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Review of the Culvers Franchise Opp and Startup Costs

Culver’s might seem like a traditional fast food restaurant from the outside, but inside you’ll find something very different. The ordering process is much like a fast food establishment, but once you’ve placed your order it becomes very much like a traditional American diner. You’re assigned a number, the food is delivered to you, and it’s all made fresh, never frozen.

Started in Wisconsin, the Culver’s brand name stretches throughout the country, but has a particular presence in the Midwest. Their menu features butter burgers and custard that is made in-store, giving customers a friendly, very homey atmosphere to enjoy.

Where Are There Culver’s Franchise Opportunities Right Now?

Culver’s operates currently within a 24 state footprint in the lower 48 of the United States. This footprint stretches as far west as Idaho and reaches the East Coast with the Carolinas and Florida. Unlike other similar franchises, you don’t order your operating equipment from the parent company. As a franchisee, however, you will meet with the brand ownership and walk through the ordering process together so that there is a model of comparative consistency throughout the brand.

As an owner-operator for Culver’s, you are expected to work full-time with your franchise. They will only accept applications from those who are willing to be hands-on with the new franchise. There is a minimum 50% ownership stake required in each franchise or an owner-operator must have a 25% stake in the real estate and the franchise combined and be completely involved in its day-to-day operations.

A total investment into a franchise may require up to $3 million to get it off the ground. It may take as little as $600,000, but because of the extensive costs, partnerships are often encouraged when applying for a new franchise to mitigate a portion of the personal responsibility. Culver’s franchises are unique in that almost all of them are partnerships.

What Is the Startup Cost For a Culver’s Franchise?

The initial fee to start a Culver’s Franchise is $55,000. This gives you an exclusive franchise license for 15 years that is fully renewable, but each franchise must qualify for a renewal at the expiration of their current agreement. Those franchisees that do qualify for a renewal have a 10 year option at that time for a cost of $30,000. There is also a minimum cash liquidity balance of $350,000 that must be maintained in order to qualify for a franchise opportunity and this balance may have a higher requirement if you intend to own the real estate of the franchise as well.

There are also royalties that must be paid to Culver’s once your new franchise holds its grand opening and begins receiving customers. You can expect to pay:

• 4% general royalty from the gross sales that your store receives.
• 2.5% marketing royalty for brand awareness and marketing efforts throughout the sales footprint of the organization [existing franchises pay 2% royalites].
• 1% royalty that is used for local advertising and marketing efforts that you are responsible to pay directly to advertisers in your territory.

In return for the fees, when you are awarded a franchise, you are also awarded a specific territory. You’ll get a 3 mile radius around your new restaurant where you won’t receive any internal competition if the county you placed your store in has less than 500,000 residents. If there are more than 500,000 residents or there are natural barriers within your territory, such as a river, then your assigned territory might be smaller.

With more than 400 franchises, but a wide footprint of opportunity, there isn’t much of an overcrowding problem at the moment. This brand has been growing rapidly, however, and future opportunities are certainly on the horizon outside the 24 states where this organization currently operates. If the time isn’t right now for an investment, it could be in the near future!

Is There Any Training To Help a Franchisee?

It is an intensive training program you’re agreeing to go through if you decide to become a franchisee of the Culver’s brand. All new franchisees are required to go through a 16 week training course in Prairie du Sac, WI, at what the organization calls Culver’s ButterBurger® University. There is no financial assistance for this training module. You’re responsible as the new franchisee for lodging, transportation, and food costs, but the cost of the training course itself is contained within the franchise fee that was paid.

The goal of Culver’s is to make sure every guest is able to leave with a smile, so to help facilitate this the organization will also send an opening team to your new franchise 1 week before your scheduled grand opening to assist with the final preparations you have. The opening team will also stick around for the next 2 weeks after your grand opening just to help you make sure that things are running as smoothly as possible.

It generally takes 7 to 12 months for a new franchise to get started once the franchise application has been accepted and the fee paid. This includes the 16 weeks of training in Wisconsin. Some franchisees have started faster than this because they were able to hire their staff more quickly and secured their franchise location quickly. More than 12 months may be required if you plan on owning your real estate and constructing your own building.

Is There Another Way To Become a Franchisee?

One of the unique aspects about Culver’s is that they have a mentoring program in place to reward their most successful general managers in the organization. It provides them with the opportunity to own a franchise on their own outside of the general requirements listed above and over 50 people have taken advantage of this program to date. A majority of them even own multiple sites! If you don’t meet the financial qualifications, then finding work at Culver’s and becoming a general manager could help you achieve this goal as well.

Is a Culver’s franchise right for you? If you have the capital to get started, then apply with the organization today to have a personal meeting and the initial discussion. Who knows? Maybe you’ll leave that meeting with a smile yourself!

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