How to Finance a Federal Donuts & Chicken Franchise: Key Costs
By Anthony Cornella
A Federal Donuts & Chicken franchise loan finances a compact restaurant that sells three things all day: donuts, coffee and fried chicken. The franchisor publishes its headline numbers, which makes it easier to plan a loan request around a known franchise fee, royalty and total project cost.
This article breaks down those published figures, the franchisor’s financial requirements, how the brand’s SBA Franchise Directory listing works and which loan structures fit new and existing locations.
US Professional Funding is not affiliated with, sponsored by or endorsed by Federal Donuts & Chicken; the name is used only to describe the business. Figures from the franchisor’s website and disclosure document can change, loan programs and terms vary, and every loan is subject to review and approval. Nothing here is legal, tax or investment advice, and buyers should review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Federal Donuts & Chicken Franchise Loan at a Glance
- Franchise fee: $50,000, according to the franchisor’s franchising website.
- Royalty: 6%.
- Advertising fee: 2%.
- Total project cost: $592,000 to $747,500.
- Financial requirements: net worth of at least $500,000 and $200,000 in liquid capital.
- Typical unit: small footprint averaging 1,500 square feet, with non-traditional options such as stadiums, airports and food trucks.
- Founded: 2011.
- SBA Franchise Directory: listed as Federal Donuts and Chicken (code S8156), with one note on lease assignment explained below.
What Is Federal Donuts & Chicken?
Federal Donuts & Chicken was founded in 2011 by award-winning restaurateurs Michael Solomonov and Steve Cook. The concept pairs fresh donuts and coffee in the morning with fried chicken later in the day, giving a single small shop several sales peaks. The brand’s chief executive is Jeff Benjamin.
The franchisor describes three revenue streams (donuts, coffee and chicken) and an average unit size of 1,500 square feet. Beyond traditional storefronts, it lists non-traditional venues such as stadiums and airports, along with food trucks, and it markets open territory across the US.
Why lenders view the brand the way they do. Lenders see a chef-founded brand with strong name recognition in its home market and published, mid-range investment figures. Because franchising beyond its home market is still developing, lenders will weigh the operator’s experience and the specific site heavily, and they will want projections built around a multi-daypart menu rather than a single meal period.
Federal Donuts & Chicken Franchise Costs
Initial franchise fee. The franchising website lists a $50,000 franchise fee. Item 5 of the FDD confirms when it is due, whether any portion is refundable and whether reduced fees apply to additional units. Because the fee is usually paid at signing, most buyers fund it from personal cash rather than loan proceeds.
Real estate and build-out. A 1,500-square-foot unit keeps rent and construction more manageable than a large restaurant, but a fryer-heavy kitchen still needs a hood, fire suppression, grease management and adequate electrical and gas service. Second-generation restaurant space with existing ventilation can reduce costs. Our article on restaurant build-out financing explains how construction draws work.
Equipment. Expect donut fryers and proofing equipment, chicken fryers, glazing and finishing stations, espresso and brewed coffee equipment, refrigeration, display cases and a point-of-sale system.
Opening costs and working capital. Opening inventory, training, pre-opening payroll, grand opening marketing, deposits, insurance and funds for the first months of operation all belong in the budget.
Total investment. The franchising website lists a total project cost of $592,000 to $747,500. Item 7 of the FDD breaks the total into line items with their own ranges and assumptions. Expect categories such as:
- Initial franchise fee
- Leasehold improvements and construction
- Kitchen, coffee and display equipment
- Furniture, fixtures and signage
- Point-of-sale and technology
- Opening inventory and supplies
- Rent, deposits, utilities and insurance
- Additional funds for the initial operating period
Compare each Item 7 line with real landlord and contractor quotes for your site, since build-out costs vary widely by market.
Ongoing Fees and Your Federal Donuts & Chicken Franchise Loan
Royalty and advertising. The franchisor lists a 6% royalty and a 2% advertising fee. Both are calculated on the revenue base the FDD defines and are paid before rent, labor, food costs or debt.
Other fees. Item 6 of the FDD lists any technology, transfer, renewal or training fees, plus any local marketing requirement. Check the franchise agreement for remodel or refresh obligations too.
