How much does it cost to start a Jersey Mike’s franchise?
Jersey Mike’s is an exciting business opportunity that offers a straightforward and successful restaurant franchise concept. The company’s franchise locations are simple-to-run, fast-casual sandwich restaurants, needing just a limited number of employees and a minimum amount of equipment. This makes them ideal for many individuals looking for a start as a small business owner and trying to find a franchise they can both afford and operate without a great deal of past experience.
The operation itself dates back to 1956. However, recently, Jersey Mike’s has been growing rapidly, and the national franchise was ranked third on Entrepreneur’s 2023 Franchise 500 Ranking, moving up from fourth place a year earlier. As of 2023, the franchise boasts over 2,400 units – an increase of 37.9% in just 3 years’ time.
As a core component of their efforts to expand franchising opportunities, Jersey Mike’s has gotten the franchise process down to a science. The national company provides a comprehensive training program that lasts for eight to ten weeks and includes both classroom and on-the-job instruction, year-round support to franchisees, and invests heavily in marketing and innovation.
As part of this, Jersey Mike’s prides itself on using only the freshest and best quality products, which are prepared in front of the customer and are presented with a high level of energy and passion. Through operational excellence, high-quality menu items, and dedicated franchise owners across the nation, Jersey Mike’s has generated a nationwide following that makes them a recognizable, trusted, and go-to brand for fast-casual dining.
With this in mind, we’ll cover everything you need to know about starting a Jersey Mike’s franchise and how much it costs in this post. Here are the different topics we will cover in detail:
How Much Does a Jersey Mike’s Franchise Cost?
Investing in a Jersey Mike’s Subs franchise is a significant business decision that requires careful consideration of all associated costs.
On average, you would need to invest $574,323 to become a franchisee. However, this investment amount can vary based on factors such as the franchise locations, size, and type of restaurant you choose to open.
According to the latest Franchise Disclosure Document (FDD), the total investment amount can range from $194,035 to $954,611.
The initial franchise fee of $18,500 is just a small part of the overall investment amount. In addition to this fee, there are a number of other costs that you will need to cover as part of your initial investment in a Jersey Mike’s Subs franchise.
One of the main categories of costs that you will need to consider is formation costs. These costs include expenses such as real estate and construction fees, rent, leasehold improvements, equipment, furniture, exterior signage, interior branding, licenses, and permits. The exact costs will depend on the location and size of the restaurant that you choose to open.
Individuals looking to start a Jersey Mike’s franchise must meet the following requirements:
Minimum Net Worth: $300,000
Liquid Net Worth: $100,000
In addition to formation costs, you will also need to consider operating expenses. These expenses include items such as initial inventory, insurance, training, grand opening advertising, and additional funds to cover the first three months of business.
These costs are necessary to get your business up and running and are clarified in the franchise agreement. They are to ensure that you are properly prepared to start serving customers.
Royalty Fees & Marketing Fees
As a franchisee, you will also need to pay royalty fees and marketing fees to Jersey Mike’s. The current royalty fee is 6.5% of your gross sales, and the marketing fee is 5% of your gross sales. These fees can impact your bottom line, so it is important to consider them as part of your overall investment calculation.
It is important to keep in mind that the investment amount outlined in this article is only an average. The actual investment required to become a Jersey Mike’s Subs franchisee will vary depending on the location, size, and type of restaurant that you choose to open. It is essential to carefully review the FDD and to work with a franchise consultant to understand all of the costs associated with owning a Jersey Mike’s Subs franchise.
Owning a Jersey Mike’s Subs franchise is a significant business decision that requires careful consideration of all associated costs. On average, you would need to invest $574,323 to become a franchisee, but this amount can vary depending on your specific circumstances.
You will need to consider formation costs, operating expenses, and royalty and marketing fees when evaluating the potential returns of owning a franchise.
It is important to review the FDD and work with a franchise consultant to fully understand all of the costs and responsibilities associated with owning a Jersey Mike’s Subs franchise.
History of Jersey Mike’s
Jersey Opportunities to Own a Franchise of Mike’s Subs in Historical Jersey In 1956, in Point Pleasant, New Jersey, an establishment known as Mike’s Subs was established. Peter Cancro, who had just graduated from high school, got a job there in 1972 and fell in love with the original submarine sandwiches.
When Peter was a senior in high school, the owner of Mike’s Subs (the third one) decided to sell the business. Peter Cancro, who was just 17 years old at the time, seized the chance to acquire the shop and did so with some assistance from his football coach.
