Breadsmith Franchise Cost, Revenue & Review 2026
- Investment
- $399K – $446K
- Disclosed sales
- $1.2M
- gross sales, not profit
- SBA charge-off
- 7.7%
- on 34 loans
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Breadsmith is a neighborhood bakery franchise baking European-style artisan breads and pastries from scratch in a hearth oven. Franchisees run the bakeries, managing baking, retail sales, and wholesale accounts.
FranchiseVerdict summary · 2026
A Breadsmith franchise requires a total initial investment of $399K – $446K, including a $49K franchise fee and an ongoing 7.0% royalty[2]. Per the 2026 FDD, average unit revenue was $1.2M[2]. SBA 7(a) loans show a 7.7% charge-off rate across 34 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: 2026 filing · Data extracted: · Last cited check: · Staleness risk: low - the current year's filing
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored6 of 8 headline figures on this page cite a page of the filing; the rest are marked “Not cited” beside the figure.
Overview
- Investment
- $399K – $446K
- 64th pct Service Resta…
- Avg gross sales
- $1.2M
- Outlet subset23rd pct Service Resta…
- Royalty
- 7.0%
- 90th pct Service Resta…
- Units
- 32
- 57th pct Service Resta…
- SBA charge-off
- 7.7%
- % 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 median · 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 $399K – $446K including a $49K franchise fee, 7.0% ongoing royalty.
- RETURNSAverage unit revenue of $1.2M/year (median $727K) (reported for a subset of outlets rather than the whole system).
- RISKVerdict A (Strongest tier), verdict score 79/100 (higher is better). SBA loan charge-off rate of 7.7% across 34 loans (near or below the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- GROWTHFlat: no net change in franchised outlets in the latest year (0 opened, 0 closed) (Item 20).
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- Breadsmith Franchising, Inc.
- CEO title
- President and CEO
- Tim Malouf
- Incorporated in
- Wisconsin
- HQ
- 409 East Silver Spring Drive, Suite U11, Whitefish Bay, Wisconsin 53217
- Auditor
- Ritz Holman LLP
- Audited financials
- Franchisor revenue
- $1.4M
- vs $1.3M prior year
Overview
About
- CEO
- Tim Malouf
- Headquarters
- Wisconsin
- Founded
- 1993
- FDD year
- 2026
- States available
- 15
Can you afford it, and what does the money buy?
Entry cost runs 13% below the typical quick-service restaurants franchise.
Source: FDD 2026 · Items 5–7
Full Item 7 breakdown10 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Initial Franchise Development Fee | $49K | $49K | |
| Equipment and small wares | $155K | $155K | |
| Leasehold Improvements and Fixtures | $164K | $185K | |
| Opening Inventory | $4K | $8K | |
| Signage | $5K | $8K | |
| Security Deposits | $3K | $6K | |
| Promotion | $500 | $2K | |
| Pre-Opening Training | $5K | $8K | |
| Miscellaneous (legal, insurance, permits, office supplies, tools, etc.) | $10K | $10K | |
| Additional Funds (6mos.) | $4K | $16K | |
| Total initial investment | $399K | $446K |
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
- $399K – $446K
- Middle of category vs category
- Liquid capital req'd
- $4K – $16K
- Top 40% of category vs category
- Franchise fee
- $49K – $49K
- Bottom third — review vs category
- Royalty
- 7.0%
- Tiered by sales volume · typical 6–8%
- Ad fund
- 2.0%
- typical 3–5%
- Total fee load
- 9.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 7.0% of gross sales |
| Marketing / ad fund | 2.0% of gross sales |
| Technology fee | $275 |
| Training fee | $5K |
| Transfer fee | $15K |
| Renewal fee | $5K |
| Inventory (initial) | $4K – $8K |
| Total fee load | 9.0% of rev |
What do units actually make?
Average unit sales run 24% above the quick-service restaurants norm.
Reported for a subset of outlets rather than the whole system
Source: FDD 2026 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for Breadsmith until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$433K
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
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, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own lease quote, labor market and build-out budget.
