How to buy a fast food restaurant
Short answer
Most fast food restaurants for sale are franchise units, so buying one is mainly a franchise resale. You'll need the franchisor's approval and training, you'll usually sign the current franchise agreement (check royalty, ad fund and tech fees), and transfers often trigger remodel or equipment upgrades. Verify the unit's own sales from POS and royalty reports, check drive-thru share and speed, labor scheduling and turnover, the lease or real estate, and health inspection history.
A fast food unit is a restaurant, a franchise relationship and often a real estate decision. Get all three right.
The franchise layer
- Franchisor approval criteria and timeline; training requirements.
- Current franchise agreement terms vs the seller's: royalty, ad fund, technology fees, term remaining.
- Required remodels, image updates or equipment upgrades on transfer; get them in writing and price them.
- Territory and any planned new units nearby.
- Franchisor inspection scores for the unit.
The restaurant layer
| Metric | Source |
|---|---|
| Sales by daypart and channel (drive-thru, counter, delivery) | POS |
| Drive-thru car counts and service times | Drive-thru timer system |
| Food and paper cost | Supplier invoices, inventory |
| Labor by hour vs sales | Scheduling and payroll |
| Royalty and ad fund paid | Franchisor statements |
Worked example: sales, royalties and the remodel
Illustrative example, not any brand's real fees or a real unit
A unit sells $1,500,000 a year. In this example the royalty is 4% and the ad fund 4%, so $120,000 a year goes to the franchisor and the ad fund ($1,500,000 × 8%). Technology and other brand fees add $9,000. Food and paper are 31% ($465,000) and labor including the manager 30% ($450,000). Rent is $96,000 and other operating costs $150,000. That leaves $1,500,000 − $120,000 − $9,000 − $465,000 − $450,000 − $96,000 − $150,000 = $210,000 before debt and the owner. Now the franchisor says a transfer requires a $350,000 remodel within 18 months. Financed over 10 years at an 8% rate (an example rate), that's about $51,000 a year of extra debt payments, almost a quarter of the $210,000. Price that into your offer.
Labor: the controllable cost
Quick service restaurants live and die on scheduling. Ask for labor hours and cost by hour of the day for several typical weeks, alongside sales by hour from the POS. You'll see where staffing runs ahead of demand. Check turnover and the general manager's tenure: a strong GM is often the difference between a unit that runs and one the owner has to stand in. Many units employ teenagers, so federal child labor rules (29 CFR Part 570) on hours and hazardous tasks apply, along with any stricter state rules; ask whether the unit has had any wage-and-hour or child labor findings. Local predictive scheduling laws apply in some cities.
Red flags specific to fast food units
- Sales that don't match royalty statements. Royalties are calculated on sales, so the franchisor's statements are an independent record.
- Falling drive-thru counts or service times well behind brand standards.
- A franchise agreement with little term left, and a renewal that requires a new agreement at higher fees.
- Low franchisor inspection scores or a cure notice.
- A new unit of the same brand planned nearby; check territory rights.
- Equipment the brand will require you to replace, such as POS or kitchen systems moving to a new standard.
Real estate and lease
Fast food units often sit on valuable pads. If the seller owns the land, decide whether to buy it (SBA allows real estate on a longer blended term) or lease it from them at market rent. If leased, the lease must run long enough for your loan and franchise term. See related-party rent and franchise resales.
Drive-thru: where most of the money comes through
Many quick service units do most of their sales through the drive-thru, so its speed and capacity are part of the value. Ask for the drive-thru timer data the brand requires units to keep: cars per hour at peak and average service time by daypart. A unit that can't serve more cars at lunch because the lane backs up into the street has a ceiling. One with slow times has an operational problem a better manager may fix. Compare with brand standards, which the franchisor will hold you to.
Illustrative example, not a real unit
At lunch, the lane serves 60 cars an hour at an average ticket of $12, or $720 an hour. If service time improves enough to handle 72 cars an hour and demand is there, that's 12 × $12 = $144 more per lunch hour. Over two lunch hours a day, 360 days a year, that's 144 × 2 × 360 = $103,680 of extra sales. Upside like this is real but it's yours to earn, not something to pay the seller for.
