Founded in 1990 and headquartered in Athens, Georgia, Zaxby’s is a fast-casual restaurant franchise specializing in chicken fingers, wings, sandwiches, and salads.
The very first location was opened near Georgia Southern University by childhood friends Zach McLeroy and Tony Townley, gaining popularity among the student body. From there, Zaxby’s began franchising in 1994 and has expanded to over 900 locations across the Southeast and beyond.
What does it take to open a Zaxby’s franchise?
The initial franchise fee to open a Zaxby’s is $35,000. Additionally, franchisees must have at least $500,000 in liquid assets and a net worth of $1 million. For veterans of the U.S. military, Zaxby’s offers a 20% discount on the franchise fee via their participation in the International Franchise Association’s VetFran program.
If operating under a development agreement spanning multiple locations, 50% of the total franchise fees for those units will be due upfront as a development fee.
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Total investment amount
According to Zaxby’s 2023 Franchise Disclosure Document (FDD), the total investment to launch a new restaurant ranges from $1.39 million to $3.27 million. This encompasses building construction, kitchen equipment, signage, and marketing assets, initial food inventory and staff uniforms, operating capital for the first few months, and all training expenses.
Potential ongoing fees
In addition to the upfront franchise fee, Zaxby’s also charges the following ongoing monthly fees, which must be factored into the operating budget:
- Royalty Fee – Currently 6% of gross sales are due weekly
- National Marketing Contribution – Currently 1.5% of gross sales go to Zaxby’s National Marketing Fund, due weekly
- Local Marketing Contribution – Up to 3% of gross sales, depending on the marketing cooperative in the franchisee’s area
- Technology Fee – Not currently charged but may be implemented in the future
- Accounting Services Fees – Optional bookkeeping, payroll, and related services
Zaxby’s corporate may also charge various other one-time fees for late payments, transfers of ownership, attorney costs related to dispute resolution, renewal arrangements, and more.
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How much can Zaxby’s franchise owners expect to make?
In 2021, over 700 Zaxby’s locations that submitted financial performance data showed an average gross revenue of approximately $2.54 million. However, as with any restaurant, sales volumes vary widely depending on the trading area, population, competition levels, and operational expertise.
Some well-managed units do reach substantially higher returns. As one example, a franchisee who appeared on the Franchise Empires podcast runs 14 Zaxby’s locations, including the top-performing restaurant company-wide, which achieved over $5.3 million in gross revenue last year.
Potential pros and cons of Zaxby’s franchise ownership
Advantages of Investing in a Zaxby’s Franchise Joining the Zaxby family brings built-in benefits like an established brand reputation centered around flavorful chicken meals, salads, and signature dipping sauces. Franchisees can capitalize on sophisticated corporate systems for site selection, vendor relationships, and localized marketing campaigns driven by area cooperatives.
Zaxby’s also actively supports new franchise partners through an extensive initial training program plus ongoing coaching and conferences. Given Zaxby’s 30-plus years in business focused specifically on chicken, franchise owners can leverage deep functional expertise to manage costs across fluctuating poultry markets.
As a strongly regional chain based in the Southeast U.S., Zaxby’s has room for targeted expansion before reaching brand saturation. This allows incoming franchisees to secure attractive trade zones with limited nearby competitors.
Potential risks to consider
On the other hand, Zaxby’s regional nature also means a smaller footprint versus national quick-service chains like McDonald’s or Subway. Franchisees hoping to open restaurants outside Zaxby’s core southern geography may face extra hurdles in introducing the brand in new areas.
Operating any restaurant franchise brings inherent challenges like managing food costs, hiring and retaining staff, keeping up with changing technology, and adapting to evolving consumer preferences. As a franchisee, major decisions over pricing, menus, and suppliers are controlled more by the parent company.
Key takeaways on Zaxby’s franchising opportunity
For over 30 years, Zaxby’s has carved out a niche serving high-quality chicken meals, complemented by its range of unique dipping sauces. The franchise has strong financials relative to other quick-service concepts. Meanwhile, the core menu stays true to customer favorites without overexpanding options that weigh down operations.
Those seriously exploring Zaxby’s franchise opportunity should thoroughly review the FDD, consult the IFA’s franchise buyer’s guide, speak to existing multi-unit owners, and evaluate their own appetite for this sizeable capital commitment. Thorough due diligence remains vital before signing any franchise agreement.