How lenders factor fees into cash flow. Lenders deduct royalty and advertising contributions from projected sales before measuring cash available for debt service. Because donuts are produced early in the day and chicken later, labor scheduling and food waste also deserve careful modeling.
Franchisor Requirements for New Owners
The franchising website states that a franchisee must have a net worth of at least $500,000 and $200,000 in liquid capital to invest. Those are franchisor minimums; a lender will separately look at how much liquidity remains after the equity injection and franchise fee.
The approval process. The franchisor outlines six steps: learn about the brand and connect with the team and existing franchisees, attend a Discovery Day, sign the franchise agreement, find, build out and market a location, complete operational training, and open with ongoing support. It also lists support for site selection, construction coordination, pre-opening training and connections with financing partners.
Start talking with a financing specialist once you receive the FDD, so loan review can run alongside franchisor approval and site selection. Our article on how much franchise you can afford can help you test the numbers.
Ways to Own a Federal Donuts & Chicken
A new traditional location. Most buyers will open a new storefront, financing the franchise fee, build-out, equipment and working capital without operating history. See how we approach franchise start-up financing.
Non-traditional venues. Stadium, airport and food truck formats can carry different costs, revenue patterns and contract terms. A venue concession agreement may replace a conventional lease, and lenders will review its length and termination rights closely.
Buying an existing location. If a franchised unit comes up for sale, the buyer gains operating history but needs franchisor approval of the transfer. Lenders will review historical financials, the lease and the remaining franchise term.
Financing Options for a Federal Donuts & Chicken Franchise
SBA 7(a) loans. Because the brand is on the SBA Franchise Directory, an SBA 7(a) loan can finance the franchise fee, build-out, equipment and working capital for a new unit, or the purchase of an existing one, subject to underwriting.
SBA 504 loans. If you buy the building or a long-lived fixed asset, an SBA 504 loan may fit. Most 1,500-square-foot storefronts are leased, so 504 financing matters mainly for owner-occupied real estate.
Conventional term loans. Experienced operators with strong credit and collateral may consider conventional business loans, especially when adding units.
Equipment financing. Fryers, proofers, espresso machines and refrigeration can often be financed separately to preserve cash for opening. Learn about restaurant equipment financing and leasing.
Working capital and lines of credit. New locations need cash for pre-opening payroll, inventory and marketing, and a cushion for the ramp-up period. Our restaurant working capital options can help bridge those months.
Seller financing on resales. When buying an existing unit, a seller may carry part of the price. Seller notes are typically subordinate to the primary loan, and SBA rules may limit how they are structured.
SBA Loans for Federal Donuts & Chicken Franchisees
SBA lenders rely on the SBA Franchise Directory to confirm that a brand’s franchise documents are eligible for SBA financing. A listing does not approve any borrower; it clears the franchise relationship so the lender can focus on the deal. The SBA 7(a) program maximum is currently $5 million, though program rules can change.
The brand’s directory listing. The brand is listed as Federal Donuts and Chicken under code S8156, with one note: when the real estate where the franchise is located will secure the SBA-guaranteed loan, the Collateral Assignment and Assumption of Lease may not be executed. In plain English, if the owner or an affiliate owns the building and pledges it as collateral, the franchisor’s lease assignment document is not used for that location. For a typical leased storefront, the note has little practical effect.
SBA application tips. Prepare tax returns, a personal financial statement, a resume, the FDD and franchise agreement, a lease or letter of intent, contractor bids and monthly projections. Early payment estimates from our SBA loan calculator are for planning only and are not an offer or approval.
How Lenders Evaluate a Federal Donuts & Chicken Deal
Personal credit and financial history. Lenders review credit, tax returns and existing debts, and owners with significant stakes typically sign a personal guarantee.
Net worth and liquidity. Meeting the franchisor’s $500,000 net worth and $200,000 liquidity minimums is the starting point. Lenders also want reserves after closing.
Industry and management experience. Food service management experience, especially with high-volume frying, early-morning production and coffee service, strengthens an application.
Business plan and projections. Build sales by daypart: morning donut and coffee traffic, lunch and dinner chicken orders, and catering or delivery. Deduct the 6% royalty and 2% advertising fee, and include a ramp-up period.
