Franchise Deep Dive: Freddy’s Franchise Costs, Fees, Profit and Data

The frozen custard and steakburger concept, Freddy's, is a favorite for diner-style American cuisine.

By Morgan Wood1851 Franchise Contributor

7:07AM • 03/22/23

Freddy’s Frozen Custard & Steakburgers is an American classic, standing among other ice cream and burger concepts with a reminiscent diner feel. The brand was launched in 2002, opened its first franchise in 2004 and crossed the 100-unit line in 2013.

The concept now offers burgers, cheese curds, fries, shakes and malts, frozen custard, combo meals, and more. Expanding its menu to include special limited time offers and signing agreements to expand in Canada, the brand is embracing the classic American foods customers crave in a new, unique way.

How Many Freddy’s Locations Are There?

As of the end of 2021, there were 29 company-owned and 391 franchised Freddy’s restaurants. Entrepreneur now lists a unit count of 443, noting a 26.2% increase in footprint over three years, though the brand has been on a steady climb since the early 2010s.

By offering the classic meals that people crave while focusing on high-quality ingredients, great employee training and an enjoyable customer experience, Freddy’s is able to offer a balance of value, popular foods and a positive experience that other fast food concepts may fall short on.

What Is the Freddy’s Business Model?

Freddy’s leverages demand for American-style food and offers, in many cases, both drive-thru and dine-in models. According to its 2022 Franchise Disclosure Document (FDD), locations with a drive-thru tend to have higher returns, indicating that many individuals may see Freddy’s as an easy grab-and-go option.

By offering in-line, end cap and standalone restaurant models, the franchise allows owners to build their concept in a variety of locations.

Though they are not listed in the FDD, Freddy’s website does spotlight other flexible, nontraditional build-out options, bringing Freddy’s to airports, malls and college campuses.

How Much Can Freddy’s Franchise Owners Make?

Freddy’s FDD includes financial representations measured from the brand’s 2021 sales.

Their 323 franchised locations averaged an annual gross revenue of $1,852,460. Freddy’s also discloses a range of annual gross revenue by model.

Standalone with Drive-Thru: $797,331–$4,636,891
End Cap with Drive-Thru: $922,416–$2,585,142
Locations with No Drive-Thru: $687,102–$1,169,152

How Much Does It Cost To Open a Freddy’s?

Freddy’s offers three build-out models with varying startup costs.

For an in-line restaurant with no drive-thru, franchisees should expect to invest $794,254–$1,288,798. End cap restaurants with a drive-thru can require $1,032,968–$2,132,066, and standalone restaurants with a drive-thru can require $1,142,828–$2,327,329.

These numbers include a series of costs, which can change depending on which model a franchisee is pursuing:

Training Expenses: $20,000–$50,000
Construction, Remodeling, and Leasehold Improvements: $372,000–$1,478,899
Real Property Rent: $5,667–$15,750
Security Deposit: $5,667–$15,750
Computer, Point of Sale Equipment, Outdoor Ordering System and Software, Security Cameras, Drive Thru Headsets: $30,102–$70,200
Equipment, Furniture, Fixtures and Décor: $282,318–$452,900
Building Signage / Interior Neon / LED Border: $6,000–$100,830
Miscellaneous Opening Costs: $8,000–$15,000
Opening Inventory and Supplies: $10,000–$25,000
Insurance: $2,000–$8,000
Grand Opening Advertising: $2,500–$5,000
Additional Funds: $20,000–$60,000

What Is the Franchise Fee for Freddy’s?

According to the brand’s website, all franchisees pay a $25,000 franchise fee.

Who Is the Leadership of Freddy’s?

What Helpful Articles Can I Read To Learn More?

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