He expanded on the notion that workers should connect with customers in a courteous manner, which is something that still occurs today, and launched a few additional Mike’s Subs. Cancro started offering franchises in 1987, the same year that the firm changed its name to Jersey Mike’s Subs.
Today, Peter Cancro remains in his role as CEO of Jersey Mike’s Franchise Systems Inc., where he is responsible for the oversight of more than 600 sites, both operating and in the planning stages.
Jersey Mike’s Franchise is a well-known chain of sub sandwich shops that is known for its authentic taste and quality food. The success of the company lies in its menu, which offers a limited but diverse range of options that keeps foodies engaged.
The menu includes cold subs, hot subs, sides, drinks, and desserts that cater to the taste buds of people of all ages.
Cold subs are one of the most popular items on Jersey Mike’s menu. It includes the Jersey Shore’s Favorite, Ham and Provolone, The Veggie, The Super Sub, Turkey and Provolone, Tuna Fish, Roast Beef and Provolone, The Original Italian, Club Sub, Club Supreme, BLT, The Number Four, Stickball Special, and Cancro Special. These subs are made with fresh ingredients and are known for their refreshing taste.
Hot subs are a must-try for those who love grilled sandwiches. The hot subs menu includes Grilled Portabella Mushroom & Swiss, Portabella Cheese Steak, Portabella Chicken Cheese Steak, Mike’s Famous Philly, Chipotle Cheese, Big Kahuna Cheese Steak, Big Kahuna Chicken Cheese Steak, Bacon Ranch Chicken Cheese Steak, California Chicken Cheese Steak, and Buffalo Chicken Cheese Steak. These subs are grilled to perfection and are a perfect combination of flavors and textures.
For kids, Jersey Mike’s Franchise has a special kids’ meal that includes a sub, chips, and a drink. Parents can choose from a variety of options, such as a Kid’s Meal with Water or a Kid’s Meal with a Fountain Drink.
For those who are looking for a catering option, Jersey Mike’s Franchise also offers sandwich catering that includes Subs by the Box, Subs by the Bag, Boxed Lunches, Chips & Drinks, and Fresh Baked Cookies/Brownies. These options are perfect for events, parties, and other gatherings.
Hence, the menu at Jersey Mike’s Franchise is diverse and offers a range of options for all tastes. From cold subs to hot subs, sides, drinks, and desserts, there is something for everyone.
Pros of Owning a Jersey Mike’s Franchise
Low Franchise Fee
One of the key advantages of owning a Jersey Mike’s franchise is the low franchise fee of $18,500. This makes it a more affordable option for aspiring business owners compared to other franchise brands.
Jersey Mike’s has established relationships with third-party investors to help franchisees acquire the necessary funds to invest in their businesses. This financial support can make it easier for franchisees to get started and grow their business.
Exclusive Territory Protection
Jersey Mike’s offers its franchisees exclusive territory protection, which means that no other franchisees can operate within the same territory. This provides franchisees with peace of mind and a greater sense of security in their investment.
Extensive Training and Support
Jersey Mike’s offers comprehensive training and ongoing support to its franchisees. This support includes everything from training on operating the business to marketing and promotional support, which can help franchisees succeed and grow their business over time.
Cons of Owning a Jersey Mike’s Franchise
No Absentee Ownership
One of the drawbacks of owning a Jersey Mike’s franchise is that the company does not allow absentee ownership. This means that franchisees must be actively involved in overseeing and managing the day-to-day operations of the business. Additionally, the franchise cannot be run as a part-time business.
This means that if you want to own a Jersey Mike’s franchise, you must be committed to making it your full-time job and the center of your attention. You can’t open them as a side investment while you focus on other endeavors or other businesses. Jersey Mike’s must be your main business.
That said, this can also be seen as a pro since it means other franchise owners are in the same boat. This likely increases the likelihood of success of Jersey Mike’s franchises, which is good for the national brand as a whole and your individual storefront.
High Employee Requirements
Jersey Mike’s requires franchisees to have a minimum of 10-15 employees. This can increase the operational overhead of the business, as franchisees must manage a larger workforce and cover the associated payroll expenses. It also means you can run a lean team at your franchise in order to drive up profits and margins.
High Royalty and Marketing Fees
Compared to similar franchises, Jersey Mike’s has rather high royalty and marketing fees, which are 6.5% + 5%. These fees can eat into a franchisee’s profits and limit the financial returns of the business. It is important for franchisees to carefully consider these fees when evaluating the potential returns of owning a Jersey Mike’s franchise.
However, high marketing fees also typically suggest that the national franchise is investing heavily in growing its customer base and innovating in terms of product offerings and quality. This is something that your franchise will benefit from in the long-term likely, so it may be worth it from that perspective.
