How to Finance a Lenny’s Grill & Subs Franchise: Costs and SBA
By Marc Cornella
A Lenny’s Grill & Subs franchise loan funds a fast-casual sandwich shop known for Philly cheesesteaks, deli subs and catering. The franchisor reports a total investment of $283,826 to $582,744, and the spread depends largely on whether you open in a strip center, a free-standing building or a drive-thru format.
This article covers the brand’s background, its published fees, how ongoing costs affect loan payments, its SBA Franchise Directory listing and how owners finance a new restaurant, an existing location or several units.
US Professional Funding is not affiliated with, sponsored by or endorsed by Lenny’s Grill & Subs; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs and terms vary, and every loan is subject to approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a franchise attorney and an accountant.
Lenny’s Grill & Subs Franchise Loan at a Glance
- Initial franchise fee: $25,000 for a single-unit franchise agreement, with multi-unit and veteran incentives available.
- Royalty and advertising: a 6% royalty plus a 2% advertising fee.
- Total investment: $283,826 to $582,744, as reported by the franchisor.
- Training: four weeks of hands-on training in a certified training restaurant plus one week at Lennys University in Memphis.
- Franchisor financing: the franchisor says it does not offer direct financing.
- SBA Franchise Directory: listed as Lenny’s Grill & Subs under code S1001, with no additional notes.
What Is Lenny’s Grill & Subs?
The brand opened its first restaurant in the Memphis area in 1998 and has operated as a franchise system since 2001. Its menu centers on Philly cheesesteaks cooked on the grill, Italian subs made with prosciutto, Mile-High Turkey subs and fresh-sliced deli sandwiches, along with catering.
Where it operates. The company describes its footprint as the Southeastern and South Central United States and lists Florida, Tennessee, Texas, Georgia, Mississippi, Alabama and North Carolina as target growth states.
Restaurant formats. The franchisor’s financial performance table groups restaurants by format: airport, strip center, strip center drive-thru, free-standing, free-standing drive-thru and convenience-store drive-thru. Each format carries different build-out and real estate costs.
Ordering channels. Restaurants offer dine-in, takeout, catering, online ordering and app ordering. A downtown Pensacola restaurant that opened in July 2026 added a late-night walk-up window, which the company called a first for the system.
How lenders see the concept. A grill-based sub shop has a simpler kitchen than a full-service restaurant, but it still carries real equipment and build-out costs. Lenders focus on site quality, the format you choose and your restaurant management experience.
Lenny’s Grill & Subs Franchise Costs
The franchisor reports a total investment range of $283,826 to $582,744. Its franchise pages do not publish the full Item 7 table, so request the current FDD to see each line item and confirm which formats sit at the low and high ends.
Initial franchise fee. The fee is $25,000 for a single unit. Ask how the multi-unit and veteran incentives reduce it.
Real estate and build-out. Inline strip-center units typically need less construction than free-standing or drive-thru buildings, which need site work, a drive-thru lane and more extensive permitting. Our page on restaurant build-out financing explains how lenders handle these costs.
Equipment. Flat-top grills, refrigeration, slicers, prep tables, a hood system, point-of-sale and ordering technology, and drive-thru equipment where applicable.
Opening costs and working capital. Opening inventory, training travel for the five weeks of training, grand-opening marketing, insurance, deposits and early payroll belong in the budget, along with the additional funds Item 7 lists.
Item 7 categories to confirm. When you receive the FDD, map these categories to your loan request:
- Initial franchise fee
- Real estate, lease deposits and rent before opening
- Leasehold improvements or construction
- Kitchen equipment, furniture and signage
- Technology and point-of-sale systems
- Opening inventory and supplies
- Training expenses and grand-opening marketing
- Additional funds for the initial period
For a broader view of start-up budgeting, see our page on franchise start-up financing.
Ongoing Fees and How They Affect Your Loan
Royalty. The royalty is 6% of sales, as reported by the franchisor. Because it is a percentage, it rises in busy months and falls in slower ones, which softens its effect on cash flow during ramp-up.
