Cheba Hut Franchise Cost & 2026 FDD Data
83/100
Strongest tier
83 this brand51 Quick-Service Restaurants medianlikely 79–87: narrower with more SBA loans (high confidence)
Higher is better · an editorial assessment, not investment advice
#130 of 3,069 graded brands
Why an A: Helped by unit growth, scale, legal record and transparency. See all six factors
- Total investment
- $631K – $2.1M
- Avg net sales
- $2.3M
- “Reporting Group (Franchise only) - 73 Businesses 2025”, 73 outlets; not profit
- SBA charge-off
- 5 resolved of 23 loans: too few to judge
Data from the FDD filing + SBA 7(a) records. Analysis by FranchiseVerdict · Methodology · Website · Report an error · Franchisor? Claim this listing
FranchiseVerdict summary · 2026 FDD
Per the 2026 FDD, a Cheba Hut franchise requires a total initial investment of $631K – $2.1M, including a $50K franchise fee. Once open, the ongoing royalty is 5.0%. Per the 2026 FDD, average net sales were $2.3M (Item 19 group “Reporting Group (Franchise only) - 73 Businesses 2025”, 73 outlets; net sales, not profit). Verdict grade: A (Strongest tier), an editorial assessment, not investment advice.
Sources: 2026 FDD · What one unit could make and lose →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: low (issued within the last 12 months)
Evidence for the headline figures: 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 scored8 of 8 headline figures on this page cite a page of the filing.
Overview
Quick verdict · vs Quick-Service Restaurants median
Top edge: green = better than the Quick-Service Restaurants median by more than 10%, red = worse by more than 10%, gray = within 10% or no benchmark. Source: FDD filings + SBA 7(a).
Data from public FDD filings and SBA records. Methodology
Bottom line
- RETURNSAverage net sales of $2.3M/year (outlet median $2.3M; Item 19 group “Reporting Group (Franchise only) - 73 Businesses 2025”, 73 outlets; net sales, not profit).
- GROWTHIn the latest Item 20 year, the number of franchised outlets grew by 7 (7 opened, 0 closed).
- GROWTH+22 franchised outlets over the two years to 2025 (58 to 80, +37.9% in total, +17.4% a year compounded), with 83 total units.
AT STAKEOne unit at the Item 7 midpoint: $176K a year in payments on assumed SBA 7(a)-style terms.You put in about $272K of your own cash and personally guarantee a $1.1M loan. Assumptions are labeled in Sales; not investment advice.See what one unit could make and lose
Things to check before you sign (3)
- 1 pending matter names the franchisor in Item 3 (litigation). Pending claims are allegations, not findings; for a system this size the score counts the legal record in the brand's favour. Read the matter in Item 3.
- The franchisor keeps the right to compete inside your territory (Item 12, territory).
- The franchisor receives rebates or payments from suppliers you buy from (Item 8, required suppliers).
Checked and clear: no auditor doubt that the franchisor can keep operating, no net loss of franchised outlets in the latest Item 20 years, no rule that the owner must run it personally and the full filing on file, and an Item 19 average from 73 units. Not on file here, so ask: SBA charge-off rate against the category median and jury-trial waiver.
What to do next
Step 1: Read the FDD itself.
Free: the franchisor must give it to you at least 14 days before you sign or pay. Or look it up in a state registry (Wisconsin, Minnesota, California). What to read first.
Step 2: Talk to current and former owners.
Free: Item 20 of the FDD lists every current owner and those who left last year, most with a phone number. Questions to ask.
Step 3: Talk to an SBA lender.
Free: the SBA's Lender Match, or the lenders already lending to this brand in the SBA section. Ask what you would personally guarantee and what the monthly payment would be. If you plan to use retirement savings, ask a CPA about the rules for that first.
Step 4: Have a franchise attorney review the FDD and agreement.
Free: your state bar's lawyer referral service can name franchise lawyers, and many offer a short first consultation. Bring the checks listed above.
Research steps, not investment or legal advice.
Can you afford it, and what does the money buy?
Entry cost (the Item 7 midpoint) is 2.8× the Quick-Service Restaurants median ($487K).
Source: FDD 2026 · Items 5–7 (fees and startup costs)
Do you qualify? The filing states no minimum net worth or liquid capital. Ask Cheba Hut Franchising, Inc. (Item 1: 400-A N. College Avenue, Fort Collins, Colorado 80524) and your lender what they require, and keep living costs for the first year outside the deal.