The FDD and franchise agreement. Lenders review the term, renewal and transfer provisions, territory rights, fees and the franchisor’s financial statements. Check Item 19 to see whether the FDD includes financial performance representations, and Item 10 for any franchisor financing.
Site and lease. Lenders want a lease term at least as long as the loan, rent that fits projected sales and landlord approval for fryer ventilation. For non-traditional venues, they review the concession or license agreement.
Multi-Unit Growth and Development Agreements
The franchisor markets open territory across the US, which may appeal to operators planning several locations in one market. A development agreement can secure territory but sets an opening schedule. Read more about multi-unit franchise financing.
Financing additional units. Once the first location has operating history, lenders can underwrite its cash flow alongside the next. Pace openings so reserves are not spread across several build-outs at once.
Real-World Scenarios
A first-time owner with restaurant experience. A former restaurant general manager meets the franchisor’s minimums, signs for one storefront and uses an SBA 7(a) loan for build-out, equipment and working capital, paying the franchise fee from savings.
An existing multi-brand operator. An operator of other food franchises adds Federal Donuts & Chicken, financing equipment separately and using a conventional term loan supported by existing cash flow.
A non-traditional venue. A franchisee opens inside a large venue under a concession agreement. The lender reviews the agreement’s length and termination rights before sizing the loan.
Common Mistakes to Avoid
- Treating the published total project cost as a fixed price instead of a range to test with real quotes
- Forgetting that the 6% royalty and 2% advertising fee come off the top of sales
- Underestimating ventilation and fire suppression costs for two frying operations
- Building projections around one daypart instead of morning and afternoon traffic
- Leaving too little working capital after meeting the $200,000 liquidity requirement
- Signing a lease or concession agreement shorter than the loan term
Read more about restaurant loan mistakes that slow down approvals.
Next Steps to Finance Your Federal Donuts & Chicken Franchise
Step 1: Confirm you meet the requirements. Verify that you have at least $500,000 in net worth and $200,000 in liquid capital.
Step 2: Review the FDD. Study Items 5, 6, 7, 10, 17 and 19 with a franchise attorney and accountant.
Step 3: Attend Discovery Day. Meet the team and talk with existing franchisees.
Step 4: Choose a site. Look for morning and afternoon traffic, then confirm ventilation and lease terms.
Step 5: Build projections and talk to a financing specialist. Model sales by daypart and decide between SBA 7(a), conventional and equipment financing.
Step 6: Apply, close and open. Submit your documents and coordinate closing with construction and training.
Federal Donuts & Chicken Franchise Loan FAQs
How much does a Federal Donuts & Chicken franchise cost?
The franchising website lists a total project cost of $592,000 to $747,500. Item 7 of the current FDD gives the detailed breakdown.
What is the franchise fee?
The franchise fee is $50,000, according to the franchisor’s website.
What royalty and advertising fees apply?
The franchisor lists a 6% royalty and a 2% advertising fee.
How much net worth and liquid capital do I need?
At least $500,000 in net worth and $200,000 in liquid capital, according to the franchisor.
Is the brand eligible for SBA loans?
Yes. It is listed on the SBA Franchise Directory as Federal Donuts and Chicken under code S8156, subject to normal underwriting.
How big is a typical location?
The franchisor lists an average unit size of 1,500 square feet.
Can I open in an airport or stadium?
The franchisor lists stadiums, airports and food trucks as non-traditional options. Financing depends on the venue agreement.
Can a first-time owner get a Federal Donuts & Chicken franchise loan?
Yes, if the franchisor approves you and you show management experience, good credit and enough liquidity.
Does the franchisor offer financing?
The franchisor says it provides connections with financing partners. Review Item 10 of the FDD for any direct financing.
How long is the franchise agreement?
The term, renewal and transfer conditions appear in Item 17 of the FDD. Lenders generally want the remaining term to be at least as long as the loan.
Final Thoughts
A Federal Donuts & Chicken franchise loan starts with clear published numbers: a $50,000 fee, a 6% royalty, a 2% advertising fee and a $592,000 to $747,500 project cost. Test those figures against real quotes, model every daypart and keep reserves for the ramp-up.
US Professional Funding helps franchise owners and buyers finance start-ups, equipment and working capital. Learn more about our franchise financing and restaurant financing solutions.