What moves the value of a fast food unit
We don't value deals or publish multiples we can't verify. Appraisers and lenders weigh these factors:
| Factor | Supports a higher value | Pulls it lower |
|---|---|---|
| Sales trend | Steady or growing, confirmed by royalty statements | Declining |
| Franchise term | Long, with clear renewal | Short, renewal at new terms |
| Remodel | Recently done | Required at transfer |
| Site | Busy pad, long lease or owned | Short lease, access issues |
| Management | Strong general manager staying | Owner runs the shifts |
The first 90 days after you buy
Keep the general manager and shift leads, keep schedules steady, and follow the brand's systems closely; franchisors watch new owners. Learn the ordering, waste and labor reports week by week, and get to know the franchisor's field consultant. Plan any required remodel early so it doesn't collide with the busiest season.
What an SBA lender will check
Many fast food resales are financed with SBA loans. Lenders review the franchise agreement and brand eligibility, verify the unit's tax returns against IRS transcripts, and test debt coverage after royalties, ad fund and any remodel. They'll want the lease (or real estate) to run at least as long as the loan, and they'll count transfer fees and remodel costs in the project.
Questions to ask the seller and the franchisor
- What are the unit's sales by month and channel for three years, and do they match royalty statements?
- What will the franchisor require at transfer: fees, training, remodel, equipment?
- How much term is left on the franchise agreement and the lease?
- How long has the general manager been there, and will they stay?
- What were the last three franchisor inspection scores?
- Any planned units nearby, or territory changes?
Independent checks on fast food sales
A franchised unit gives you several records the seller doesn't control. Royalty reports to the franchisor are based on gross sales, so they should match the P&L. Food and paper purchases from the approved distributor should move in line with sales, and a sharp change in food cost percentage needs an explanation. Delivery app statements show orders and commissions by month. Card processor deposits cover most sales. Sales tax returns show taxable sales. If all of these line up, the sales are probably real; if one doesn't, ask why before you go further.
Ask the franchisor for the unit's recent operations or food safety audit scores as well. A unit that has failed audits may face required fixes, extra visits or default notices soon after you take over.
Ask about required technology, such as POS, kiosks and app integrations, and what upgrades are due.
Frequently asked questions
Can anyone buy a fast food franchise resale?
Only buyers the franchisor approves. Brands set financial and experience requirements and usually require training before transfer.
What extra costs come with a fast food resale?
Transfer fees, required remodels or equipment upgrades, and any differences between the seller's franchise agreement and the current one.
How do I verify the unit's sales?
POS reports, royalty and ad fund statements (paid as a percentage of sales), card processor statements and bank deposits should agree.
Is the real estate included?
Sometimes the seller owns the property; often it's leased. Check the lease term against your financing and the franchise term.
What does the franchisor look at when approving a buyer?
Typically your net worth and liquidity, experience (often restaurant or multi-unit management), background checks, and a business plan; many brands also require you to complete their training program before the transfer closes. Ask the franchisor for its transfer criteria early, before you spend on diligence.
Where can I find how other units of the brand perform?
In the brand's Franchise Disclosure Document. Item 19 shows any financial performance representations the franchisor makes, and Item 20 shows outlet openings, transfers and closures, plus contact details of current and former franchisees you can call. For the specific unit you're buying, rely on its own records.
Sources
- FTC Franchise Rule, 16 CFR Part 436 (eCFR)
- SBA: Franchise Directory
- FTC Franchise Rule, 16 CFR Part 436 (FDD contents)
- FTC Franchise Rule: required disclosure items, 16 CFR 436.5
- Child labor regulations, 29 CFR Part 570
- FDA Food Code 2022
- SBA SOP 50 10 8.1 (franchise and change-of-ownership lending)
Related guides
General information, not legal, tax, financial or investment advice. Rules and lender practices change; check the linked sources and talk to your attorney, CPA and lender about your deal. Examples with named numbers are illustrations, not real businesses. OKtoBuy's Deal Check does not value businesses or give price opinions.