ATLANTA Huddle House Inc. has lowered its franchise fees and cut royalty rates to encourage potential and existing franchisees to develop more restaurants for the 400-unit family-dining chain.
The franchise fee for new developments signed in 2010 has been reduced to $5,000, and no sales royalties will be charged for the first five months of operation, Huddle House said this week. It was unclear at press time how much the original franchise fee had totaled.
Thomas Flaherty, the chain’s new chief development officer, made the decision to cut the fees in order to prop up franchise development strategies in the weakened economy.
“This program allows existing and new Huddle House franchisees the opportunity to develop with a lower cost of entry,” he said. “Also, the savings in paying no royalty for the first five months provides fuel for new restaurants to advertise more heavily during the initial stages. This model also encourages multiunit development.”
Many restaurant franchisors have looked for ways to spur franchisee development at a time when traditional financing is tough to garner. Reduced fees, waived or reduced royalties and even equipment purchases have been used by such chains as Domino’s, Papa John’s and Pizza Inn.
Huddle House is seeking to attract experienced restaurant operators for new development in target markets, which it did not outline. Today, Huddle House operates in 17 states, primarily in the Southeast, Midwest and Southwest.
“Many good investments are made during a down economy,” Huddle House’s chief executive Phil Greifeld said, “and our incentive program provides a great investment benefit to both existing and new franchisees.”
Contact Elissa Elan at [email protected].