Do you want to start a restaurant business by buying Burger King franchise? If YES, here is how much it cost to open a Burger King franchise.
Burger King is the second-largest hamburger chain in the whole of the United States and they can comfortably boast of having 14,000 stores spread across 100 countries of the world. Burger King started franchising their operations in 1954 based on the successful marketing of the signature Whopper hamburger. It specializes in burgers, salads, chicken, veggies, and desserts.
How Much It Cost to Open a Burger King Franchise
If the franchisor owns or leases the land or the land and building of the restaurant, it may lease or sublease the location to the franchisee. The franchisor may from time to time provide financing for certain other types of transactions as well.
Estimated Initial Investment
- Franchise Fee: $15,000 – $50,000
- Travel and Living Expenses while Training: $0 – $25,000
- Real Property/ Occupancy Charge: $90,000 – $850,000
- Civil & Architectural Drawings / Professional Fees: $10,000 – $45,000
- Zoning Expenses: $1,000 – $25,000
- Improvements / Construction: $25,000 – $1,100,000
- Landscaping N/A: $60,000
- Equipment: $84,600 – $294,600
- Decor Package : $0 – $95,000
- Signage & Drive-Thru: $3,000 – $166,000
- Pre-Opening Wages: $28,000 – $61,000
- Opening Inventory: $2,500 – $12,000
- Cash and Inventory Control System: $35,000 – $110,000
- Insurance: $8,000 – $25,000
- Working Capital / Additional Funds: $15,000 – $90,000
- Business Licenses, Utility Deposits, Lease Deposits, and Payments: $6,000 – $30,000
- 2-Story Interior Playground N/A: $245,000
- ESTIMATED TOTAL = $323,100 to $3,283,600
Please note that the estimated initial investment range covers from an indoor Modular Retail System facility restaurant type with up to a Freestanding restaurant type. The range doesn’t include real estate costs.
Aside from the fees listed above, below are other fees you would need to look out for;
- Royalty: 4.5% of monthly gross sales.
- Advertising: 4% of monthly gross sales.
- Rent (where property leased from the franchisor): Varies.
- Building Improvement Payments (certain BKLs only): $500 per month.
- Service Desk Fee: $190 to $240 per year per restaurant.
- Late Charges / Interest: Lesser of 18% per annum or maximum rate allowed by Florida law.
- Stamp Tax: Currently $0.35 per $100.
- Transfer of Interests: The amount of this fee depends on the number of restaurants or interests in restaurants that are being transferred in the transaction.
- Application Fee: $250 per individual applicant; Up to $5,000 per Corporate / Entity Franchise Application.
- New Franchisee Training Fee: $2,000
- Entity or LLC Fees: Up to $5,000 per Entity; plus up to $1,000 per restaurant transferred to Entity or LLC.
- Franchise Extension Fee: $2,500 annually.
- Investment Spending (marketing): Up to 2% of Gross Sales.
- Sales Transfer Study: $5,000 – $8,000 Per restaurant.
- Sales Impact Contribution: Varies.
- Gift Card Services: Set up fee: $40 for each restaurant. Transaction Fee: Estimated 1.8% of any redeemed sales, may increase or decrease no more than one time per year, the minimum and maximum Transaction Fee will be 0.5% and 3.5% of redeemed sales, respectively.
- BK LINK/Support & Training Material: $560 annually.
- Digital Fee: $25 per screen per month.
- Miscellaneous Reimbursements, Purchases, Services: Varies.
- Follow Up Walk-Thru: $1,500
- One Time Cure Fee TRA: $5,000
- MTRA: Balance of the franchise fee multiplied by the number of restaurants not developed pursuant to the schedule.
- Site Re-approval Fee: $5,000
- Remodel Default Payments: Monthly amount equal to $4,000 multiplied by the number of restaurant remodels that the franchisee fails to timely complete in connection with the purchase from the franchisor of those franchisor-owned restaurants.
- Deferred Remodel Default Payments : Royalty rate increases to 6% or 7.5% if franchisee fails to complete the remodel to the franchisor’s specifications by the date specified in the agreement.
- Audit Expenses: Cost of audit.
- Indemnity: The losses and expenses the franchisor incurs.
- Costs and Attorneys’ Fees: Will vary under circumstances.