Full Item 7 breakdown19 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Initial Franchise Fee | $50K | $50K | |
| Leasehold Improvements | $275K | $1.1M | |
| Furniture, Fixtures, Décor and Equipment | $150K | $325K | |
| Point-of-Sale Systems and Other Equipment | $0 | $15K | |
| Pre-Opening Technology Fee | $900 | $2.4K | |
| Opening Team Expenses | $0 | $20K | |
| Training Expenses | $15K | $25K | |
| Architectural and Engineering Fees | $17.5K | $50K | |
| Non-preferred Architect Fee | $0 | $4.2K | |
| Site Survey Fee | $1.75K | $3.5K | |
| Signs | $10K | $50K | |
| 3-Months’ Lease Payments | $20K | $50K | |
| Miscellaneous | $15K | $30K | |
| First Party | $3.5K | $10K | |
| Additional Funds - 3 Months | $50K | $100K | |
| Initial Inventory- Food & Bar | $15K | $30K | |
| Professional Fees | $5K | $15K | |
| Liquor License Costs | $2.5K | $200K | |
| Extension Fee | $0 | $6K | |
| Total initial investment | $631K | $2.1M |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. The total row is the total as printed in Item 7. Actual costs may fall outside this range depending on market and build-out scope.
Item 6 · what you pay once you are open
Ongoing fees
| Fee | Amount |
|---|---|
| Royalty | 5.0% of net sales |
| Marketing / ad fundBrand-wide marketing pool. 2% of weekly Net Sales (Brand Fund Contribution); may be increased up to 4.20% upon 30 days written notice | 2.0% of net sales |
Technology feeThe filing's detailTechnology Fee: then-current fee, currently $1,000/month, covers technology used in operations (software, POS-adjacent systems); Pre-Opening Technology Fee of $100/month until opening | $1,000/month |
| Transfer fee | $10,000 |
| Renewal fee | $25,000 |
| Total fee loadnear the Quick-Service Restaurants median of 7.0% | 7.0% of sales |
What do units actually make?
Average net sales are 2.5× the Quick-Service Restaurants median ($950K).
Source: FDD 2026 · Item 19 (sales and earnings)
Items 6 (other fees), 7 (startup costs) and 19 (sales and earnings) · assumptions labeled
What you could make and lose: one unit
What one Cheba Hut unit would ask of you, from the filing's Item 7 total and labeled assumptions.
Average net sales are $2.3M (FDD p.54), and the royalty and ad fund take about $164K of that a year (Item 6). This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners. So this box does not estimate a profit. To cover the loan payment alone, one unit has to clear $176K a year after its food, labor, rent and other costs and the franchisor's fees.
How these figures are worked out
- Loan (assumption): 80% of the $1.4M Item 7 midpoint is a $1.1M loan, paid over 10 years at 10.5%: $176K a year. SBA 7(a)-style terms on a long-term rate; your lender sets yours. Cheba Hut's past SBA 7(a) loans averaged 7.9% at approval; 7(a) rates move with the prime rate, so 10.5% is a current-rate assumption, not this brand's history.
What you put at risk
Your own cash in: about $272K Assumption (the part the loan does not cover of the $1.4M Item 7 midpoint), plus whatever anything Item 7 leaves out (its notes say what). The loan is $1.1M.
Personal guarantee. SBA 7(a) loans require a personal guarantee from anyone who owns 20% or more of the business. If the unit cannot pay, the lender can collect from you personally, which can include your savings and your home. The worst case is losing the cash you put in and still owing the rest of the loan.
Gross sales are not profit, and none of these figures is take-home pay until tax and every operating cost are paid. The assumptions are ours, not the filing's. Not investment advice.
Returns modelOne unit · several units · editable
One unit
One unit: what is left after the loan payment
Gross sales, minus the franchisor's fees and the operating costs, is the unit's EBITDA (earnings before interest, taxes, depreciation and amortization). Minus an assumed loan payment, that is what is left for you, before tax. Gross sales are not profit.
This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners. Invested capital is the Item 7 total, which already includes its working-capital (additional funds) line.
Returns model · one unit
What would one Cheba Hut unit leave you each year after the loan payment?
Item 19: $2,337,070 average for 73 outlets (Reporting Group (Franchise only) - 73 Businesses 2025). Use a figure for outlets like yours if yours differ.
Gross sales, not profit: the costs below decide what is left.
Item 6, as stored, a year. A fixed fee, so it comes off EBITDA as dollars, not a share of sales.
This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners.
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.
Item 7 midpoint of $631K to $2.1M
Item 7's $50K to $100K additional funds are already in the total
Left after the loan payment · per year
The unit's EBITDA minus the assumed loan payment. Before tax, depreciation and any cost your inputs leave out (insurance, accounting and legal, licenses, technology fees): not take-home pay.