Returns model · single-unit ROIC
What would one Breadsmith unit return on the cash you put in?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
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%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
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: 2026 FDD
Financial Performance
Reported for a subset of outlets rather than the whole system
- Avg gross sales
- $1.2M
- Per unit, per year
- Median gross sales
- $727K
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- gross sales
- Sample size
- 16 outlets
- vs category median 19
- Range (low → high)
- $391K→$5.0MCited, not corroborated — printed on page 37 of the 2026 FDD. Nothing else in our record independently restates or re-derives it.
- Cohort dispersion (min → max)
- Quartile band
- $474K→$2.8M
- Bottom 25% → top 25%
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2026
- Disclosed in the 2026 filing, covering 2024
- Transparency
- 7 / 10
- vs category median 4 / 10 · above
Compared against 781 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 $1.2M/year in gross sales. Median is $727K — top performers pull the average up, so a typical unit earns less. Revenue-to-investment ratio: 2.9x. Reported for a subset of outlets rather than the whole system.
Fee burden
Total ongoing fee load of 9.0% — above the Quick-Service Restaurants median of 7.5%.
Disclosure
Transparency score 7/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
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 medians
How Breadsmith Compares
Category median of published Quick-Service Restaurants brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Is the system healthy?
Source: FDD 2026 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 32
- Opened
- 0
- Last reporting year
- Closed
- 0
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- N/A
- Company-owned
- 4
- Corporate units in the system
- % franchised
- 88%
- vs corporate-owned
Last fiscal year · Item 20 exits and transfers
- Terminated
- 0
- Not renewed
- 0
- Transferred
- 1
- Reacquired
- 0
- Franchisor bought back
- Signed, not yet open
- 0
- 0.00 per open outlet · Item 20 Table 5
- Projected new
- 1
- Franchisor's next-year forecast
- Transfer rate
- 12.5%
- Owners selling to other franchisees
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 4 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.
Where the owners are · Item 20 owner list
7 current owners across 4 states.
- WI 3
- AZ 2
- MO 1
- SD 1
Counts only, from the list the franchisor prints in Item 20. Names and phone numbers are for your own due diligence and are not shown here.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 34
- Loan volume
- $5.2M
- Median loan
- $125K
- 50th percentile
- Charge-off rate
- 7.7%
- on 34 loans · 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)
- 92.3%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 20
- Defaults
- 2
- Typical loan rate
- 5.9%
- avg rate to borrowers
- Franchised industry avg
- 10.0%
- brand beats franchise avg ↓
- Jobs supported
- 150
- 3.3 per loan
- Lender concentration
- 10%
- top lender's share
Borrower mix: 0% went to startups / new businesses, 100% to established operators
Franchise vs independent — in retail bakeries, franchised businesses charge off at 10.0% vs 17.6% for independents — franchising is associated with 43% lower SBA default risk in this category.
Vintage analysis
Breadsmith charge-off rate by loan vintage
Top lenders financing Breadsmith franchisees
Showing 3 of 20 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.
Lender network · 7(a) + 504
SBA Lending Report
Full lending analysis for Breadsmith from SBA 7(a) FOIA data.
- Principal loss rate
- 4.1%
- Avg SBA guarantee
- 78%
- Avg interest rate
- 5.92%
- Avg chargeoff amount
- $92K
- Lender concentration
- 10.3%
- Job velocity
- 3.3 per $100K
- NAICS benchmark
- 1.2%
- NAICS 311811
- Jobs supported
- 150
Top SBA lendersTop lender holds 10% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | BMO Bank National Association | 3 | $355K | 0.0% |
| 2 | American National Bank-Fox Cities | 3 | $400K | 0.0% |
| 3 | PNC Bank, National Association | 2 | $230K | 0.0% |
| 4 | Loans from Old Closed Lenders | 2 | $366K | 0.0% |
| 5 | Readycap Lending, LLC | 2 | $348K | 0.0% |
| 6 | Independent Bank | 2 | $331K | 0.0% |
| 7 | Associated Bank, National Association | 2 | $117K | 0.0% |
| 8 | Bank First, N.A. | 2 | $484K | 0.0% |
| 9 | Eastern Bank | 1 | $100K | 0.0% |
| 10 | Wells Fargo Bank National Association | 1 | $100K | 100.0% |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| WIWisconsin | 10 | 0 | 0.0% |
| CACalifornia | 3 | 1 | 33.3% |
| ILIllinois | 3 | 0 | 0.0% |
| MIMichigan | 3 | 0 | 0.0% |
| OHOhio | 3 | 0 | 0.0% |
| NJNew Jersey | 2 | 0 | 0.0% |
| MAMassachusetts | 1 | 0 | 0.0% |
| MNMinnesota | 1 | 0 | 0.0% |
| MOMissouri | 1 | 0 | -- |
| NDNorth Dakota | 1 | 0 | -- |
SBA 7(a) lending trend
Borrower profile
Source: SBA 7(a) + 504 FOIA loan-level data, matched by FranchiseVerdict
What could kill this investment?