- Background Check Fee: $280 – $15,000
- Burger King McLamore Foundation Scholarship: $1,000 per restaurant per year.
If you are interested in starting Burger King Franchise in the USA, India, Indonesia, The Philippines, Pakistan, or another country, then you might find this estimated franchise costs for these countries useful:
- In the United States, the total investment to start the Burger King Restaurant is around $323,100 to $3,076,600.
- In Indian currency, the investment comes around Rs 229.4 lakhs to Rs 21.8 crores.
- In Indonesian currency, the investment comes around Rp 457.6 crores to Rp 4357.7 crores.
- In Philippine currency, the investment comes around Php 16,713,963 to Php 159,152,518.
- In Pakistani currency, the investment comes around PKR 50,613,615 to PKR 481,949,390.
Table of Content
Steps on How to Open a Burger King Franchise
If you are cool with the requirements and finance involved in acquiring this franchise, then you need to follow these steps to achieve your dream of owning a Burger King franchise;
For Opening New Burger King Franchise
- Collect and organize your financial portfolio information to qualify for a franchise and a bank loan. The Burger King Corporation requires potential franchisees to have a minimum of $1.5 million net worth and $500,000 in liquid assets to qualify for an application in 2012.
- Research lenders to determine the best fit for your fast food franchise loan. Shop loans specifically for fast food restaurants. Lenders make loans for various types of franchises, but not all lend for restaurant operations.
- Submit paperwork and an application to a lender to prequalify for a franchise loan.
- Take the online qualifying questionnaire on the Burger King franchise website.
- Contact the Burger King corporate representative charged with supervising the state of your prospective franchise. Locate the name of the representative from listings on the Burger King franchise website.
- Evaluate Burger King’s corporate Uniform Franchise Offering Circular and a copy of the franchise disclosure. Federal law requires the disclosure as part of the business offering.
- Decide on a building site for your franchise with the Burger King state representative or propose your own location for the restaurant on land you currently own.
- Select the contract options for your restaurant and ask the Burger King state representative to write the franchise agreements incorporating these terms. Options include advanced training, special decorative features for your restaurant and types of equipment.
- Hire an attorney with a specialty in franchise law to review the Uniform Franchise Offering Circular, franchise agreement and disclosure document, if it is required in your state. The UFOC and disclosure, regulated under the Federal Trade Commission, provide useful financial information about your investment with Burger King, including the number of franchises in the geographic region of your new store and any Burger King franchise failures.
- Review the franchise termination clause and restaurant resale clauses in the franchise agreement and make sure the language matches your verbal conversations with the franchiser.
- Meet with your lender and arrange the franchise loan. The lender requires information about the franchise and may also need to evaluate additional financial documents to confirm your economic status since the prequalifying loan interview.
- Sign the franchise agreement and paperwork and deposit your cash as required under the franchise agreement.
For Existing Burger King Franchise
- Develop a personal finance portfolio and meet with bank lenders to prequalify for a franchise business loan. Shop lenders for the best terms on your fast food restaurant loan.
- Locate franchises offered for sale by contacting a franchise broker or commercial real estate broker.
- Shop for franchises by visiting the fast food restaurants in person. Avoid selecting a franchise by examining paperwork and photographs or videos.
- Evaluate the physical condition of the existing fast food franchise locations offered for sale. Restaurants with outdated exteriors and interior decor face increased costs of renovation. The physical evaluation includes an assessment of the kitchen equipment, landscaping, condition of the parking lots, building roof, lot drainage, and plumbing and electric wiring. Professionals in these fields provide added expertise in determining the quality of the current systems and equipment.
- Evaluate the financial condition of the existing Burger King franchise. Hire an accountant to examine the restaurant’s tax statements and business records and hire a marketing research specialist to evaluate the local fast food market surrounding your prospective restaurant. This step might include an external audit of financial records of your selected store after you narrow the offerings to one or two restaurants.
- Write an offer with the broker for your selected franchise and provide earnest money to accompany the real estate offer. Your real estate representative places this money into escrow when your offer is accepted.
- Have your franchise real estate representative present the offer for the franchise and represent you during any real estate sales contract negotiations.
- Open escrow on the Burger King franchise and deposit your down payment with the escrow office.
- Meet with the lender and complete the final loan application by submitting the escrow paperwork and submitting any personal financial documents required by the lender. Work with the Burger King franchise to obtain the financial documents requested by the lender.