Gross sales are not profit. Neither the filing nor a stated assumption on this page supplies COGS, labor, rent / occupancy and other operating costs. Enter your own (a lease quote, owner calls) and the model runs on it.
Loan of $1.1M at 10.5% over 10 years, an assumption, not a quote. Return and payback are before tax, depreciation and the costs above. The loan usually needs your personal guarantee.
Buying several existing units? The acquisition scenario
Buying several units
What buying a few existing units could return
Prices an existing operator of a few units off the single-unit EBITDA above, after shared services, and finances it with an SBA 7(a) loan, a conventional loan and a seller note. It shows the yearly return on your cash (IRR), whether year-1 earnings cover the loan payments (DSCR) and how the price is paid for. It starts at 5 units; every deal term is an assumption you can change, and none is from the FDD.
Not modelled yet
Gross sales are not profit. Neither the filing nor a stated assumption on this page supplies COGS, labor, rent / occupancy and other operating costs. Enter your own (a lease quote, owner calls) and the model runs on it.
This scenario starts from a per-unit EBITDA. Fill in the operating costs in the one-unit model above and it runs on that figure, or take it to the full ROI workbench, where the multi-unit and acquisition models accept your own per-unit economics.
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 · filed by Cheba Hut Franchising, Inc.
Financial performance
- Range (low → high)
- $611K→$3.9MSource: 2026 FDD, page 53
- Cohort dispersion (min → max)
- Top and bottom 25%
- $1.3M→$3.4M
- Bottom group → top group: the top and bottom 25% as the filing reports them
Percentile ranks within Quick-Service Restaurants
Each rank is among the Quick-Service Restaurants brands that report that figure (the count is under each bar).
vs Quick-Service Restaurants medians
How Cheba Hut 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.
Who are you contracting with?
Cheba Hut Franchising, Inc.
Item 1 (the franchisor) · who you're contracting with
The franchisor
Corporate structure & franchisor financials
- Legal entity
- Cheba Hut Franchising, Inc.
- CEO title
- Chief Executive Officer
- Marc Torres
- Incorporated in
- Arizona
- HQ
- 400-A N. College Avenue, Fort Collins, Colorado 80524
Overview
About
Quick-service restaurants offering toasted submarine sandwiches, original sauces, salads, soups, chips, brownies, and other food/beverage items in a fun, casual atmosphere
- CEO
- Marc Torres
- States and territories listed
- 18
- registered or offered in, as the filing lists them (DC and territories included); not where units may open
Is the system healthy?
+22 franchised outlets over the two years to 2025 (58 to 80, +37.9% in total, +17.4% a year compounded).
Source: FDD 2026 · Item 20 (outlets opened, closed and transferred)
Item 20 (outlet counts) · unit dynamics
The growth chart
- Company-owned
- 3
- Corporate units in the system
- % franchised
- 96%
- vs corporate-owned
Last fiscal year · Item 20 rates and pipeline
- Reacquired
- 0
- Franchisor bought back
- Signed, not yet open
- 15
- 0.18 per open outlet · Item 20 Table 5
- Projected new
- 15
- Franchisor's next-year forecast
Item 20 · franchised units at year end
Franchised units rose from 58 in 2023 to 80 in 2025
Axis does not start at zero.
Source and method
Fast growth in a small system. Newer franchisors expanding quickly may not yet have the support infrastructure of larger systems.
Government records
SBA loan data
Matched to this brand from SBA 7(a) and 504 FOIA loan records.
- Loans on file
- 23
- SBA 7(a) loans matched to this brand, incl. those still being repaid
- Loan volume
- $14.1M
- Average loan
- $612K
- loan volume divided by loans
- Charge-off rate
- 5 resolved of 23 loans: too few to judge
- Limited SBA coverage: 23 loans, rate hidden until 10 have resolved and loans reach 2% of franchised units
- Paid in full
- 5 resolved of 23 loans: too few to judge
- Recent-loan charge-off
- 5 resolved of 23 loans: too few to judge
- Lenders
- 15
- Average interest rate
- 7.9%
- Jobs reported
- 742
- Lender concentration
- 17%
- top lender's share
Cumulative: every 7(a) loan matched to this brand in the SBA’s FOIA files, approved FY1991 onward. Historical lending data, not predictive of future performance. How SBA charge-off rates are calculated
Borrower mix: of the 21 loans with a recorded business age, 19 (90%) went to startups or businesses under two years old and 2 (10%) to established businesses or ownership changes.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Full SBA lending reportlenders · charge-off rate · trend
Lender network · SBA 7(a)
SBA Lending Report
Lender, state and yearly detail for Cheba Hut from SBA 7(a) FOIA loan records.
