Freddy’s Frozen Custard & Steakburgers
Bottom line
- Total investment $786K – $2.8M including a $35K franchise fee.
- Average unit revenue of $1.9M/year (median $1.9M).
- Rated STRONG with a risk score of 46/100. SBA loan default rate of 0.0% across 13 loans (below the industry average).
- System growing at 2040% CAGR over 3 years with 550 total units — strong expansion trajectory.
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Freddy’s Frozen Custard & Steakburgers unit return on the cash you put in?
Unlevered ROIC · per unit
15%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Freddy’s Frozen Custard & Steakburgers units return on equity?
Equity IRR · 5-yr
35.5%
4.57× MOIC
Year-1 DSCR
2.30×
EBITDA ÷ debt service
Equity required
$4.9M
on $14.2M purchase
Total debt
$9.3M
SBA $5.0M + senior + seller note
Overview
About
Franchisees operate fast-casual restaurants serving premium beef steakburgers, hand-scooped frozen custard, and sides. Day-to-day operations include food preparation, customer service, staff management, inventory control, and local marketing to drive foot traffic in a protected territory.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 18 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 phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Freddy's presents moderate-to-caution risk: lack of earnings disclosure, corporate going concern issues, and declining growth rates offset by established brand presence and no litigation history.
Score breakdown · what drove the 46 / 100 rating
- 01MEDNo Item 19 (Average Unit Volume) disclosed despite $1.89M average revenue being provided — suggests inconsistent profitability across units or franchisor unwilling to guarantee earnings potential
- 02HIGHGoing Concern status is FALSE — indicates potential financial distress at corporate level that could impact franchisee support, marketing funds, and supply chain stability
- 03MINORRoyalty rate increase from 4.5% to 5% effective July 1, 2025 — represents 11% fee increase for new franchisees, reducing unit economics and creating a two-tier system that may fragment the system
- 04MINORModest unit growth of 6.2% YoY — below QSR industry averages (8-12%), suggesting slower expansion and potential market saturation or franchisee dissatisfaction
- 05MEDHigh initial investment range ($785K–$2.75M) with high ongoing royalties leaves thin margins, especially without disclosed net income transparency
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
85 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Freddy’s Frozen Custard & Steakburgers · FDD (2025) PDF