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Guide 8 min read Updated July 25, 2026

Cost to Start a Freddy's Frozen Custard & Steakburgers Franchise in 2026

Freddy's Frozen Custard & Steakburgers franchise startup costs run $805K–$2.0M for a fast-casual concept that combines smash-style steakburgers with fresh-frozen custard. The dual revenue stream from food and dessert in a single visit drives above-average check sizes and strong repeat visit frequency.

Freddys Frozen Custard Steakburgers franchise costs at a glance

Total investment $805,000–$2M
Franchise fee $35,000
Royalty 4.5%
Ad / marketing fee 4.5%
Liquid capital required $250,000
Net worth required $600,000
Source: Freddys Frozen Custard Steakburgers Franchise Disclosure Document (FDD) · as of 2026-07-25. Figures vary by market and site; verify against the current FDD before signing.

Key takeaways

  • Total estimated startup cost: $805,000–$2,000,000 (combo fast-casual: steakburgers + frozen custard)
  • Franchise fee: $35,000
  • Ongoing royalty: 4.5% of gross sales; advertising fund contribution applies
  • 400+ locations across the US; founded 2002 in Wichita, KS; rapidly expanding nationally
  • Listed on the SBA Franchise Directory — eligible for expedited SBA loan processing
Ready to fund your Freddy's Frozen Custard & Steakburgers franchise?

Total startup cost breakdown

Per the current FDD filed under the FTC Franchise Rule (16 CFR Part 436), total estimated initial investment for a Freddy's franchise runs $805,000–$2,000,000. The combo concept requires both burger kitchen and custard equipment infrastructure:

  • Franchise fee: $35,000
  • Real estate and building (or leasehold improvements): $300,000–$900,000 (freestanding drive-through or end-cap)
  • Burger kitchen equipment (flat-top grills, fryers, prep line): $80,000–$200,000
  • Frozen custard machines and cold equipment: $60,000–$150,000
  • Drive-through equipment and technology: $30,000–$80,000
  • Furniture, fixtures, and interior design: $50,000–$150,000
  • Signage and exterior branding: $25,000–$70,000
  • Technology and POS systems: $15,000–$40,000
  • Training and travel: $10,000–$30,000
  • Grand opening marketing: $10,000–$30,000
  • Working capital (3 months): $40,000–$100,000
  • Permits, insurance, professional fees: $20,000–$60,000

Ongoing fees

Freddy's charges a 4.5% royalty on gross sales plus advertising fund contributions. The 4.5% rate is favorable relative to many fast-casual peers — the lower royalty reflects Freddy's franchise-growth-first strategy. National advertising fund investment is growing as the footprint expands past 400 locations, providing increasing media leverage for franchisees.

Financing options

Freddy's is listed on the SBA Franchise Directory, qualifying franchisees for expedited SBA loan processing. Financing paths:

  • SBA 7(a) loan: Covers franchise fee, leasehold improvements, kitchen and custard equipment, drive-through systems, and working capital per the SBA 7(a) program. The $805K–$2M range fits within standard 7(a) loan limits.
  • SBA 504 loan: For ground-up freestanding builds or real estate purchase, SBA 504 pairs bank financing with an SBA-guaranteed debenture for fixed-asset projects up to $5.5M.
  • Equipment financing: Flat-top grills, frozen custard machines, and drive-through equipment can be financed separately over 5–7 years.
  • Working capital line of credit: Covers early ramp-up, seasonal custard revenue management, and pre-opening operating costs.
  • Multi-unit development financing: Freddy's growth model often involves multi-unit agreements — staged capital structures align draws to unit opening timelines.

Realistic ROI timeline

Fast-casual combo concepts at the $805K–$2M investment level typically target break-even within 24–42 months. Freddy's dual revenue stream from food and dessert in a single visit is a structural advantage: dessert customers who visit specifically for custard also frequently add a meal, and meal customers frequently add a custard, driving higher check averages than single-category fast-casual concepts. The 4.5% royalty and strong AUV performance among existing franchisees are frequently cited as strengths of the Freddy's system.

Who's a good fit

Freddy's suits operators with QSR or fast-casual management experience who want a high-growth dual-concept brand before it reaches saturation in their market. The $805K+ investment requires solid liquidity but is more accessible than pure freestanding drive-through QSR builds. Financial benchmarks typically include net worth of $600K+ and liquid capital of $250K+. Midwest, South, and Sun Belt operators benefit from Freddy's strong existing regional brand equity.

