Culver's ButterBurgers & Frozen Custard
Single Unit | Area Development
We were originally incorporated in the State of Wisconsin on July 24, 1987, under the name Culver Franchising System, Inc. In October 2017, we converted from a Wisconsin corporation to a Wisconsin limited liability company, and changed our name to Culver Franchising System, LLC. Our parent company is Culver Franchising System Deluxe, LLC, whose parent company is Culver Franchising System Holdco, LLC, whose parent company is Culver Franchising Holdings, LLC, whose parent company is Culver Holdings, Inc. Our principal place of business and our parent companies’ principal places of business are 1240 Water Street, Prairie du Sac, Wisconsin 53578. The telephone number is (608) 643-7980 and our website is www.culvers.com. We do business under our corporate name and under the name “Culver’s®.” Several related entities assist us in providing the first part of the training program to new franchisees (See Item 11) and are considered “affiliates” of CFS. We own GoCulv, LLC (“GoCulv”), CulvCo, LLC (“CulvCo”), and MidCul, LLC (“MidCul”). GoCulv currently operates three Culver’s® Restaurants, with one in Sauk City, Wisconsin, one in Richland Center, Wisconsin, and one in Spring Green, Wisconsin. CulvCo currently operates the Culver’s® Restaurant in Baraboo, Wisconsin. MidCul currently operates two Culver’s® Restaurants, with one in Middleton, Wisconsin and one in Madison, Wisconsin. We do not directly operate any Culver’s® Restaurants. GoCulv, CulvCo and MidCul assist us in providing the first part of the training program to new franchisees. None of these affiliates have ever offered franchises in this or any other line of business. The address for each of GoCulv, CulvCo, and MidCul is 1240 Water Street, Prairie du Sac, Wisconsin 53578.
The first Culver’s® Restaurant opened on July 18, 1984, in Sauk City, Wisconsin. Culver Enterprises, Inc. (“CEI”), our predecessor, owned and operated this Restaurant until 1994 when it transferred the assets of the Restaurant to a relative of our Chief Executive Officer and entered into a franchise agreement for the Restaurant. In 1996, we acquired the assets of this Restaurant. In 1997, we transferred the assets of this Restaurant and two other Culver’s® Restaurants to Culver’s Corporate Custard, Inc. (“CCCI”), which has since then been merged into CFS. In 2000, CCCI opened a fourth Culver’s® Restaurant. In 2001, CCCI transferred the assets of these four Culver’s® Restaurants to GoCulv. GoCulv sold one of the Culver’s® Restaurants in August 2004. GoCulv currently owns and operates three Culver’s® Restaurants. CulvCo acquired the assets of the Baraboo, Wisconsin Culver’s® Restaurant in August 2001, and has operated that Culver’s® Restaurant since that date. MidCul acquired the assets of the Middleton, Wisconsin Culver’s® Restaurant in June 2004 and opened the Madison, Wisconsin Culver’s® Restaurant in March 2016, and has been operating these Culver’s® Restaurants since those dates. We have conducted a business of the type to be operated by you, directly or through our predecessor or affiliate, since 1984. We have offered franchises for businesses similar to the type offered in this disclosure document since 1990. We have not offered franchises in any other line of business. Other than as described above, we have no affiliates, parents or predecessors required to be disclosed in this Item.
We grant you the right to operate a Culver’s® restaurant (the “Restaurant”) within a certain geographic area (the “Designated Territory”). Your Restaurant will offer burgers, sandwiches, salads, dinners, frozen custard desserts, beverages and other menu items for drive-thru, carryout and on-site consumption in a quick-service, casual dining setting. In addition, in certain limited instances and subject to certain restrictions, we may allow you to offer certain menu items at locations other than the Restaurant premises within your Designated Territory. You must prepare the menu items in accordance with our specified recipes and serve in accordance with our specified standards. Each Restaurant operates under the name Culver’s® and other marks as we designate (“Marks”). You must operate your Restaurant under the Culver’s® System (the “System”). The System is characterized by distinctive layout, service style, design, signs, decor, furnishings, recipes, procedures and techniques, all of which we may change. We offer a “Mentoring Program” to existing franchisees who wish to open an additional Culver’s® Restaurant together with a General Manager or employee of the franchisee’s existing Restaurant who is performing the duties of a General Manager. The program allows an existing franchisee, subject to certain requirements, to enter into an additional Franchise Agreement for a reduced fee, as further described in Item 5. An existing franchisee that is granted a franchise under the Mentoring Program must sign the Franchise Agreement attached to this disclosure document as Exhibit B, together with the Mentoring Program Addendum, attached to this disclosure document as Exhibit I. We also may offer you the opportunity to enter into a Franchise Agreement for an additional Restaurant and pay a reduced initial franchise fee, so long the previous franchise agreement provides for the opportunity and you meet certain criteria, as further explained in Item 5. We offer this opportunity to those franchisees that sign the Franchise Agreement attached as Exhibit B and pay the initial franchise fee as described in Item 5 of this disclosure document. Except for the initial franchise fee, which will be modified to reflect the amount detailed in Item 5, the additional franchise for existing Culver’s® franchisees is the same as a Culver’s® franchise operated by someone new to the System. In addition, we may offer certain existing Culver’s® franchisees that meet our criteria an opportunity to reserve a territory, as further described in Item 12 (“Territory Reservation Agreement”). If you sign a Territory Reservation Agreement with us, you can reserve the right, for 24 months, to develop a Culver’s® Restaurant in a defined area for a fee of $20,000. We also offer multiple unit development agreements to existing Culver’s® franchisees that meet our criteria, or under certain limited circumstances, to a new franchisee that meets our criteria, as further described in Item 5 (“Development Agreement”). If you sign a Development Agreement, you will receive the right to open a certain number of Restaurants over a defined period of time in a defined area, as we determine, on the basis of the market potential and the size of the designated area. The term of your Development Agreement generally will not be longer than 5 years.