- Average SBA guarantee
- 75%
- Average interest rate
- 7.9%
- Lender concentration
- 17%
- Jobs reported
- 742
Top 10 SBA lenders by loan count
| Loans | Volume | Charge-off |
|---|---|---|
| The Huntington National Bank | ||
| 4 | $2.1M | Not on file |
| Oostburg State Bank | ||
| 3 | $1.8M | Not on file |
| FirstBank | ||
| 2 | $364K | Not on file |
| Brookline Bank, a Division of Beacon Bank and Trust | ||
| 2 | $1.3M | Not on file |
| First Commonwealth Bank | ||
| 2 | $418K | Not on file |
A lender’s rate counts only its resolved loans, the loans that have finished (paid in full or charged off); a 0.0% often means few of its loans have finished. Under 10 resolved loans, the rate reads “Too few”.
Charge-off rate by state (top 10 by loans)
| State | Loans | Charged off | Rate |
|---|---|---|---|
| TX Texas | 6 | 0 | Too few0 resolved |
| WI Wisconsin | 4 | 0 | Too few1 resolved |
| CA California | 3 | 0 | Too few0 resolved |
| TN Tennessee | 3 | 0 | Too few0 resolved |
| OH Ohio | 2 | 0 | Too few2 resolved |
| AR Arkansas | 1 | 0 | Too few0 resolved |
| CO Colorado | 1 | 0 | Too few1 resolved |
| FL Florida | 1 | 0 | Too few1 resolved |
| LA Louisiana | 1 | 0 | Too few0 resolved |
| NM New Mexico | 1 | 0 | Too few0 resolved |
Rate: charged-off loans over resolved loans (paid in full plus charged off), shown from 10 resolved loans. "Too few": under 10 resolved. The Loans column counts every approval in the window, including loans still being repaid.
SBA 7(a) loans approved per year
Borrower profile
The SBA's own business-age labels (3)
Source: SBA 7(a) FOIA loan-level data, matched to the brand by FranchiseVerdict.
What are the risks?
Source: SBA 7(a) FOIA · FDD Items 3, 21
Verdict grade + FDD Items 3 (litigation), 4 (bankruptcy), 8 (required suppliers), 16 (what you may sell), 21 (audited financials)
Risk and legal
Grade A: Strongest tier, 83/100 (category median 51); the full grade is at the top of the page.
How the grade is built
Why an A, factor by factor
- Financial health NeutralAudited financials; no going-concern doubt
- Unit economics NeutralAvg net sales $2.3M on a $1.4M investment midpoint, 1.7x (net sales, not profit)
- Unit growth Helps+22 franchised outlets over the two years to 2025 (58 to 80, +37.9% in total, +17.4% a year compounded); turnover 0.0%
- Scale Helps80 franchised units, +3 company-owned (83 in all); franchising since 2002
- Legal Helps1 matter naming the franchisor among the Item 3 matters we list (1.2 per 100 outlets)
- Transparency HelpsItem 19 discloses financial performance; audited financials
- Adjustments after the six dimensions (+1 point)Rounding: the score is kept as a whole number, which moved it by 1 point.
From the six scored dimensions, an editorial assessment, not investment advice. How the score is built
Litigation (Item 3)
Subject: the franchisor is a named party (defendant).
Capital Canada Limited v. Cheba Hut Franchising Inc., Scott Jennings, Marc Torres, Seth Larsen, James Wedding (Ontario Superior Court of Justice, filed Oct 30, 2025): plaintiff investment bank alleges breach of contract to pay a $1,080,000 USD "Success Fee" tied to introducing a strategic partner/financing transaction; includes misrepresentation counts; case pending, franchisor intends to defend.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Supplier relationship · Items 8 & 16
Ask what the franchisor earns on the supplies it sells you or the rebates it takes (Item 8).
- Franchisor sells you products: Yes
- Franchisor takes supplier rebates: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
Litigation case detail1 matter · Item 3
Litigation cases
The franchisor
Pending (1)
Capital Canada Limited v. Cheba Hut Franchising Inc., Scott Jennings, Marc Torres, Seth Larsen, and James Wedding
pendingfiled 2025-10-30 · Ontario Superior Court of Justice · CV-25-00755334-0000
“… Case No. CV-25-00755334-0000, was filed on October 30, 2025, in the Ontario Superior Court of Justice.”Page 11 of the 2026 FDD, Item 3
Item 3 lists the litigation the franchisor must disclose; a matter against a parent, an affiliate or a named officer is not a matter against the franchisor, and pending claims are allegations, not findings.
