Do you want to start a restaurant by buying Jimmy John’s franchise? If YES, here is how much it cost to open a Jimmy John’s franchise and their requirements. Unlike other companies that charge their franchises fees based on the benefits of using the brand’s name to earn income, Jimmy John’s charges what it calls a “Royalty and Continuing Services fee” of 6 percent of gross sales. This is essentially an ongoing branding fee whereby the company earns residual income from the franchisee’s success with the brand.
Also, Jimmy John’s does regular advertising for its brand and charges all franchisees a fee of 4.5 percent of gross sales to support advertising efforts. To ensure success and proper service, all Jimmy John’s franchisees are mandated to participate in management training programs.
The training program for new owners lasts seven weeks. This includes three weeks at the Jimmy John’s Training Center in Champaign, Illinois. Apprenticeship training follows for four weeks during which the new owner works in another location under the direction of an established store manager.
Assistant managers also participate in the initial three weeks of training and franchise owners get ongoing training updates. Non-produce products are shipped weekly from national distributors. Produce is acquired fresh daily from a local source.
These rules help operators to deliver on the brand’s commitment to offer the freshest gourmet sub sandwiches, which helps the brand and the franchisees. As a franchisee with Jimmy John’s, you are expected at all times to be faithful, honest, and diligently perform your contractual obligations and use best efforts to promote and enhance the restaurant and the Jimmy John’s brand.
You have to personally guarantee the obligations under the Franchise Agreement and agree to be bound personally by every contractual provision, whether containing monetary or non-monetary obligations, including the covenant not to compete. You’re expected to also offer and sell all menu items and perform all services Jimmy John’s periodically requires for all its restaurants.
Financial Requirements and How Much It Cost to Open Jimmy John
If you are hoping to acquire and manage a Jimmy John’s franchise, below are the financial requirements, according to Jimmy John’s 2019 FDD.
1. Initial Franchise Fee: $30,000 to $35,000
- You’re expected to pay Jimmy John’s an initial franchise fee in full when you sign the Franchise Agreement. The standard initial franchise fee currently is $35,000.
- If you are a franchisee in good standing and buy a second or additional franchise, the initial franchise fee for that additional unit currently is $30,000 (unless it is under a Development Rights Rider, as described below).
- The parent company uses the initial franchise fee to cover, among other things, the costs of evaluating your proposed site, providing the initial training program, and helping you develop and open your Restaurant (although the initial franchise fee is not in exchange for any particular products, services, or assistance).
- If you sign Jimmy John’s Development Rights Rider to the Franchise Agreement because you commit to develop at least 4 Jimmy John’s Restaurants in an area, it currently charges a development fee that you’re expected to pay in full when you sign the Development Rights Rider.
- You’re expected to pay a $35,000 initial franchise fee for the first Restaurant and a $30,000 initial franchise fee for each additional Restaurant to be developed.
- The development fee due when you sign the first Franchise Agreement and Development Rights Rider equals the full $35,000 initial franchise fee for the first Restaurant, plus the full $30,000 initial franchise fee due under each additional Franchise Agreement you sign concurrently with signing the Development Rights Rider for the development of Restaurants under the development schedule, plus a deposit of $25,000 for each additional Restaurant you agree to construct, develop, and operate under the development schedule but for which you are not signing a Franchise Agreement concurrently with signing the Development Rights Rider.
- The balance of the initial franchise fee (that is, $5,000) for each Restaurant in the last group is due when you sign the Franchise Agreement for that Restaurant.
- Jimmy John’s and you will determine the number of Restaurants you’re expected to develop, and the dates by which you’re expected to develop them, before signing the Development Rights Rider.
2. Royalty: 6% of Restaurant’s weekly Gross Sales
- When payable: Due on Wednesday of each week on Gross Sales during previous week ending Tuesday.
