Togo's launches royalty incentive

 
Sept. 4, 2013

Togo’s Eateries Inc. is rolling out a royalty incentive for new multi-unit franchise agreements. Beginning today, franchisees that sign a new deal for three or more locations will receive reduced royalty fees for the first two years for each new restaurant, said Tony Gioia, chairman and CEO of Togo’s Holdings.

Franchisees will pay 3 percent royalty during the first year of operation, followed by 4 percent in year two and 5 percent in the third year and beyond. The royalty incentive will allow franchisees to invest additional funds into local marketing to help grow sales at each new restaurant. The brand is targeting new market growth in Washington, Oregon, Idaho, Utah, Colorado, Nevada and Arizona. Currently, the new incentive only applies to development agreements within these seven states. 

“As part of Togo’s plan to grow the brand to 400 restaurants along the West Coast, we’re offering an attractive incentive to encourage multi-unit development and introduce our big, fresh, meaty sandwiches to guests in new markets,” Gioia said. “Through reduced royalties, franchisees can invest more dollars into local marketing, allowing them to connect with even more guests and raving fans of the brand.”

Togo’s, which has experienced 12 consecutive quarters of same-store sales increases, is currently seeking qualified multi-unit franchisees that have a passion for the brand and deep connection to their community, Gioia said. Both new and existing Togo’s franchisees will benefit from $10 million for remodels and transfers, as well as $5 million to build new restaurants in the state.

At Togo’s, traditional restaurants experienced average unit sales in excess of $633,000, with 50 percent averaging over $799,000, and 25 percent averaging over $930,000. To become a franchisee, candidates should possess liquidity of $150,000 for a single restaurant and a net worth of $300,000. Area developers looking to develop three or more restaurants should have liquidity of $450,000 and net worth of $900,000. Special incentives are available for qualified franchisees interested in opening three or more restaurants. 

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Topics: Franchising & Growth


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