How much potential revenue does a Jersey Mike’s franchise offer?
A typical Jersey Mike’s Subs franchise brings in 1,220,586 dollars in annual revenue. This is the predicted median sales for franchises that are expected to be operated in the year 2021.
Given that Jersey Mike’s Subs does not provide information on sales at individual restaurants in its Franchise Disclosure Document, we were able to calculate the figure by dividing total franchise sales by the total number of franchisees. This resulted in $2 billion (2,069).
Franchise owners of Jersey Mike’s make annual earnings of $236,242 dollars. This equates to an adjusted EBITDA margin of around 19% (as a percentage of total sales).
We discuss adjusted EBITDA since this figure takes into account just COGS, labor expenses, rent, royalties, and marketing fees. This figure does not take into account any other expenditures, such as taxes, debt, or any other costs that are not related to operations.
The 19% margin is only a little bit lower than the industry average of 25% to 29% for franchises that are comparable. This is a result of rent, royalties, and marketing expenses that are much greater than usual.
It is important to note that we utilized the industry average for COGS and labor expenses; however, as this information is not included in the Franchise Disclosure Document, it is likely that these costs are substantially lower.
The process of becoming a Jersey Mike’s Subs franchisee starts with the completion of the online franchise application. This application can be found on the Jersey Mike’s Subs official website and is straightforward to fill in.
To begin with, you need to provide your personal details such as name, contact information, and location. This will help Jersey Mike’s to understand your geographical area of interest and to assess the feasibility of opening a franchise in your preferred location.
After entering your personal details, you will need to provide information about your experience and qualifications. Jersey Mike’s is looking for individuals who are passionate about the food industry and have experience in business operations.
This application section is crucial as it will help Jersey Mike’s determine if you have the skills and background necessary to run a successful franchise.
Once you have filled in your experience and qualifications, you will be asked to provide additional information about your financial situation, including your net worth, liquid assets, and the source of your investment funds.
This information is critical as Jersey Mike’s is looking for individuals with the financial resources necessary to start and sustain a franchise business.
After submitting the online application, Jersey Mike’s franchisor will review it and get back to you within a few days. If your application is approved, you will be invited for an in-person meeting or a conference call with Jersey Mike’s franchise development representative.
During this meeting, you will have the opportunity to discuss your new franchise goals, expectations, and the overall investment process in detail.
In addition to the online application, you can also reach out to Jersey Mike’s through email or phone. Their franchise development team can be reached at 732-292-8272 or by email at email@example.com. The team is always available to answer any questions about franchise opportunities and provide you with additional information about the process. It’s always important to ask upfront questions before agreeing to or signing anything. Before signing the dotted line, you should also consider having a lawyer look over any contracts or terms. That way, you will know exactly what is expected of you and what you will be required to uphold as a franchise owner.
In conclusion, the application process for a Jersey Mike’s Subs franchise is straightforward and accessible. All you need to do is complete the online application, provide the necessary information, and wait for a response from Jersey Mike’s.
If your application is approved, you will be well on your way to owning a successful franchise business with a reputable brand.
Training & Support Program
Jersey Mike’s takes the training and support of its franchisees very seriously. In order to help its franchisees run successful restaurants, the company invests a significant amount of resources into providing comprehensive training and support.
In 2022, Jersey Mike’s hosted numerous training sessions, including regional manager-level training, multi-unit workshops, cultural and management training sessions, and town hall meetings. These training sessions cover a wide range of topics, including leadership, management, operations, and customer service.
In addition to its extensive training program, Jersey Mike’s also has a strong IT team that provides support for a number of proprietary systems, including its point of sale system, online ordering platform, and mobile app.
The IT team operates an in-house help desk, which is available to franchisees and their crews for 15 hours a day, 7 days a week. This level of support allows franchisees to receive quick and efficient help with any technical issues they may encounter.
The company’s IT team has received a number of awards for its work, including recognition as a 2021 Hospitality Technology Industry Hero and a 2021 Hospitality Technology Top Women in Technology.
In 2022, the team received the ICX Association Elevate Award for Best Mobile ICX and the Technomic Consumers’ Choice Award for Highest-Rated Online Ordering Experience. These awards are a testament to the company’s commitment to providing top-notch support and training to its franchisees.
By investing in the success of its franchisees, Jersey Mike’s is able to maintain its position as one of the leading sandwich franchises in the country.
Franchise Financing Options
Small Business Administration (SBA) Loans
SBA loans are offered through the United States Small Business Administration (SBA). These loans are unique in that they are backed by the federal government, making them more accessible for small business owners across the nation. Lenders that work with the SBA to offer these loans are, as a result, exposed to less risk in providing the loans. This opens them up to a wider array of borrowers and also lowers the interest rates associated with them.