- “Gross Sales” means all your revenue from operating Restaurant (and includes delivery and catering charges not included in the price of Menu Items, your proceeds from business interruption insurance, all amounts you receive for the Restaurant’s relocation from, or closure at, its premises, and all amounts from selling or issuing gift or loyalty cards (except Jimmy John’s gift cards), but:
- (i) excludes taxes collected from customers and paid to taxing authority,
- (ii) excludes your revenue from selling or issuing Jimmy John’s gift cards (but your revenue from selling products and services to customers using those cards for payment is included in Gross Sales), and
- (iii) is reduced by amount of any documented refunds, credits, and discounts the Restaurant in good faith gives customers (if those amounts originally were included in calculating Gross Sales).
3. Advertising and Development Fund: up to 4½% of Restaurant’s weekly Gross Sales (currently the full 4½%)
- When payable: Due on Wednesday of each week on Gross Sales during previous week ending Tuesday.
4. Cooperative Advertising Programs: up to 2% of Restaurant’s Gross Sales
- When payable: As Cooperative Program directs.
- These Cooperative Advertising Programs will include Jimmy John’s Restaurants operated in the designated market area by the franchisor, JJE, or its other affiliates.
- Besides your advertising obligations described in this Item, you’re expected to spend 0.5% of the Restaurant’s weekly Gross Sales on local marketing.
- Jimmy John’s recommends that you spend between $3,000 and $5,000 to conduct a grand opening event.
5. Successor Franchise: $2,500
- When payable: When you acquire successor franchise after initial franchise term expires.
6. 1-Week or 2-Week Certified Management Training Program for New, Additional, or Repeat Trainees: currently $1,500 (or $2,000 for expelled trainee re-attending); Jimmy John’s may increase this fee and charge up to $5,000
- When payable: Upon registration in training program.
- Jimmy John’s provides initial training for 2 people at no additional cost; it may charge you for initial training of more than 2 people, for training newly-hired managers, and for re-training people in its 1-week or 2-week training program.
- Howbeit, if you are a first-time franchisee opening your first Jimmy John’s Restaurant, Jimmy John’s does not charge this additional training fee for your third trainee for that first Restaurant.
7. New Training and Additional Guidance or Support: currently $400 per person per day, plus expenses if provided at Jimmy John’s location; currently $600 per person per day, plus expenses if provided at your Restaurant. Jimmy John’s may increase this per-person, per-day fee and charge up to $1,000.
- When payable: When new training or additional guidance or support begins.
- Jimmy John’s may charge you for new training programs and for additional guidance or support you need or request (excluding aspects relating to labor relations and employment practices).
8. Area Manager Training: currently $2,000; Jimmy John’s may increase this fee and charge up to $5,000
- When payable: Upon registration in training program.
9. Transfer: $7,500 or $12,500
- When payable: ½ due (and nonrefundable) when you request transfer approval; balance due before transfer completed.
- $12,500 if transfer is of Restaurant, or controlling ownership interest in you or your owners, and transferee is not then an existing Jimmy John’s Restaurant franchisee that has operated at least 1 Jimmy John’s Restaurant for 1 full year.
- $7,500 if transfer is of Restaurant, or controlling ownership interest in you or your owners, and transferee is an existing Jimmy John’s Restaurant franchisee that has operated at least 1 Jimmy John’s Restaurant for 1 full year.
- No charge if Franchise Agreement transferred to an entity you control.
10. Product and Service Purchases
- When payable: As incurred.
- You will be mandated to buy products and services from Jimmy John’s, certain of its affiliates, designated and approved vendors whose items meet Jimmy John’s standards and specifications, and/or other suppliers to the industry.
- Prices depend on the supplier and item/service involved.
11. Testing: costs of testing (amount of which depends on circumstances, including supplier’s location, testing required, and item involved)
- When payable: When billed.
- This covers the costs of testing new products or inspecting new suppliers you propose.
12. Relocation: $2,500, plus costs and expenses
- When payable: As incurred.
