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How To Read Layne’s Franchise Disclosure Document (FDD)

Everything you need to know about a franchise opportunity is located in the FDD. Here is a step-by-step guide to understanding Layne’s FDD for prospective franchisees.

By Erica InmanStaff Writer
3:15PM 05/28/24

Layne’s Soon to be Famous™ Chicken Fingers has gained a cult-like following thanks to its incredible chicken fingers, secret sauce and warm hospitality. For aspiring franchisees, it’s important to understand what goes on behind the franchise’s success. Those considering joining the Layne’s family will especially want to know the initial investment required and the potential earnings they can expect.

The Franchise Disclosure Document (FDD) is a vital resource in understanding any franchise. Comprising 23 items, the FDD serves as a guide to assess how well a franchise aligns with your business objectives. Let’s walk through Layne’s 2024 FDD to learn more about the brand.

Item 1: The Franchisor, Its Predecessors, and Affiliates - This section offers a snapshot of Layne’s business, its history and its place in the industry.

  • Layne’s, a restaurant chain established in 2017, traces its origins back to M.A.G. Systems, Inc., which introduced the concept in 1994. Additionally, Layne’s Kickin Chicken, LLC, serves as the brand’s affiliate.

Item 2: Business Experience - This item sheds light on the expertise of Layne’s leadership team, which can be a crucial factor for franchisee success given the necessary ongoing relationship between franchisee and franchisor.

  • Garrett Reed – Chief Executive Officer: Reed has been CEO since 2017 and has served as president of Main & Main Capital Group, LLC in Frisco, Texas, since 2004. 
  • Samir Wattar – Chief Operating Officer: Wattar has been the brand’s COO since 2021. He brings over 30 years experience in the restaurant industry to this role, with previous titles of vice president of supply chain for Fuzzy’s Taco Shop from 2019 to 2021, along with vice president of operations, vice president of supply chain and vice president of franchise development with MOOYAH Burgers Fries and Shakes from 2013 to 2018.
  • Ralph Reed – Chief Financial Officer and Manager: Reed became CFO and manager in 2018. He has over 45 years of financial and operations experience. Additionally, he has been the CFO of Main & Main Capital Group, LLC in Frisco, Texas, since 2003.  

Item 3: Litigation - This section discloses any litigation history.

  • Layne’s boasts a clean litigation history, indicating stability.

Item 4: Bankruptcy - This section reveals any past bankruptcies involving the franchisor or its management. Such a history may suggest financial instability.

  • Layne’s doesn’t have a history of bankruptcy, signaling financial reliability.

Item 5: Initial Fees - Prospective franchisees can gauge the initial investment required to join Layne’s, including the franchise fee, which is paid directly to the franchisor.

  • The initial franchise fee for Layne’s is $45,000.

Item 6: Other Fees - This section elaborates on ongoing fees, providing clarity on financial obligations.

  • Franchisees must pay an ongoing royalty fee of 5% of gross revenue, a brand development fee of 2% and a local advertising fee of up to 5%.

Item 7: Initial Investment - This section lays out a detailed estimate of startup costs, offering transparency on where investment funds will be allocated.

  • The total investment necessary to begin the operation of a Layne’s Franchise ranges from $446,500 to $1,015,000.

Item 8: Restrictions on Sources of Products and Services - In this section, the brand specifies approved suppliers, which influence franchisee costs.

Item 9: Franchise Owner's Obligations - This item outlines the responsibilities expected from franchisees.

Item 10: Financing - This item describes available financing options, which should be a consideration in startup planning.

  • Layne’s does not offer finance assistance. 

Item 11: Franchisor's Assistance, Advertising, Computer Systems and Training - This item describes the training and support offered by the franchisor, as well as advertising expectations.

  • Before Layne’s franchise owners begin operation of their locations, they can expect an initial training program for up to three individuals, on-site opening assistance and a list of approved suppliers.
  • The franchisor offers training on a variety of subjects, including a menu overview, management procedures, franchise reporting requirements, safety procedures and inventory management, culminating in 27 hours of classroom training and 84 hours of on-the-job training. 
  • During the operation of a franchise owner’s restaurant, the franchisee can expect ongoing advice and training programs.
  • The brand creates advertising materials in-house and has clear stipulations set out for marketing, soft openings and grand openings of new locations. 

Item 12: Territory - This item provides a comprehensive overview of the territory rights extended to franchise owners. Prospective franchisees must ensure that these regulations align with the location they are targeting.

  • Layne’s territories are not exclusive, meaning franchisees may face competition from other outlets.

Item 13: Trademarks - This item provides information on the franchisor's trademarks, including guidance on when and how to use them.

  • Layne’s iconic trademarks, like the Astro Chicken, are highlighted.

Item 14: Patents, Copyrights, and Proprietary Information - This is where the brand will disclose any patents, copyrights or proprietary information owned by the franchisor.

Item 15: Obligation to Participate in the Actual Operation of the Franchise Business

This section outlines the obligations of franchise owners concerning their involvement in business operations. Candidates should verify that these requirements align with their desired objectives and work-life balance.

  • Layne’s requires onsite supervision by a designated Operations Manager, ensuring operational quality.

Item 16: Restrictions on What the Franchise Owner May Sell - This item describes any limitations on product or service offerings.

Item 17: Renewal, Termination, Transfer, and Dispute Resolution - The terms for franchise agreement renewal and termination are clarified.

  • Layne’s offers a 10-year term, with the option for franchise owners in good standing to renew for one additional 10-year term.

Item 18: Public Figures - This item indicates any public figures who are employed to promote the brand.

  • Layne’s doesn’t employ public figures in its promotion.

Item 19: Financial Performance Representations - Prospective earnings can be estimated based on the financial performance of existing locations, which are disclosed in item 19.

  • Layne’s item 19 in its 2024 FDD includes information on the return on investment on six locations operating in 2023, as indicated below.
  • Traditional restaurant total gross revenue: 
    • Average: $1,815,606
    • Low: $1,449,709
    • High: $2,038,639
  • Non-traditional restaurant total gross revenue:
    • Average: $1,110,477
    • Low: $864,774
    • High: $1,356,179
  • A breakdown of food, paper and labor costs are included below:
    •  Food cost:
      • Average: 28.6%
      • Low: 28.2%
      • High: 29.5%
    • Paper cost:
      • Average: 3.01%
      • Low: 2.9 %
      • High: 3.08%
    • Labor cost:
      • Average: 23.67%
      • Low: 23.20%
      • High: 24.20%

Item 20: Outlets and Franchise Owner Information - This item discloses the number of operating outlets, providing insights into recent developments.

  • Layne’s reported a total of 13 locations in operation at the end of 2023, increasing the unit count by four locations from the previous year.

Item 21: Financial Statements - Franchisor financial statements are included for assessment.

Item 22: Contracts - All required contracts are provided for review with legal counsel and need to be signed by the franchise owner.

Item 23: Receipt - This section acknowledges receipt of the FDD, granting candidates time for thorough review before committing.

The FDD offers a wealth of information on the operations of a franchise brand. It’s essential for prospective franchisees to study it diligently and seek legal guidance if necessary. With a comprehensive understanding, aspiring franchisees can confidently make informed decisions about joining the Layne’s franchise family.

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