What is the Cost to Buy a Sonic Franchise

Sonic, also known as Sonic Drive-In, is an iconic American fast-food chain. You may be familiar with Sonic, having visited franchises for great and quick fast food with a variety of fun and inventive drinks. The ability to go through a drive-thru or pull up and order makes Sonic an easy spot to get great-tasting food quickly. The use of carhops adds to the novelty of the service and makes going to Sonic a fun experience.

If you're considering investing in a Sonic franchise, it's essential to understand the costs, requirements, and potential benefits before making a decision. In this article we will review the history of Sonic, the advantages and disadvantages of buying a Sonic franchise, the requirements for becoming a franchise owner, how much is it to buy a Sonic franchise, training for the franchisees, the term of agreement and renewal, and the process involved in opening up a location. In other words, you will know whether a Sonic franchise is right for you.

Sonic Drive-In

Sonic traces its roots back to Shawnee, Oklahoma. Sonic was founded in its original form in 1953 by Troy Smith, originally named Top Hat. It began as a root beer stand serving hotdogs and hamburgers. The model of ordering and bringing food out to the car began the idea of the Sonic Drive-In restaurant. While Sonic still serves the same kinds of food as the traditional Sonic Drive-In location, today they serve a lot more items than a typical American quick service restaurant (QSR). This includes burgers, hot dogs, fries, onion rings, ice cream, and various drinks like sodas, slushies, limeades, and shakes.

Today, Sonic is owned by Inspire Brands, which is a company based out of Atlanta, Georgia. Inspire Brands also manages the franchises of Buffalo Wild Wings and Arby’s. Sonic Drive-In franchise may derive its success from its flexible serving model. Some can walk up and sit down, ordering their Sonic outside. Others can drive up, eat in their car, and drive away. Whereas, if you are in a hurry, you also have the opportunity to go through a Sonic drive-thru. In all, owning a Sonic franchise means that you can be pretty sure of the brand’s success through its unique business model and tasty menu.

Advantages of Buying a Sonic Franchise

As you are considering the potential costs of owning a Sonic franchise, you are likely interested in the benefits that a Sonic restaurant would have as a franchise over other franchises. Some of the bestselling points of Sonic are that the brand has a unique business model and menu. Its food is affordable, and the company has a large following.

First, Sonic has a great business model as a fast-food location. Its value proposition of being able to serve fast-food in different forms allows for a lot of flexibility with customers. Some customers might be looking for a drive thru, or a place to eat their food without having to get out of their cars, or others might want a place to meet up and sit down. Although many Sonic locations do not have indoor seating, the food franchise serves the rest of these needs very well. This has formed a key part of the brand and is one of the reasons behind the successes of each of its franchises.

Another advantage to Sonic’s business model is its menu. As a franchise owner of Sonic, you will get access to the Sonic menu, the methods of cooking and making Sonic products, and tap into the popularity of the Sonic brand with its following of customers. Aside from traditional burgers and hot dogs, Sonic has many drinks and ice cream options that allow for a lot of customization. The unique combinations that Sonic’s menu offers attract a large population of people to frequently eat at the business.

Disadvantages of Buying a Sonic Franchise

While there may be many advantages of buying a Sonic Franchise, you might also be interested in the downsides you may be exposing yourself to in pursuing this franchise opportunity.

One of the first disadvantages of buying a Sonic franchise is the amount of competition that you face. While Sonic’s menu might be distinguished in the options and customizability that it offers, it still faces competition in the American fast-food space. This competition comes from chains like McDonald’s, Burger King, Wendy’s, Chick-Fil-A, and more.

Another disadvantage of buying a Sonic franchise is the high total investment cost. When you think about older or newer, non-traditional Sonic Drive-In locations, they sit on a large plot of land, have a lot of interactive screens, and have the capacity to host a lot of cars. As a result, you might understand that there are a lot of costs associated with setting up a Sonic.

How to Buy a Sonic Franchise

As you sort through the advantages and disadvantages of buying a Sonic franchise, you might be interested in whether you are likely to qualify as an applicant to buy a Sonic franchise. There are usually two categories of requirements for opening a franchise: financial requirements and qualities that Sonic looks for in franchisees.

If you are thinking about how much it is to own a Sonic franchise, there are two main financial requirements for buying a Sonic franchise. This includes a net worth and liquid capital requirement. The net worth requirement for 1-2 units at Sonic is $1,000,000. While this may seem high, keep in mind that this requirement is for up to 2 units.

The next requirement is the liquid capital requirement. Liquid capital, or liquid assets, for a prospective franchisee, is required to be $500,000 or greater for 1-2 units. This requirement, especially for up to 2 units, is very reasonable when compared with industry standards.

While these two requirements form the main financial requirements for buying a Sonic franchise, there is also an underlying strong intention that influences the success of your application which also affects your finances. This intention that they are looking for is for franchisees to pursue multi-unit opportunities, which means that they may not accept you if you are only able to qualify or pay for one unit.

Sonic also considers informal criteria when selecting franchisees. Demonstrating these qualities or traits can strengthen your application and improve your chances of approval. One of the first qualities that Sonic wants to see in its franchisees is that they are sales-oriented, and they are interested in seeing this quality in their experience. Another quality that Sonic looks for in franchisees is that they have strong business acumen and the capability to do well in business. If you have prior experience in franchising or business, Sonic will likely value and consider it favorably in your application.

