the restaurant’s menu. Most consumers have identified their menu as tacos, chicken sandwiches, hamburgers, and breakfast items. The franchise also offers some international food options to match customers’ demands. Some of their other food options include egg rolls and fried rice.
With Jack in the Box, the goal is to provide quick service to hungry customers who need to grab a bite almost immediately. The franchise offers a great drive-thru experience to customers and has expanded into most cities with heavy traffic. Customers can also order take-out from the restaurant to meet their needs.
Becoming a Jack in the Box Franchise Owner
If you’re pleased with the business model on which the Jack in the Box franchise is built, then you’re on your way to becoming a franchise owner. Interested franchisees have the option of franchising a newly constructed restaurant or choosing an already built restaurant. In most cases, the restaurant’s design is such that it allows drive-thru operation. While it does address drive-thru needs, customers can sometimes decide to walk into the restaurant to grab a bite.
The average Jack in the Box franchise will accommodate between 20 and 100 customers in the traditional restaurant format.
The Cost of Becoming a Jack in the Box Franchisee
Jack in the Box has rules and specific guidelines as with any other franchise. Interested entrepreneurs and investors are required to go through the demands to ensure they are comfortable with the terms. The important cost implications include;
Initial Investment
Jack in the Box estimates its initial investment to range between $1,697,000 and $2,694,600. The franchise estimates the low and high initial investment range based on the total estimated cost required to build a prototypical MK9 or MK10-style restaurant. The estimation, however, does not consider additional costs like land, financing, and other costs.
Initial Franchise Fees
You would be required to pay an initial franchise fee of $50,000 for every franchise unit owned or intended to be developed to get your foot in the door. The initial franchise fee is payable when the intending franchisee signs the franchise agreement.
Investors looking to set up non-traditional Jack in the Box restaurants are required to pay a $25,000 initial franchise fee per unit of the franchise owned.
Added to the initial franchise fee, franchisees also pay a $25,000 development fee on each location they intend to develop.
Ongoing Royalties and Program Contributions
Jack in the Box restaurant has some financial requirements that franchisees must meet as part of running their business. The franchisors have a 5% royalty fee payable monthly by each franchisee on their monthly gross sales. The franchise reserves the right to review the rate as it deems fit.
Franchisees must also pay a quarterly royalty fee for devices and games installed in each location. This fee equals 40% of the net revenues generated by the ATMs, arcade boxes, slot machines, and more.
An additional 5% of gross sales made must also be paid towards franchise marketing.
Jack in the Box Franchise in Summary
Liquid capital requirement: Over $250,000
Franchisee Net worth requirement: Over $1,000,000
Initial investment required: $1,697,000 – $2,694,600
Franchise fee: $50,000 per location
Monthly Royalty: 5% of gross sales (excluding games and devices)
Marketing fee: 5% of gross salesOperational units opened: 2,221