A&w Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
A&W is a quick-service franchise known for its root beer, floats, burgers, and coneys. Franchisees run restaurants, freestanding, endcap, or non-traditional, with drive-thru and counter service.
FranchiseVerdict summary · 2026
A A&W franchise requires a total initial investment of $894K – $1.6M, including a $15K – $30K franchise fee and an ongoing 5.0% royalty[2]. Per the 2025 FDD, average unit revenue was $1.3M[2]. SBA 7(a) loans show a 17.1% charge-off rate across 97 loans[1]. FranchiseVerdict grade: B (Above average), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $894K – $1.6M
- 92nd pct Service Resta…
- Avg gross sales
- $1.3M
- 22nd pct Service Resta…
- Royalty
- 5.0%
- 11th pct Service Resta…
- Units
- 210
- 84th pct Service Resta…
- SBA charge-off
- 17.1%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Quick-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Quick-Service Restaurants avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $894K – $1.6M including a $30K franchise fee, 5.0% ongoing royalty.
- RETURNSAverage unit revenue of $1.3M/year (median $1.3M), with an estimated 10% cash-on-cash return (based on EBITDAR).
- RISKVerdict B (Above average), verdict score 56/100 (higher is better). SBA loan charge-off rate of 17.1% across 97 loans (above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- A&W Restaurants, Inc.
- Parent company
- A Great American Brand, LLC
- CEO title
- CEO and President
- Betsy Schmandt
- Incorporated in
- Michigan
- HQ
- 1648 McGrathiana Parkway, Suite 380, Lexington, KY 40511
- Auditor
- Dean Dorton
- Audited financials
- Franchisor revenue
- $11.9M
- vs $11.7M prior year
Overview
About
- CEO
- Betsy Schmandt
- Headquarters
- Kentucky
- Founded
- 1950
- FDD year
- 2025
- States available
- 37
Can you afford it, and what does the money buy?
Entry cost runs 92% above the typical quick-service restaurants franchise.
Source: FDD 2025 · Items 5–7
Full Item 7 breakdown8 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Real Estate | — | — | |
| Professional Fees, Licenses & Permitsnot refundable | $30K | $84K | |
| Building Costs Including Site Worknot refundable | $500K | $869K | |
| Signsnot refundable | $70K | $88K | |
| Technology Systemnot refundable | $34K | $70K | |
| Furnishings, Fixtures & Equipmentnot refundable | $185K | $276K | |
| Initial Franchise Feenot refundable | $15K | $30K | |
| Grand Opening Promotion Depositnot refundable | $5K | $5K | |
| Total initial investment | $838K | $1.4M |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. Total is the sum of line-item lows / highs — actual costs may fall outside this range depending on market and build-out scope.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $894K – $1.6M
- Bottom third — review vs category
- Liquid capital req'd
- $30K – $150K
- Middle of category vs category
- Franchise fee
- $15K – $30K
- Top 40% of category vs category
- Royalty
- 5.0%
- tiered · typical 6–8%
- Ad fund
- 5.0%
- typical 3–5%
- Total fee load
- 10.0%
- vs 9–13% typical
- Payback period
- 10.4 yrs
- From FDD / Item 19
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 5.0% of gross sales |
| Marketing / ad fund | 5.0% of gross sales |
| Transfer fee | $5K |
| Renewal fee | $3K |
| Inventory (initial) | $9K – $16K |
| Total fee load | 10.0% of rev |
What do units actually make?
Average unit sales run 10% above the quick-service restaurants norm.
Source: FDD 2025 · Item 19
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$159K
12.0% margin
Unlevered ROIC
12%
EBITDA / total invested capital
Payback
8.5 yrs
cash-on-cash, unlevered
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
FDD-reported earnings vs. model
The FDD reports $244K as EBITDAR. Our model estimates $159K SLEBITDA from the same revenue using category-average cost assumptions. These numbers differ because EBITDAR deducts different expense categories than our model.
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real lease quote, labor market, and build-out budget.
Returns model · single-unit ROIC
What would one A&W unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
12%
Below the 30–60% attractive-franchise band
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Levered LBO scenario · Yale Crease Capital framing
What would 25 A&W units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$1.3M
on $6.6M purchase
Total debt
$5.3M
SBA $3.3M + senior + seller note
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
- Avg gross sales
- $1.3M
- Per unit, per year
- Median gross sales
- $1.3M
- Avg ebitdar
- $244K
- Reported as EBITDAR in FDD Item 19
- Cash-on-cash
- 9.6%
- Based on EBITDAR / investment midpoint
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- Historical average/high/low/median Net Sales by quartile, reported separately for Freestanding and Convenience/Gas-station Restaurants, plus a P&L (EBITDAR) subset
- Sample size
- 59 outlets
- vs category median 20 · large
- Range (low → high)
- $511K→$3.1M
- Cohort dispersion (min → max)
- Quartile band
- $831K→$2.0M
- Bottom 25% → top 25%
- Transparency tier
- none
- Categorical assessment of disclosure depth
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
- Transparency
- 10 / 10
- vs category median 4 / 10 · above
Compared against 782 Quick-Service Restaurants brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $1.3M/year in gross sales. Revenue-to-investment ratio: 1.0x.