What lenders look for in a Freddy's franchise application

SBA-approved lenders evaluate Freddy's applications against five underwriting criteria sourced from SBA SOP 50 10 8:

  • 9% combined fee load stress test — 4.5% royalty + ~4.5% advertising fund; despite the 4.5% royalty being competitive vs. peer premium burger QSR brands, the advertising fund brings the combined load to ~9%; lenders stress-test DSCR at full fee load against conservative FDD Item 19 AUV
  • Dual-equipment collateral discount — frozen custard batch machines, smash grill equipment, drive-through systems, and refrigeration are specialized; limited liquidation market results in 50–60% collateral discount; most collateral coverage comes from leasehold build-out value
  • 20–25% equity injection at $805K–$2.0M — equity injection of $161K–$500K required; ROBS is a common equity path for operators at the lower investment tier; equity must be verified and injected before SBA loan disbursement
  • Drive-through real estate documentation — freestanding QSR builds require executed lease or land purchase agreement before SBA close; end-cap and inline formats require site plan approval from the franchisor; SBA 504 preferred for freestanding land+building acquisitions
  • FDD Item 19 AUV benchmark for dual-concept model — Freddy's strong AUV performance is a key underwriting anchor; lenders compare applicant revenue projections to FDD Item 19 system-level data; the dual food+dessert revenue stream is a favorable DSCR differentiator vs. single-category concepts

Apply for franchise financing

ClearValue Lending works with fast-casual franchise operators on SBA 7(a), SBA 504, equipment, and working capital financing. Start at small business financing or apply for franchise financing at Find my match. Your file routes to the funding partners best matched to your file.

Sources

  • Freddy's Frozen Custard & Steakburgers is listed on the SBA Franchise Directory, qualifying franchisees for expedited SBA loan eligibility review. — SBA Franchise Directory
  • SBA 7(a) loans finance fast-casual combo franchise startups including drive-through builds, kitchen equipment, frozen custard machines, and working capital. SBA 504 is available for real estate-intensive projects. — SBA 7(a) Loan Program
  • All franchise cost and fee disclosures are governed by the FTC Franchise Rule requiring a Franchise Disclosure Document (FDD) be delivered at least 14 days before signing. — FTC Franchise Rule — 16 CFR Part 436
  • Qualifying flat-top grills, frozen custard machines, and drive-through equipment placed in service during the tax year may be immediately expensed under IRS Section 179. — IRS Publication 946

Frequently asked questions

How much does a Freddy's franchise cost in 2026?
Per the current FDD, total estimated initial investment runs $805,000–$2,000,000. Real estate or build-out, kitchen equipment, frozen custard machines, and franchise fee are the primary cost drivers.
Where was Freddy's founded?
Freddy's Frozen Custard & Steakburgers was founded in 2002 in Wichita, Kansas, by Scott Redler and Bill Simon. The brand has grown to 400+ locations across the United States and is consistently ranked among the fastest-growing fast-casual chains.
What is the Freddy's royalty rate?
Freddy's charges a 4.5% royalty on gross sales plus advertising fund contributions. The 4.5% rate is favorable relative to many fast-casual peers and reflects Freddy's franchise-growth-first strategy.
Can I finance a Freddy's franchise with an SBA loan?
Yes. Freddy's is on the SBA Franchise Directory. SBA 7(a) can cover the build-out, kitchen and custard equipment, drive-through systems, franchise fee, and working capital. SBA 504 is available for ground-up freestanding builds.
Why is Freddy's a combo concept an advantage?
The dual revenue stream from steakburgers and frozen custard in a single visit drives higher per-visit check averages than standalone burger or standalone frozen dessert concepts. Custard-focused customers frequently add a meal; meal customers frequently add custard — the two menu categories are naturally cross-promotional.
What DSCR do lenders require for a Freddy's franchise loan?
SBA lenders require a minimum DSCR of 1.25× after all operating costs, royalties, and debt service. At $805K–$2.0M total investment, lenders stress-test DSCR using Freddy's FDD Item 19 systemwide AUV data and apply the full ~9% combined royalty + advertising fee load against projected gross sales before approving.
How much equity is required for a Freddy's SBA loan?
SBA lenders typically require 20–25% equity injection for QSR franchise startups. At $805K–$2.0M, that translates to $161K–$500K in equity. ROBS (Rollover for Business Startups) allows eligible borrowers to use 401(k) or IRA funds as the equity injection without triggering taxes or penalties — a common path for Freddy's operators at the lower investment tier.
Summary:

Freddy's Frozen Custard & Steakburgers franchise startup costs run $805K–$2.0M for a fast-casual concept that combines smash-style steakburgers with fresh-frozen custard. The dual revenue stream from food and dessert in a single visit drives above-average check sizes and strong repeat visit frequency.

This article is for educational purposes and is not financial, legal, or tax advice. Rates, fees, qualification requirements, and product availability are illustrative ranges that vary by lender, market conditions, and individual business profile. ClearValue Lending is a funding platform; all financing is subject to lender partner approval and terms. Always read your contract end-to-end and verify specific numbers before signing.

https://clearvaluelending.com/franchises/freddys-frozen-custard-steakburgers/cost-to-start

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