- Due if you wish to relocate the Restaurant’s premises.
13. Computer Systems, Maintenance, and Support: costs of service
- When payable: As incurred.
- This covers computer system support and ongoing development and software upgrades that Jimmy John’s or certain of its affiliates might provide in the future; it does not now provide these services but may charge you for them if it does.
14. Confidential Area Manager Manual: $500
- When payable: As incurred.
- You’re expected to pay for a replacement copy or if you want a copy of this Manual and an Area Manager has not yet attended Area Manager training (obtaining a copy does not replace mandatory Area Manager training).
15. Franchisee Convention: up to $500
- When payable: When billed.
- Jimmy John’s may charge you this fee to attend each franchisee convention (you also must pay your travel and living expenses); this fee is intended to help cover its conference costs and may increase if its costs increase.
16. Regional Advisory Council: council assessments
- When payable: When billed.
- Jimmy John’s has right to enforce payments, which may vary among councils.
- You’re expected to participate actively in any Regional Advisory Franchisee Council (“Council”) Jimmy John’s designates.
- A Council’s purpose includes exchanging ideas and problem-solving methods, advising Jimmy John’s on expenditures for regional advertising, and coordinating franchisee efforts.
- You’re expected to pay all assessments the Council levies, and Jimmy John’s may enforce this obligation for the Council. Amounts and expenditures may vary due to differences in Council participation and costs (but Jimmy John’s must approve them).
- Jimmy John’s may form a Council when more than one franchisee operates a Restaurant in any given region, the boundaries of which it may determine.
- Contingent Fees (typically arise only upon your default)
17. Audit: cost of inspection or audit (amount of which depends on circumstances and extent of your non-compliance)
- When payable: 15 days after billing.
- Due if you do not give Jimmy John’s reports, supporting records, or other required information, or understate required Royalties or Fund contributions by more than 3%.
18. Interest: lesser of 1.5% per month or highest commercial contract interest rate law allows
- When payable: When billed.
- Due on all overdue amounts more than 7 days late.
19. Non-Approved Restaurant Opening: $2,500 for each day Restaurant is open without Jimmy John’s approval
- When payable: When billed.
- Due if you open Restaurant for business before Jimmy John’s gives its approval.
20. Non-Compliance: $250 to $1,000 for deviations from operational requirements/Brand Standards
- When payable: When billed.
- Due, at Jimmy John’s option, if you deviate from its requirements for operations or Brand Standards. This compensates Jimmy John’s for administrative and management costs, not for its damages due to your default.
- The company may charge you $250 for each deviation. If it discovers the same (or a substantially similar) deviation on 1 or more consecutive, subsequent visits to or inspections of your Restaurant, it may charge $500 for first repeat deviation and $1,000 for second and each subsequent repeat deviation.
21. Potential Liquidated Damages After Violating Non-Recruitment/Non-Solicitation Restriction: $50,000 per occurrence
- Payable: When awarded to any party that successfully seeks them after a claimed violation.
- Due if you breach your obligation not to recruit, solicit, or hire the managers of certain other entities (unless you have a written release) to be your employees or partners/investors (for one year after their original employment ends).
22. Unauthorized Advertising Fee: $1,000 per occurrence
- When payable: When billed.
- Due if you use unapproved advertising or marketing materials.
23. Late Fee: 10% of original amount due but not paid on time
- When payable: When billed.
- Due for each late payment.
24. Confidential Operations Manual: $500
- When payable: 15 days after billing.
- Charge for replacement copy.
25. Management Fee: $600 per person per day, plus costs and expenses
- When payable: As incurred.
- Due when Jimmy John’s (or a third party) manages Restaurant after your Operations Partner’s death or disability, or after your default or abandonment.
26. Costs and Attorneys’ Fees: will vary under circumstances and depend on nature of your non-compliance
- When payable: As incurred.
- Due when you do not comply with the Franchise Agreement.