Fee burden
Total ongoing fee load of 10.0% — above the Quick-Service Restaurants average of 7.9%.
Disclosure
Transparency score 10/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System roughly stable (+1.4% 3-year CAGR) with 210 units.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Quick-Service Restaurants averages
How A&w Compares
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 210
- Opened
- 5
- Last reporting year
- Closed
- 37
- Terminated
- 6
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 4
- Term expired, not renewed (per Item 20)
- Turnover rate
- 3.8%
- Company-owned
- 2
- Corporate units in the system
- % franchised
- 99%
- vs corporate-owned
- Net growth (3-yr)
- +1.4%
- Net unit change over 3 years
- 3-yr CAGR
- +1.4%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 5
- Closed (3yr)
- 0
- Terminated (3yr)
- 6
- Non-renewed (3yr)
- 4
- Transfers (3yr)
- 3
- Reacquired (3yr)
- 0
- Franchisor bought back
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 36 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator. Not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
Available to sell in · Item 12
- California
- Hawaii
States where the franchisor is registered to sell new franchises (FDD registration filings).
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 97
- Loan volume
- $41.2M
- Median loan
- $682K
- 50th percentile
- Charge-off rate
- 17.1%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 82.9%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 16
- Defaults
- 12
- Typical loan rate
- 6.1%
- avg rate to borrowers
- Franchised industry avg
- 10.8%
- brand above franchise avg ↑
- Jobs supported
- 481
- 3.2 per loan
- Lender concentration
- 14%
- top lender's share
Borrower mix: 36% went to startups / new businesses, 64% to established operators
Franchise vs independent — in limited-service restaurants, franchised businesses charge off at 10.8% vs 10.0% for independents — franchising is associated with 8% higher SBA default risk in this category.
Top lenders financing A&w franchisees
Showing 3 of 16 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into A&w's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 10 lenders with concentration factor
- Per-state charge-off rates across 10 states
- Startup risk premium and job creation velocity
- 9-year lending trend
- SBA 504 real estate/equipment data
Instant access. No subscription.
What could kill this investment?
SBA loans here charge off near the 16.0% national average.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
A&W is a contracting legacy QSR franchise with undisclosed financial performance data, declining unit count, and wide-ranging investment requirements that create uncertainty around actual profitability and ROI.
Litigation (Item 3)
No litigation disclosed in Item 3.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Dean Dorton
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
ⓘ These are the parent company's consolidated financials (the parent guarantees the franchisor), not this brand's standalone results — the figure reflects the whole corporate group, not this brand alone.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Kickbacks from required suppliers: No
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
Score breakdown · what drove the 56 / 100 verdict
- 01MEDNet income of $244K on $1.33M revenue implies 18.4% net margin, which is optimistic for QSR; sustainability unclear without disclosed expenses breakdown
- 02MINOR20-year term locks franchisee into aging brand during rapid industry consolidation and changing consumer preferences
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 10.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 20 years |
|---|---|
| Renewal term | 5 years |
| Allowed renewalsℹ | 2 |
| Territory type | protected |
| Protected territory | Yes |
| Exclusive territoryℹ | No |
| Territory radius | 1 mi |
| Territory population | 30,000 |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 10 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Termination groundsℹ | 17 |
| Curable defaultsℹ | 8 |
| Mandatory arbitration | No |
| Jury trial waiver | Yes |
| Governing law | Kentucky |
| Litigation count | 0 |
View Item 3 litigation summary
No litigation disclosed in Item 3.
Items 10, 11
Training & Operations
- Classroom training
- 37 hrs
- On-the-job training
- 44 hrs
- Training location
- A&W's Restaurant Support Center in Lexington, Kentucky and A&W's company-owned Restaurant in Richmond, Kentucky
- Ongoing training
- Required
- Time to open
- 10 mo
- From signing to launch
- Site selection
- both
- Franchisor financing
- Not offered
- Item 10
- POS system
- PAR POS
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: PAR POS
Item 20 · call current owners
Franchisee Contacts
268 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
A&W · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a A&W franchise?
The total investment to open a A&W franchise ranges from $894K – $1.6M, with an initial franchise fee of $30K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do A&W franchise owners earn?
According to Item 19 of the A&W FDD, the average gross sales per unit is $1.3M. The median is $1.3M. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Item 19 in the A&W FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the A&W FDD and qualifies whose outlets they describe.
What is A&W's franchise failure rate?
Based on SBA 7(a) loan data, A&W has a charge-off rate of 17.1% across 97 loans, meaning 17.1% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many A&W franchise locations are there?
As of their most recent FDD filing, A&W has 210 total units in the United States, including 208 franchised units and 2 company-owned units. 5 new units were opened in the latest reporting year.
Is A&W a good franchise to buy?
FranchiseVerdict rates A&W as a B-grade franchise with a verdict score of 56 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.