SBA loans charge off at 7.7% — 52% below the 16.0% national norm, i.e. lower lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Declining franchise system with shrinking unit count, undisclosed profitability metrics, and high capital requirements create material risk despite protected territories.
Litigation (Item 3)
Subject: officers or affiliates. The franchisor is not a named party in these cases.
No litigation required to be disclosed in Item 3.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Ritz Holman LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 79 / 100 verdict
- 01MEDUnit count declined 10% YoY (32 units down from ~36) indicating system contraction and potential viability concerns
- 02MEDNet income not disclosed in Item 19 — impossible to assess actual profitability despite $1.2M average revenue
- 03MINOR7% royalty on gross receipts (not net profit) means franchisees pay during unprofitable periods
- 04MINORBakery category historically challenged by commodity pricing, labor costs, and artisanal market saturation
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 9.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2026 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 15 years |
|---|---|
| Renewal term | 15 years |
| Allowed renewalsℹ | 1 |
| Territory type | Exclusive territory |
| Protected territory | Yes |
| Exclusive territoryℹ | Yes |
| Territory radius | 5 mi |
| 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 | 5 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Termination groundsℹ | 16 |
| Mandatory arbitration | No |
| Arbitration location | Whitefish Bay, Wisconsin |
| Jury trial waiver | No |
| Governing law | Wisconsin |
| Litigation count | 0 |
View Item 3 litigation summary
No litigation required to be disclosed in Item 3.
Items 10, 11
Training & Operations
- Classroom training
- 26 hrs
- On-the-job training
- 115 hrs
- Training location
- Whitefish Bay, Wisconsin (Milwaukee metropolitan area)
- Ongoing training
- Optional
- Time to open
- 9 mo
- From signing to launch
- Site selection
- franchisee
- Franchisor financing
- Not offered
- Item 10
- POS system
- Toast Point of Sale System
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Toast Point of Sale System
Item 20 · call current owners
Franchisee Contacts
7 owners to call
Name · phone · city · state. Extracted from FDD Item 20
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Breadsmith franchise?
The total investment to open a Breadsmith franchise ranges from $399K – $446K, with an initial franchise fee of $49K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Breadsmith franchise owners earn?
According to Item 19 of the Breadsmith FDD, the average gross sales per unit is $1.2M. The median is $727K. Important context: Reported for a subset of outlets rather than the whole system. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
Who owns Breadsmith?
Breadsmith is franchised by Breadsmith Franchising, Inc.. Source: FDD Item 1, 2026 filing.
What is Item 19 in the Breadsmith 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 Breadsmith FDD and qualifies whose outlets they describe.
What is Breadsmith's franchise failure rate?
Based on SBA 7(a) loan data, Breadsmith has a charge-off rate of 7.7% across 34 loans, meaning 7.7% 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 Breadsmith franchise locations are there?
As of their most recent FDD filing, Breadsmith has 32 total units in the United States, including 28 franchised units and 4 company-owned units.
Is Breadsmith a good franchise to buy?
FranchiseVerdict rates Breadsmith as a A-grade franchise with a verdict score of 79 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. 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
Are you the franchisor?
If you represent Breadsmith, you can request corrections or provide updated information.
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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.