Advertising. The advertising fee is 2% of sales. Together with the royalty, roughly eight cents of every sales dollar goes to royalty and advertising before food, labor and rent.
Other fees. Check Item 6 for technology, training and transfer fees, and read the franchise agreement for remodel obligations.
How lenders factor these costs in. Lenders subtract the combined royalty and advertising fees, food and paper costs, labor, rent and other expenses from projected sales to see what remains for loan payments. A Lenny’s Grill & Subs franchise loan is sized so that payments fit within that remaining cash flow with a cushion.
Franchisor Requirements for New Owners
The franchisor’s own pages list different minimum net worth and liquid capital figures, so ask for the current requirements in writing. The company says restaurant experience is preferred but not required.
The approval process. Expect an application, introductory calls, delivery of the FDD, conversations with existing owners and a visit to the franchisor. After approval, you will complete four weeks of hands-on training in a certified training restaurant and one week at Lennys University in Memphis.
Ways to Own a Lenny’s Grill & Subs
Build a new restaurant. A new unit is financed on projections, so lenders focus on your experience, liquidity and site.
Buy an existing location. The franchisor says it has existing locations available for sale and offers package deals for buying an existing restaurant or building a new one. Resales are underwritten on historical sales and tax returns. See our page on franchise restaurant acquisition financing.
Develop multiple units. Multi-unit development agreements come with incentives and are aimed at experienced operators.
Financing Options for a Lenny’s Grill & Subs Franchise
SBA 7(a) loans. An SBA 7(a) loan can combine the franchise fee, build-out, equipment and working capital.
SBA 504 loans. For free-standing or drive-thru buildings you buy, an SBA 504 loan can finance the land, building and long-lived equipment.
Conventional term loans. Experienced operators may qualify for conventional business loans.
Equipment financing. Grills, refrigeration, slicers and drive-thru equipment can be financed separately. Learn more about restaurant equipment financing.
Working capital and lines of credit. A reserve covers payroll, inventory and marketing during ramp-up. See restaurant working capital.
Seller financing on resales. A seller may carry part of the price on a note. Seller notes are typically subordinate to the main loan, and SBA rules may limit how they are structured.
SBA Loans for Lenny’s Grill & Subs Franchisees
The brand is listed on the SBA Franchise Directory under code S1001 with no additional notes, so qualified borrowers can apply for SBA-backed financing without special document requirements tied to the listing.
Program limits. The SBA 7(a) program maximum is currently $5 million, although program rules can change. That leaves room for a single unit and, for some borrowers, additional units.
Application tips. Gather the FDD, franchise agreement, lease or purchase contract, equipment quotes, projections, personal financial statements and tax returns. Use our SBA loan calculator to estimate payments.
How Lenders Evaluate a Lenny’s Grill & Subs Deal
Personal credit and financial history. Lenders reviewing a Lenny’s Grill & Subs franchise loan look for solid credit and a clear explanation of any past issues.
Net worth and liquidity. Lenders want to see the source of your equity injection and enough reserves after closing.
Restaurant experience. Experience is preferred by the franchisor and valued by lenders. Without it, plan to hire an experienced manager.
Business plan and projections. Projections should reflect your format, catering potential and local competition.
The FDD and franchise agreement. Lenders review Items 5, 6 and 7, Item 17 terms and the Item 19 financial performance representations the franchisor says its most recent FDD includes.
Site and real estate. Drive-thru access, visibility, parking and lease terms all matter.
For resales. Expect a review of historical sales, tax returns and equipment condition.
Choosing a Format: Inline, Free-Standing or Drive-Thru
Format is the single biggest decision in a Lenny’s Grill & Subs franchise loan. An inline strip-center unit is usually leased, so the loan covers improvements, equipment and working capital, and an SBA 7(a) loan often fits. A free-standing or drive-thru unit may involve buying or ground-leasing a pad site, adding site work, a drive-thru lane and a larger building.
