Owning a Little Caesars franchise has proven to be an extraordinary business investment for some franchisees. For others, the going has been rough. Like investing in any other business opportunity, there are a considerable amount of variables to consider when electing to purchase any franchise. There are many risks associated with such a venture. But in the right market, with a solid business plan, and resources to back up the investor, franchise ownership can be a tremendous business move.
Little Caesars Background And Current Trends
Little Caesars was opened in 1959, with franchises opening in 1962. Based out of Detroit, it is the world’s largest carry-out pizza chain, with over 2,500 franchises worldwide.
The company was recently named “Best Value in America” of all quick serve restaurant chains for the ninth year in a row (Sandelman & Associates Quick Track research study). The Small Business Administration (SBA) has listed Little Caesars as one of the best loan performers with more than 60 SBA- guaranteed loans.
The Cost Of A Franchise
Some generally agreed upon figures by different sources (including data provided by the company) state that the franchise fee is $20,000, with a minimum of $50,000 (some say $100,000) in liquid, unencumbered assets (like cash). From there, it’s just a matter of who you can trust to get even a general ballpark figure as to start-up costs.
One site, Franchise Direct (franchisedirect.com), has a range of between $314,000 – $1,335,500 for Little Caesars Franchise Cost and Fees. So with a variance of over $1 million in their estimates, it could be an extremely difficult, time-consuming task to get a better handle on the numbers.
A small sampling of some Pros and Cons in becoming a Little Caesars franchisee:
Little Caesars supports franchisees with tools of a proven system. Ongoing training, architectural and construction services to help with building design, effective marketing programs, and relationships with preferred lenders to assist in financing are just a few ways the parent company provides franchisee support.
98 percent of franchisees agree that Little Caesars is one of the hottest concepts in the pizza business, with 99 percent of franchisees surveyed agreeing that the company’s system works.
Cons and Complaints:
The Little Caesars company does not provide financing. Yes, they will help point an investor in the right direction, but the investor is on their own the whole way, bearing 100 percent of the burden of the loan themselves.
It is against company policy to divulge any financial information (namely, profits per franchise) not required by law. Perhaps investors ready to really “get down to brass tacks” can learn more specifics about the profitability of individual franchise locations. Up to that point, it can be perhaps anyone’s guess how much profit can be realized. Investors should ask themselves- why is this such a big secret?
No matter how well (or poorly) the franchisee is doing financially, the company will take a considerable cut at the beginning of the franchise process; monthly corporate fees will then be owed, as well as a percentage of the store’s profits, which can be a considerable burden to any start-up business.