Individual Franchise Agreement If you are new to the System, you must pay an initial franchise fee of $55,000. You will first sign a “Preliminary Agreement” attached to this disclosure document as Exhibit F, and you must pay an “Application Fee” of $5,000 to defray some of the cost of initial evaluation, processing of the application and background investigation. If you are approved as a Culver’s® franchisee, the Application Fee will be credited towards the initial franchise fee as described below. If you are not approved, this fee will be refunded. You must sign a separate Franchise Agreement for each Restaurant you open. You do not receive any right or interest to develop or operate additional Restaurants, except as described below. If we approve you as a Culver’s® franchisee, you must sign a Franchise Agreement within 18 months of the notice of operational approval and pay the balance of the initial franchise fee to us at that time. If you do not sign a Franchise Agreement within 18 months after we notify you in writing that you have received operational approval, we will refund your Application Fee and terminate the application process for a Culver’s® franchise, or you may reapply to become a Culver’s® franchise and your Application Fee becomes nonrefundable. If your Franchise Agreement provides for this opportunity, we may offer you the opportunity to develop and operate an additional Culver’s® franchise during the initial term of your first Culver’s® Franchise Agreement for the fee of $45,000 provided the Operator (as defined in Item 15) for the additional Culver’s® Restaurant is the same Operator as the first Culver’s® Restaurant, you are in complete compliance with your Franchise Agreement, and meet our then-current qualifications (among other things, financial stability, operations ability and management skills). We reserve the right to determine whether you meet these and other qualifications. If we permit you to open an additional Restaurant, we will waive your obligation to sign the Preliminary Agreement and will waive the Application Fee. Otherwise, the process of selecting a site and entering into a franchise agreement is the same as that described above. We also currently offer a “Mentoring Program,” as described in Item 1, for certain individuals who have worked as a General Manager or who have performed the duties of a General Manager at an existing Culver’s® Restaurant(s) for at least one year (“Key Manager”). In these instances we may grant existing franchisees, as mentors, an additional franchise for a reduced initial franchise fee provided that the existing franchisee and the Key Manager meet certain ownership requirements in the franchisee entity. In addition, the Key Manager must satisfy our then-current approval process for new franchisees and must successfully complete a skills assessment and evaluation course and any other training we may require. A Key Manager may only participate under the Mentoring Program once as a mentee candidate. We reserve the absolute right to determine whether anyone may participate as a mentor or a mentee in our Mentoring Program and may deny participation for any reason. Currently, if you qualify for the Mentoring Program, the initial franchise fee is $30,000. We also currently offer a “Veterans’ Discount”, whereby we will reduce the initial franchise fee by $10,000 for qualified franchisees. In order to qualify for the Veterans’ Discount you must be an honorably discharged United States veteran with a form DD 214, you must be opening your first Restaurant, and you must be the full-time on-site owner-operator and personally manage the Restaurant. We reserve the absolute right to determine whether you qualify to receive the Veterans’ Discount and we may deny this discount or modify this discount at any time for any reason. One of the distinguishing features of the Culver’s® franchise is that you have the right to terminate the Franchise Agreement at any time before attending your fifth week of the 16-week management training program (described in Item 11), provided you comply with the post-term obligations and sign a release. Should you decide to terminate the franchise relationship with us before the start of your fifth week of the management training program, you must provide us with written notice, and we will refund 75% of your initial franchise fee. Except as described in this Paragraph and above, the initial franchise fee (including deposits) is not refundable. Territory Reservation Agreement As described in more detail in Item 12, certain existing Culver’s® franchisees may be offered the opportunity to enter into a “Territory Reservation Agreement” with us in the form attached as Exhibit G to this disclosure document. If you sign a Territory Reservation Agreement with us, you can reserve the right, for 24 months, to develop a Culver’s® Restaurant in a defined area for a fee of $20,000. This fee is in addition to any initial franchise fee and is not refundable, however, if you secure a site and sign a Franchise Agreement within 12 months of the date that you sign the Territory Reservation Agreement, $10,000 of your Territory Reservation Agreement fee will be applied toward your initial franchise fee. Development Agreement If you are an existing Culver’s® franchisee, or under certain circumstances, a new franchisee, we may offer you the opportunity to develop several Restaurants within the Designated Area (as defined in Item 12) under a Development Agreement if you are in compliance with your current Franchise Agreement (if applicable), and you meet our then-current qualifications (among other things, financial criteria, operations ability and management skills). If you sign a Development Agreement, the “Territory Fee” is $10,000 for each Restaurant you agree to establish under the “Development Schedule” described in the Development Agreement. The Territory Fee for each Restaurant is in addition to the initial franchise fee due under each Franchise Agreement. The Territory Fee is not refundable under any circumstances.