When real estate is part of the deal, lenders look at the property’s appraised value, the site’s traffic and access, and whether the building could be reused by another tenant. Owning the property can mean a longer amortization for that portion of the debt, but it also raises the total project cost and the equity you need.
Convenience-store drive-thru and airport units appear in the franchisor’s format list as well. These non-traditional sites often involve agreements with a host property, so lenders will want to review those agreements alongside the franchise agreement.
Kitchen Equipment and Catering
The grill line is the heart of the restaurant. Flat-top grills for cheesesteaks, slicers for fresh-sliced deli meats, refrigerated prep tables, walk-in or reach-in coolers and a ventilation hood are core equipment, and a drive-thru adds headsets, timers and a pickup window. Equipment financing lets you match payments to the useful life of each item and keep more cash available.
Catering is a meaningful part of the menu, so plan working capital for larger food orders, packaging and delivery logistics. Lenders reviewing a Lenny’s Grill & Subs franchise loan will want projections that separate in-store, digital and catering sales.
Multi-Unit Growth and Development Agreements
Development agreements set an opening schedule and come with incentives. Lenders usually finance each unit separately after reviewing the first restaurant’s performance. Our article on multi-unit franchise financing explains how operators plan for growth.
Real-World Scenarios
A first-time owner. A former restaurant manager opens a strip-center unit with an SBA 7(a) loan and equipment financing.
A drive-thru developer. An operator buys land for a free-standing drive-thru and uses SBA 504 financing for the building.
A resale buyer. A buyer acquires an existing location with a seller note subordinate to the main loan.
A veteran owner. A veteran uses the franchisor’s veteran incentive and an SBA 7(a) loan to open a first unit.
Common Mistakes to Avoid
- Assuming the low end of the investment range fits a drive-thru format.
- Underestimating build-out time and working capital.
- Signing a lease before franchisor and lender review.
- Ignoring the combined 8% royalty and advertising fees in projections.
For more, read our article on restaurant loan mistakes.
Next Steps to Finance Your Lenny’s Grill & Subs Franchise
Step 1: Request the FDD. Review Items 5 through 7, 17 and 19 with your attorney.
Step 2: Confirm requirements. Ask for the current net worth and liquidity minimums in writing.
Step 3: Choose a format and site. Compare strip-center, free-standing and drive-thru options.
Step 4: Talk to owners. Ask about build-out, staffing and catering.
Step 5: Build your plan. Turn Item 7 into a budget and projections.
Step 6: Apply for financing. Submit your loan package with the FDD, site documents and quotes.
Lenny’s Grill & Subs Franchise Loan FAQs
How much does a Lenny’s Grill & Subs franchise cost?
The franchisor reports a total investment of $283,826 to $582,744.
What is the franchise fee?
The fee is $25,000 for a single unit, with multi-unit and veteran incentives.
What royalty does Lenny’s Grill & Subs charge?
The royalty is 6%, plus a 2% advertising fee.
How much liquid capital do I need?
The franchisor’s pages show different figures, so confirm the current minimums in writing.
Can I get an SBA loan for a Lenny’s Grill & Subs franchise?
Yes. The brand is listed on the SBA Franchise Directory under code S1001.
Does the franchisor offer financing?
The franchisor says it does not offer direct financing. Item 10 of the FDD confirms the details.
Do I need restaurant experience?
It is preferred but not required.
Can I buy an existing location?
Yes. The franchisor says some existing locations are available for sale.
How long is training?
Four weeks in a certified training restaurant plus one week at Lennys University in Memphis.
Can I finance kitchen equipment separately?
Yes. Grills, refrigeration and drive-thru equipment can be financed with equipment loans or leases.
Final Thoughts
Lenny’s Grill & Subs combines a grill-centered menu with several restaurant formats, which makes site and format the biggest drivers of your loan size. Confirm the current FDD figures and plan for a working capital cushion.
US Professional Funding helps restaurant franchisees compare SBA, conventional and equipment financing. Learn more about our franchise financing and restaurant financing solutions.