The last aspect that Sonic is specifically looking for in a franchisee is that they have connections to their communities. For a franchise, it is important that the owner can establish good connections with those that live around it. If you are looking to start a Sonic location or locations where you live, you can mention your involvement in the local community and how that might help your franchise succeed.

How Much Does It Cost to Buy a Sonic Franchise

If you meet the requirements for becoming a Sonic franchisee, you may be rightly interested in the cost of buying a Sonic franchise. There are generally two categories of costs involved in starting a Sonic: corporate costs and other investment costs.

The first cost that you will need to pay to the corporation is the franchise fee. The franchise fee is an upfront sum of money that you pay to the corporation at the signing of the franchise agreement. The franchise fee for Sonic differs based on the type of location. When franchising with Sonic, you are given choices to start a traditional or non-traditional location. The traditional location has a franchise fee of $45,000, which is standard for the industry. The non-traditional location has a franchise fee of $22,500, which is cheap for industry.

Franchises are also obligated to pay two ongoing costs to the corporation known as the royalty fee and advertising fee. Both are usually charged monthly as a percentage of your gross sales. The royalty fee when buying a Sonic franchise is 5%. Currently, Sonic is running specials of reduced royalty fees in the early months of the operation of your franchise. You should contact them directly to see what you might qualify for.

Another fee that you will be obliged to pay is the advertising fee, also known as a marketing fee. The advertising fee ranges from 3.25% to 5%. The advertising fee is paid to the franchisor to support national and local advertising efforts via the advertising funds they are collecting. The other set of costs related to the total initial investment are related to the land and setup costs of a Sonic franchise. However, the exact costs of buying a Sonic franchise will depend on your unique situation.

Training for Sonic

Recognizing the strong profit potential in buying a Sonic franchise, you may also be curious about what it takes to succeed as an owner. This likely includes understanding the training and support Sonic provides to its franchisees.

The good news is that Sonic has a robust and long training program compared to other franchises. This will allow you to become well-accustomed to the Sonic business model and how to successfully operate a multi-unit Sonic franchise strategy. Keep in mind that each franchise you start will need to have a general manager. This is especially important as you run your multi-unit strategy.

The training program at Sonic will consist of twelve weeks. The first eight weeks are spent related to restaurant training. After completing this training, you will spend three weeks at new stores, assisting with their openings and gaining firsthand experience in the process.  You will then have a final week of classroom training. In doing so, the training program will give you both a general and specific view of the successful operation of a Sonic franchise.

Term of Agreement and Renewal for a Sonic

If you are interested in buying a Sonic franchise, it is also important to understand the license agreement that you are entering. Your franchising agreement will be valid for a certain amount of time before it is necessary to renew. Usually, at the renewal of a licensing agreement, you will need to pay a renewal fee to the corporation.

Sonic offers two different options for their term of agreement and renewal. They break these up into traditional and non-traditional licensing options. The traditional licensing option involves a 20-year initial license with a 10-year renewal option. The non-traditional licensing option involves a 10-year initial license with a 5-year renewal option. This gives franchisees added flexibility in the franchising process to control costs as best as it suits them.

Process of Buying a Sonic Franchise

If you are ready to buy a Sonic franchise, now is the time. Sonic is offering special reductions on the royalties that you are obligated to pay among other incentives to start your franchises quickly.

If you are interested in starting your Sonic, head over to their website. Then, continue to their information on franchising. As you go through their franchising information, you will find a form where you can request more information on buying a Sonic franchise. The form will ask for general information about you, your intentions for franchising with Sonic, and the areas in which you are interested in starting franchises.

Once you have filled out the form, you are ready to start your franchising journey with Sonic. Someone at the company will reach out to you if they are interested in you based on the responses on your form. At that point, you will go through an interview process where you will also have the Sonic FDD (franchise disclosure document) disclosed to you. Study up on the brand, your motivations for starting your franchises, financing options, and your business plan. That way, you are ready to go when it is time for the interview.

Final Thoughts

Owning a Sonic Drive-In franchise can be a profitable venture with a well-known brand and a strong customer base. However, it requires a significant financial investment, business experience, and a commitment to multi-unit ownership. With comprehensive training and ongoing support, Sonic equips franchisees for success. If you meet the requirements and are ready to invest, this could be a great opportunity to build a thriving business.

Frequently Asked Questions About Buying a Sonic Franchise

How can I apply to buy a Sonic franchise?

You can apply to buy a Sonic franchise by visiting the Sonic Drive-In website and filling out a franchise inquiry form. If your application meets their qualifications, a company representative will contact you to begin the process.

What makes Sonic unique compared to other fast-food franchises?

Sonic stands out due to its drive-in service model, carhop servers, customizable drink menu, and flexible ordering options, including drive-thru, and walk-up.

How much is the franchise fee for buying a Sonic franchise?

The franchise fee for buying a traditional Sonic location is $45,000, while the fee for a non-traditional location is $22,500.

How long is the franchise agreement term for a Sonic location?

The franchise agreement duration depends on the type of location when buying a Sonic franchise. Traditional locations: 20-year initial term with a 10-year renewal option. Whereas non-traditional locations: 10-year initial term with a 5-year renewal option. 

Can I lease the land to buy a Sonic franchise instead of purchasing it?

Yes, franchisees have the option to buy or lease the land. However, the cost of land varies based on location, which impacts the total startup investment.

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