- Close the escrow on your Burger King franchise by funding the loan, signing the grant deed and depositing any cash required in addition to the loan.
What You Must Know About Burger King Franchise
Burger King entices franchisees with a cafeteria-type menu of operations and store-management training, including financial, construction and store-decor advisers. Owners also have access to a purchasing network for food and supplies. If you’re interested in Burger King franchise opportunities, you have the option of corporate restaurants requiring a significant investment in multiple locations or purchasing an existing franchise with a single location.
Burger King Corporation (BKC) is the franchisor. Burger King franchisees operate quick-service hamburger restaurants offering a limited menu of breakfast, lunch and dinner products. The franchisor operates and grant franchises to operate Burger King restaurants using certain trademarks, service marks and trade names, and a recognized design, equipment system, color scheme and style of buildings and facilities, signs, certain standards, specifications and procedures of operation, quality and consistency standards for products and services offered, and procedures for inventory control and management.
BKC is a wholly-owned subsidiary of Burger King Worldwide, Inc., which is an indirect subsidiary of Restaurant Brands International.
The franchisor currently has three different forms of franchise agreement, corresponding to three different types of franchise ownership: Individual (or Owner/Operator); Entity; and Corporate. The franchise granted can be operated at one of three locations and facility types:
- Institutional Locations
“Institutional locations” include government buildings and facilities, medical facilities, airports, train and bus stations, sports facilities, factories, corporate campuses, turnpikes, limited access toll roads, theme parks, zoos and educational facilities.
- Traditional Burger King Restaurant Facility
A self-contained, full size Burger King Restaurant which is located and operated on a site as a freestanding building or within another building structure such as a shopping mall. A Traditional Burger King Restaurant does not share any common areas with any other businesses and serves the standard approved menu for Burger King Restaurants.
- Non-Traditional Burger King Facility
A Burger King Restaurant may be located at a site which includes other businesses, such as retail, food service, gas stations, convenience stores, other franchised businesses or restaurants or other similar facilities.
Some of the benefits you stand to gain when you purchase Burger King’s franchise are;
- Training Overview
Before the opening of the restaurant, franchisees must successfully complete the franchisor’s training program. The training program is held in Miami, Florida or other locations specified by the franchisor. In-Restaurant Training will be held in various restaurant locations that have been authorized as Training Restaurants.
The franchisor may require additional training programs for individual Owner / Operators or Managing Directors to implement current operations, standards, and procedures and to facilitate the growth and changes of the franchisee.
The franchisor also makes available and sometimes requires periodic workshops and seminars for managers, which include management courses and updating of operational skills. The franchisor will provide pre-opening and restaurant opening assistance as it deems appropriate.
The franchisor also provides continuing operations training programs, which franchisees (as an Operating Partner, Managing Director, Director of Operations, or Managing Owner, as applicable) may be required to attend. For certain training courses, franchisees must pay a course or materials fee to the franchisor or third parties. The franchisor may make changes and revisions to the training program, locations or materials at any time.
- Territory Granted
The Franchise Agreement grants the right to operate the Burger King restaurant at a specific location only. The Franchise Agreement does not grant or imply any type of area or territory, exclusive, protected or otherwise, or protected customer base.
- Obligations and Restrictions
The requirements for personal participation in the operation of the business differ for the three types of ownership, as reflected in the forms of Franchise Agreements used for them. Franchisees must use the restaurant solely for the operation of a Burger King restaurant and must keep the restaurant open and in normal operation for the minimum hours and days as the franchisor specifies in the Franchise Agreement or otherwise in writing.
Franchisees must operate the restaurant and deliver, if the franchisor authorizes the franchisee to provide delivery services, in strict conformity with the methods, standards and specifications as it prescribes in the manual or otherwise in writing.
Franchisees must offer for sale and sell at the restaurant all and only those products and services as are expressly authorized by the franchisor in the manual or otherwise in writing and only in accordance with the franchisor’s specifications and standards.
- Term of Agreement and Renewal
The length of the initial franchise term is 20 years for a freestanding restaurant, and may be less for non-traditional locations or where property control is for a shorter period. There is no right of renewal. There is an option to obtain a Successor Franchise Agreement up to 20 years if the franchisee is in compliance with Franchise Agreement and with all other agreements with the franchisor.