The restaurant industry is growing daily, and A&W restaurants are a part of this massive industry.
They have been operating for decades and are incredibly successful with many stores across the United States.
This presents an excellent opportunity for entrepreneurs to use their brand awareness through franchising.
If you are thinking about owning an A&W franchise, you can because they have been offering this opportunity since 1925. This article will take a look at A&W and its franchise system.
About A&W and Its History
A&W is a popular American fast food chain restaurant founded in 1919, the oldest restaurant chain in the United States.
They are famous for their burgers, draft beers, and root beer floats. The brand quickly grew after starting to offer franchising in 1925 and went international in 1956 for the first time.
They also widened their menu, and they are now famous for their own bottled root beer and also offer hot dogs and French fries.
A&W has more than 900 stores as of 2023, and they keep increasing their numbers through franchising.
Franchise Model Table
| Initial Investment | $276,000-$1.4 million |
| Franchise | YES |
| Franchising Since | 1925 |
| Franchise-Fee | $20,000-$30,000 |
| Royalty-Fee | 5% |
| Liquidity | $1.5 million |
| Estimated Outlets | 900+ |
How Much Does It Cost To Open An A&W Franchise?
Opening an A&W franchise costs anywhere between $276,000 and $1.4 million. The main reason behind the big difference is the type of the store.
They offer various types of franchised stores, free-standing, inline, and captive. Each comes with different startup costs due to their size, equipment, number of employees, and other similar costs.
This average initial cost includes the franchise fee, which is between $20,000 to $30,000. You pay this fee in the beginning as a lump sum to the franchisor to use their name.
A&W Franchise Requirements
A&W only looks for financial requirements and doesn’t have any strict requirements for personal background.
You need to have $150,000 in liquidity and a net worth of a minimum of $350,000. If you can comply with these, you can apply to be an A&W franchise.
However, having management or owner experience could be an advantage in your application.
A&W Profit & Revenue
| Store Type | Average Annual Sales | Average Profit | Profit Margin |
|---|---|---|---|
| Average | $942,000 | $250,000 | 20% |
The profit of an A&W franchised store depends on which type it is. An average A&W store makes $942,000 in sales annually.
This is the average unit volume, and the actual results could be very different from the average number.
Free-standing restaurants make $1.2 million in sales on average annually, whereas C&G restaurants make about $668,829 annually.
The average profit of an A&W store, which includes the salary of the A&W franchise owner, is $250,000 per year.
This represents an almost 20% profit margin for the stores. Again, depending on the type of store, these numbers could be higher or lower.
A&W Training and Support
A&W offers a management training course that the owner or the designated manager must attend and complete before the store’s opening.
This training lasts between 8 to 14 days and happens at one of the designated restaurants.
In addition to the management training, all employees of the store must attend a one-week long on-site training.
A&W offers comprehensive marketing services to develop a marketing strategy. They will also get a corporate team to support the branch as long as the branch is operating.
A&W Terms of Agreement and Renewal
The length of the initial franchise agreement for free-standing and inline restaurants is for 20 years.
For captive restaurants, it is ten years. The franchisees operating free-standing or inline restaurants could be eligible for renewal for two additional five-year terms each. There is no renewal option for captive restaurants.
A&W Obligations and Restrictions
Individual franchisees must either work as the restaurant general manager or designate someone to take on the role.
This manager must actively participate in the daily operations of the store and be on-premises to devote full-time efforts.
Franchisees are also obligated to pay 5% of the net sales to the brand as a royalty fee.
Franchisees are restricted from selling any products or services that the A&W brand didn’t approve beforehand.
A&W Financial Assistance
A&W does not offer whether direct or indirect financial assistance to their franchisees. All franchisees applying to be a part of A&W has to find their own financial assistance.
A&W Comparison
| Name | Franchise Fee | Royalty Fee | Initial Investment |
|---|---|---|---|
| Wayback Burgers | $35,000 | 5% | $209,000-$698,000 |
| Dairy Queen | $45,000 | 4% | $1.5 million-$2.5 million |
| A&W | $20,000-$30,000 | 5% | $276,000-$1.4 million |
Conclusion
A&W is the oldest restaurant chain in the United States, with a great brand awareness with over 900 stores all around the country.
They offer franchising with an average initial cost of between $276,000 and $1.4 million, with the $20,000-$30,000 franchise fee included.
An average A&W store makes about $250,000 in profit annually and about $900,000 in annual sales.
It is a great opportunity for entrepreneurs and has great potential to make great money from it.
FAQ
Is A&W a franchise?
Yes, A&W has been offering franchising opportunities since 1925, and they are currently a franchise.
What is the franchise fee for A&W?
The franchise fee varies between $20,000 and $30,000. It depends on the type of franchised store you want to open.
How much does it cost to open an A&W franchise?
The average initial investment is between $276,000 and $1.4 million. The type of store, location, size, equipment, and other similar startup costs affect this cost.
Sources
https://en.wikipedia.org/wiki/A%26W_Restaurants
https://www.dairyqueenfranchising.com/investment-info/
Amit Gupta is an experienced expert in digital marketing and co-founder of DrFranchises. With more than 11 years of knowledge in franchise digital marketing, SEO, email marketing, and social media marketing, Amit has helped many brands achieve incredible success online. As a passionate entrepreneur and owner of 7 franchises, he continues to study franchise models, looking at costs, revenue, and profitability to guide brands toward profitable growth. When he’s not working on digital marketing, Amit enjoys spending time playing with his beloved dog.