Sonic Drive-In is an iconic American fast-food chain known for its carhop-style service, wide range of drinks, and classic menu items such as burgers, hot dogs, and fries. For entrepreneurs looking to venture into the world of franchising, Sonic Drive-In can be an attractive option. In this article, we’ll explore the franchise agreement for Sonic Drive-In, highlighting some key terms and factors to consider before making the investment.
Franchise Fee
One of the most crucial aspects of the franchise agreement is the franchise fee. For Sonic Drive-In, the initial franchise fee is $45,000, which is payable upon signing the agreement. The franchise fee covers the right to use the Sonic brand name, as well as the initial training, site selection assistance, and access to the franchise support system.
Royalties and Advertising Fees
In addition to the initial franchise fee, Sonic Drive-In franchisees are required to pay royalties and advertising fees. Royalties are ongoing fees paid to the franchisor, typically based on a percentage of gross sales. For Sonic Drive-In, the royalty fee is 5% of gross sales. The advertising fee is used to fund national and local advertising campaigns and is currently set at 2.5% of gross sales.
Site Selection and Build-Out
Sonic Drive-In franchisees are responsible for selecting and securing a suitable site for their restaurant. The franchisor provides assistance and guidance in selecting a site, but the final decision rests with the franchisee. The build-out process is also the responsibility of the franchisee, with Sonic Drive-In providing guidelines and standards for the design and construction of the restaurant.
Training and Support
Sonic Drive-In provides its franchisees with initial and ongoing training and support. The initial training program covers a range of topics, including operations, marketing, and financial management. Ongoing support is provided through field visits, annual conferences, and access to the franchise support system. In addition, Sonic Drive-In offers marketing and advertising support to help franchisees promote their restaurants and drive sales.
Term of Agreement and Renewal
The franchise agreement for Sonic Drive-In has a term of 20 years, with the option to renew for an additional 10 years. The renewal terms and conditions are subject to negotiation between the franchisor and franchisee. The franchisee must provide notice of their intent to renew at least six months prior to the expiration of the initial term.
Conclusion
Overall, the franchise agreement for Sonic Drive-In offers a comprehensive set of terms and conditions that provide franchisees with the support and guidance needed to successfully operate a restaurant. However, potential franchisees should carefully consider the financial and operational requirements of owning a Sonic Drive-In franchise before making the investment. By doing so, they can determine whether Sonic Drive-In is the right fit for their entrepreneurial goals and objectives.
