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TheStreet Open House

Buying a Cheap Franchise Can Get Expensive

Stocks in this article: PZZA NATH

1. Nathan's Famous
Start-up minimum: $10,350
Getting to hang a Nathan's Famous (NATH - Get Report) sign on your door requires as little as $10,350, according to the company. Nathan's highlights that it offers flexible menus and designs, including a variety of concepts available under its name for new and existing restaurants, movie theaters, convenience stores, casinos, mass retailers and stadiums -- not just stand-alone stores.

As of December, the Nathan's restaurant system had approximately 302 units (297 franchised and five company-owned). The company says the least expensive option for franchisees its "branded menu" program.

"For someone who wants to offer the true Nathan's experience but does not have the space or ability to develop a full-menu Nathan's Restaurant, the branded menu program is an ideal opportunity," the company says. The program essentially allows an existing food service operator to add Nathan's products, including hot dogs, hamburgers, corn dogs, crinkle-cut french fries and chicken tenders, and cook them on their own equipment (so long as approved by the company).

The price includes the license fee and a menu board. Under the program, the operator can use Nathan's trademarks, paper goods, marketing material and point-of-sale materials, according to promotional material about the branded menu program.

New food service vendors can also buy in, but the equipment purchase alone -- around $25,000 -- not to mention construction and ancillary costs, will make the start-up costs significantly higher. Vendors could pay a range, maxing out at $71,700.

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