What are you signing up for?
Ongoing fees run about 7.0% of sales (royalty + ad fund), before your own operating costs.
Source: FDD 2026 · Items 11, 12, 17
FDD Items 12 (territory), 15 (owner participation) and 17 (renewal, termination and disputes)
Contract and territory detail
| Allowed renewals | 1 |
|---|---|
| Protected territory | Yes, on conditions |
| Territory condition | Territory typically a two-mile radius around the Restaurant; protected unless located in a metropolitan area (population >50,000 per sq mile in any 24-hour period) or a non-traditional location (airport, hotel, stadium, college campus, etc.), in which case no exclusive territory is granted |
| Exclusive territory | No |
| Territory radius | 2 mi |
| Online sales rights | Reserved by franchisor |
| Franchisor can compete | Yes |
| Who runs it (Item 15) | A manager may run it |
| Non-compete (years) | 2 years |
| Non-compete (miles) | 10 mi |
| Right of first refusal | Yes |
| RoFR response window | 30 days |
| Transfer requires consent | Yes |
| Mandatory arbitration | Yes |
| Arbitration location | Fort Collins, Colorado (principal city closest to franchisor's principal place of business) |
| Governing law | Colorado |
Items 10 (financing), 11 (training and support)
Training and operations
- Classroom training
- 40 hrs
- On-the-job training
- 152 hrs
- Training location
- Fort Collins, Colorado
- Ongoing training
- Required
- Time to open
- 9–15 mo
- From signing to launch (FDD p.31)
- Site selection
- joint - franchisee selects subject to franchisor approval; franchisor provides approved real estate/construction management supplier and assists with lease negotiation
- Franchisor financing
- Not offered
- Item 10
- POS system
- Toast
- Operating tech stack
Items 5 (initial fees) & 11 (training and support)
Franchisor support
Franchisee contacts
We hold no owner list for this brand. Item 20 of the FDD lists the current and former owners; the free FDD is the source.
Frequently asked questions
How much does it cost to open a Cheba Hut franchise?
Per the 2026 FDD, the total investment to open a Cheba Hut franchise ranges from $631K to $2.1M, with an initial franchise fee of $50K. This is the Item 7 total in the Franchise Disclosure Document (FDD): the startup costs the franchisor lists, such as build-out, equipment, inventory and working capital. It usually leaves out buying land or a building; Item 7's notes say what is excluded.
What do Cheba Hut franchise owners earn?
According to Item 19 of the Cheba Hut FDD, average net sales were $2.3M (Item 19 group “Reporting Group (Franchise only) - 73 Businesses 2025”, 73 outlets; net sales, not profit). The median is $2.3M. Reported as net sales, not gross sales. What an owner keeps depends on location, operating costs and management.
Who owns Cheba Hut?
Cheba Hut is franchised by Cheba Hut Franchising, Inc. Source: FDD Item 1, 2026 filing.
What is Item 19 in the Cheba Hut 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 Cheba Hut FDD and qualifies whose outlets they describe.
What is Cheba Hut's franchise failure rate?
There is no published franchise failure rate, and Cheba Hut has too few resolved SBA 7(a) loans on file (fewer than 10) to show an SBA charge-off rate that would mean anything. The SBA charge-off rate is the share of a brand's resolved SBA 7(a) loans to its franchisees that the SBA wrote off, including purchased guarantees. Resolved means paid in full or charged off; active loans are excluded because their outcome is not yet known. It is a lending outcome, not a count of closed businesses. Review the turnover and closure figures in Item 20 of the FDD and speak with current and former franchisees.
How many Cheba Hut franchise locations are there?
Per the 2026 FDD, Cheba Hut has 80 franchised units and 3 company-owned (83 in all). In the latest year, the number of franchised outlets grew by 7 (7 opened, 0 closed).
Is Cheba Hut a good franchise to buy?
FranchiseVerdict gives Cheba Hut an A Verdict grade (Strongest tier) with a verdict score of 83 out of 100 (higher is better), an editorial assessment, not investment advice. Helped by unit growth (+22 franchised outlets over the two years to 2025: 58 to 80, +37.9% in total, +17.4% a year compounded), scale, legal record and transparency. The “Why an A” section on this page lists all six dimensions and any adjustment. Speak with current franchisees before making any investment decision.
Other Quick-Service Restaurants franchises
Similar investment first, then by grade
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.