We do not offer direct or indirect financing. We do not receive payments or other consideration for the placing of financing or guarantee any note, lease or other obligation you may enter into or incur.
PART 1 – SCHEDULE OF RESTAURANT FINANCIAL DATA The following information discloses sales of the 630 franchised Culver’s® Restaurants (“Franchised Restaurants”) and the 6 company-owned Culver’s® Restaurants (“Company-Owned Restaurants”) open for the entire 12 month period ended December 31, 2018, and also selected cost percentages for the 6 CompanyOwned Restaurants, for the entire 12 month period ended December 31, 2018. This includes information about non-traditional locations (including 2 Culver’s® Restaurants that do not have a drive thru window, 5 Culver’s® Restaurants that share a building with a convenience store, and 1 Culver’s® Restaurant that occupies an end-cap of a multi-tenant building). The following information does not include information from the 46 franchised Culver’s® Restaurants open as of December 31, 2018, but that were not open as of January 1, 2018, and therefore did not operate for the entire 12-month period, nor does it include information from 3 franchised Culver’s® Restaurants that were closed for a period of time during 2018 due to a substantial remodel, rebuild or relocation of the Restaurant, 1 franchised Culver’s® Restaurant that was closed for a period of time during 2018 due to damage to the Restaurant, or 1 franchised Culver’s® Restaurant that ceased operations in 2018, and therefore none of these Restaurants operated for the entire 12- month period. The Company-Owned Restaurants are located in Sauk City, Spring Green, Richland Center, Baraboo, Middleton and Madison, Wisconsin. The buildings housing the Company-Owned Restaurants are singlepurpose, one story and freestanding, seating 88 to 120 guests at one time, which is comparable to the Culver’s® Restaurants expected to be operated under the Franchise Agreement. Substantially the same services were offered to the Company-Owned Restaurants as are provided to the Franchised Restaurant. We do not, however, provide certain services to franchisees such as financing, accounting, legal, personnel, construction, management, financial and food and labor cost systems. The Company-Owned Restaurants also offered substantially the same products and services to the general public as will the Culver’s® Restaurants to be operated under the Franchise Agreement. The following tables were prepared on a basis consistent with generally accepted accounting principles and the same accounting system was used for each Company-Owned Restaurant. The figures used in the tables are based on an annual performance. The information presented in the tables has not been audited, and we have not independently verified that the information provided by Franchised Restaurants is correct. PART 2 – AVERAGE SALES INFORMATION The following tables disclose the average Franchised Restaurant sales sorted by certain geographic and demographic factors, including average Franchised Restaurant sales by state, designated market area, metropolitan area, proximity to an interstate, and population, household incomes and employees within a 3- mile radius surrounding the Franchised Restaurants, and number of eating places within a 1-mile radius surrounding the Franchised Restaurants. The information is based on 622 Franchised Restaurants open during the entire 12 month period ending December 31, 2018, and does not include the 46 Franchised Restaurants that first opened during 2018, 3 Franchised Restaurants that were closed for an extended period of time during 2018 due to a reimage remodel, rebuild or relocation of the Restaurant, 1 franchised Culver’s® Restaurant that was closed for a period of time during 2018 due to damage to the Restaurant, or 1 franchised Culver’s® Restaurant that ceased operations, and the 8 Franchised Restaurants that are non-traditional locations (including 2 Franchised Restaurants that do not have a drive thru window, 5 Franchised Restaurants that share a building with a convenience store, and 1 Franchised Restaurant that occupies an end-cap of a multi-tenant building). The sales information is not audited and we have not independently verified that the information provided by Culver’s® franchisees is correct. This business list contains data for nearly 12.5 million United States businesses and is current as of February 2018. We have not independently confirmed the data. Some Restaurants have earned this amount. There is no assurance you’ll do as well. If you rely upon our figures you must accept the risk of not doing as well. Written substantiation of the data is available upon request. Other than the preceding financial performance representation, we do not make any financial performance representations. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting Steve Anderson at Culver Franchising System, LLC, 1240 Water Street, Prairie du Sac, Wisconsin 53578, (608) 644-2155, the Federal Trade Commission, and the appropriate state regulatory agencies.