Even though SBA Loans are often a great option because of the favorable terms, the application is lengthy and extensive. Borrowers have to provide a great deal of documentation and be particularly diligent as they fill out the associated forms concerning their company, credit history, and more.
The most popular loan offered by the SBA is their SBA 7(a) loan. The SBA 7(a) loan is a term loan that is backed by the federal government and allows borrowers to access up to $5 million in funding.
One thing to keep in mind when borrowing from the SBA for a franchise is that the SBA will only provide funds to business owners who are directing the money to specific pre-approved franchises. The list of franchises that have been pre-approved by the SBA and which SBA loans can be used for can be found in their online franchise directory.
Another financing option for individuals looking to open a franchise operation is term loans. Term loans are a great resource for business owners because they provide a set amount of money in a lump sum upfront. This money must then be repaid over a set period of time at a set or variable interest rate.
You can get a term loan through either a traditional brick-and-mortar bank lender or through an alternative lender (like Biz2Credit!). There are pros and cons to both of these options.
Term loans that are offered by traditional banks are exceptionally difficult to qualify for. The application processes are long and drawn out, and even after completing the process, there is no guarantee that your application will be accepted. However, due to the lengthy application process, traditional bank lenders are able to offer some of the lowest interest rates available. This is because they are able to thoroughly assess the risk of providing funds to borrowers in advance of committing to a loan.
Term loans that are offered by alternative lenders, on the other hand, are much easier to qualify for. They typically offer online applications that can be completed quickly and with minimal effort. Additionally, depending on the circumstances, you can receive approval and the funds within as little as 24 hours. However, since alternative lenders are taking on more risk than traditional lenders, the interest rates on these loans tend to be higher to compensate for this.
Line of Credit
Lines of credit are another financing resource that many small business owners – including franchise owners – make use of. Lines of credit are different than other types of loans as they are a set amount of money that can be borrowed at any time, and they remain open for use indefinitely.
Borrowers can borrow up to the maximum value on the line of credit, typically at a variable interest rate, and then can pay back the loan at their leisure (as opposed to having a pre-defined set term of repayment). Once the money is repaid, borrowers can then borrow off the line of credit again.
Because lines of credit remain open indefinitely and can be borrowed from at any time, they are often an important resource for businesses to have access to. They make shoring up cash flow and dealing with emergencies much easier, as you don’t have to apply for a brand-new loan all over again.
That said, lines of credit are not ideal for long-term borrowing. The interest rates are variable and tend to be higher than you could get with a term loan. Instead, they are better for gap funding or interim financing that you can utilize while you search for a long-term financing solution that meets your needs.
Equipment financing is very popular among franchise owners because many franchises require a great deal of commercial equipment to be operated. Equipment financing is great because it is one of the easier forms of financing to obtain, and it comes with lower interest rates than many other options. This is largely due to the fact that the equipment you purchase with the financing serves as the collateral on the loan. That means that if you default, the lender still has something of value they can sell off to salvage at least part of the money they loaned out. This makes the loans considerably less risky for lenders.
Equipment financing is a great option for franchise owners and typically can be used for most high-value equipment that you may need to purchase to get your franchise off the ground and running.
Jersey Mike’s is a well-established brand with a strong reputation for quality, customer service, and commitment to their franchisees. The company has a comprehensive training and support program, which includes ongoing training, technical support, and marketing assistance.
This support is essential for franchisees to grow their business, stay up to date with the latest industry trends, and maintain the high standards that Jersey Mike’s is known for.
The menu is limited but strong, which makes it easier for franchisees to focus on quality, consistency, and customer satisfaction. This focus on quality has helped to build the brand’s reputation and attract loyal customers. Plus, with a more limited menu, the difficulty of the operational logistics of providing all the different menu items is substantially lower. This can be very helpful, especially for those with limited experience in the fast-casual dining industry.
The franchise has a robust online presence and utilizes a range of technology platforms to support franchisees. This includes a point-of-sale system, an online ordering platform, and a mobile app. These systems are designed to help franchisees run their business more efficiently and effectively and provide customers with a seamless experience. Again, Jersey Mike’s works hard to smooth out any operational challenges for its franchisees in advance.
In conclusion, owning a Jersey Mike’s franchise can be a lucrative business opportunity, especially for those with a passion for the food industry, a commitment to quality and customer service, and a willingness to work hard and invest time and energy into building their business. With a strong brand, a well-regarded menu, and a loyal customer base, the potential for success is high.
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