27. Indemnification: will vary under circumstances and depend on nature of third-party claim
- When payable: As incurred.
- You’re expected to reimburse Jimmy John’s if it is held liable for claims from your Restaurant’s operation or incurs costs to defend them.
28. Liquidated Damages
- If Jimmy John’s terminates the Franchise Agreement with cause or you terminate the Franchise Agreement without cause, you’re expected to pay Jimmy John’s, within 15 days after the termination’s effective date, liquidated damages equal to the product of:
- (a)the Royalties you were obligated to pay Jimmy John’s on the Restaurant’s Gross Sales during the previous 364 days the Restaurant operated
- (b)multiplied by 3 (unless there are less than 3 years remaining in the franchise term at the time of termination, in which case the Royalties will be multiplied by the number of years remaining).
- These liquidated damages cover only Jimmy John’s damages from loss of the Royalty. They do not cover other damages to which it might be entitled due to your actions or inaction.
29. Maintenance Cost Reimbursement: $600 per day, plus costs and expenses
- When payable: As incurred.
- You’re expected to pay Jimmy John’s for correcting your Restaurant’s sub-standard appearance or condition (if you do not do so when required); amount depends on extent of your non-compliance.
30. Customer Complaint Reimbursement: out-of-pocket cost reimbursement
- When payable: As incurred.
- You’re expected to reimburse Jimmy John’s if it resolves a customer complaint because you do not do so; amount depends on extent of your non-compliance.
31. Insurance Reimbursement: out-of-pocket cost reimbursement
- When payable: As incurred.
- You’re expected to reimburse Jimmy John’s if it obtains insurance for you because you fail to obtain or maintain required coverage (your failure is a Franchise Agreement default).
32. Tax Reimbursement: out-of-pocket cost reimbursement
- When payable: As incurred.
- You’re expected to reimburse Jimmy John’s for any taxes it must pay to any state taxing authority on account of either your operation or your payments to Jimmy John’s (except for certain income-related taxes of Jimmy John’s).
33. De-identification Reimbursement: out-of-pocket cost reimbursement
- When payable: As incurred.
- You’re expected to reimburse Jimmy John’s costs to de-brand the Restaurant after the franchise ends, if you fail to do so as required.
How to Get or Open a Jimmy John’s Franchise
Jimmy John’s is a popular American sandwich franchise chain that lays great emphasis on speedy delivery services. Within a crowded market, Jimmy John’s competes by offering customers fresh, made-to-order sandwiches in just 30 seconds — as fast as or faster than quick-service restaurants. If you believe you qualify financially to acquire a Jimmy John’s franchise, below is a detailed process of owning the franchise.
- First, you have to fill the application at the Jimmy John’s website at https://core.jimmyjohns.com/ownajjapplication/. Be sure to attach a current resume to the completed application. Filling out the application is free and doesn’t obligate you to open a franchise with Jimmy John’s.
- Make sure you have the needed financial backings. The estimated initial investment required to open a Jimmy John’s franchised restaurant is $329,500 to $557,500, excluding real estate purchase costs. You must have a net worth of at least $300,000 and access to at least $80,000 in cash or liquid assets to qualify for ownership of a Jimmy John’s.
- Ensure you have the correct background required by the franchise. Jimmy John’s expects at least one person who owns the franchise to have business management background. The person who would manage the franchise must also have general management experience.
- Put together an extensive plan that shows the parent company how you will fund the franchise restaurant. Jimmy John’s will respond with a request for financial documentation that supports your financial position.
- Read, sign and return the Franchise Disclosure Document upon receipt. This document provides more in-depth information about Jimmy John’s finances and management process. It also makes available existing franchisees who will talk candidly with you about operations, margins and sales.
- Sign the franchise agreement and start developing the store detail, if approved by Jimmy John’s Franchise Review Board. Franchisees have access to marketing data, training, food suppliers and marketing plan support.