How to Finance a Runza Franchise: Real Estate and Liquidity Rules
By Chris Cornella
A Runza franchise loan usually funds more than a kitchen and a dining room. Runza restaurants are drive-thru buildings on their own lots, and the brand’s published investment range runs from under $1 million to more than $3 million depending largely on whether the owner buys the land and builds. That makes real estate strategy the first financing decision for most candidates.
This article covers Runza’s costs and owner requirements, why its SBA status points buyers toward conventional financing, and how to structure loans for the land, building, equipment and opening.
US Professional Funding is not affiliated with, sponsored by or endorsed by Runza; the name is used only to describe the business. Figures from the franchisor’s disclosure document and website can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Runza Franchise Loan at a Glance
- Initial franchise fee: $30,000 for the initial 10-year term, according to Runza’s franchising FAQ, with a 10-year renewal option for $15,000, subject to terms.
- Royalty: 5% of sales.
- Advertising: a Brand Building Fund of 1% of sales, plus other advertising of up to 4% of sales; Runza says the current average is under 2%.
- Estimated initial investment: $956,800 to $3,291,800, depending on real estate ownership, building model and site factors.
- Financial requirements: at least $500,000 in liquid assets and a net worth of at least $1,000,000 for you and your partners.
- Ownership: the operating owner must be actively involved and own at least 51% of the business.
- System size: more than 90 locations in Nebraska, Iowa, Colorado, Kansas and South Dakota, according to the company’s history page as of 2023.
- SBA Franchise Directory: Runza is not listed, so conventional financing is the primary route.
What Is Runza?
Runza opened its first restaurant in Lincoln, Nebraska, in 1949, built around the Runza sandwich, which the company says pays tribute to its German heritage. The company is still family-owned and run by the founder’s grandchildren. It incorporated in 1966, replaced car hops with drive-thru lanes in 1979 and began franchising the same year. A new building prototype and logo followed in 2017.
The menu today pairs Runza sandwiches with burgers, chicken sandwiches, salads, crinkle fries, onion rings, Frings, homemade chili and cinnamon rolls. The brand is deeply regional: it operates in Nebraska, Kansas, Colorado, Iowa and South Dakota, and its franchise development focuses on South Dakota, Colorado, Iowa, Wyoming, Kansas and Missouri, in communities near existing restaurants.
Restaurant formats. Runza lists freestanding buildings, building end-caps, second-generation building conversions, airports and college or university locations. Its standard building runs 1,800 to 2,800 square feet with a minimum building height of 20 feet.
Why lenders view Runza the way they do. Lenders see a long-established, family-run regional brand with a drive-thru model and a defined building prototype. Because it is a smaller regional system that is not on the SBA Franchise Directory, underwriting leans on the borrower’s strength, the site and the value of any real estate.
Runza Franchise Costs
Initial franchise fee. Runza’s franchising FAQ lists a $30,000 fee for the initial 10-year term. Renewal for another 10 years costs $15,000, subject to the agreement’s terms.
Real estate and building. This is the swing factor in the investment range. Runza’s site criteria call for a freestanding lot of at least 18,000 square feet, at least 100 feet wide and 150 feet deep, with 15 or more dedicated parking stalls and drive-thru stacking for 10 or more cars. Buying that land and constructing a new building puts a project toward the top of the range; leasing a site or converting a second-generation building usually costs less up front but adds rent.
Runza may own the real estate. The FAQ states that Runza does not offer financing but will consider owning the real estate and leasing it back to the franchisee. Where that happens, the franchisee’s loan shrinks to the franchise fee, equipment, signage, opening costs and working capital, and occupancy becomes a rent payment rather than a mortgage.
Equipment, signage and technology. A Runza kitchen needs production equipment for Runza sandwiches, fryers for fries, onion rings and Frings, grills, refrigeration and freezers, ventilation, a drive-thru order and payment system and point-of-sale technology, plus exterior and menu signage.
Opening costs and working capital. Training, opening inventory, hiring and grand opening marketing come before the first sale, and the FDD’s Item 7 includes additional funds for the initial operating period.
Total investment. Runza’s FAQ puts the estimated initial investment at $956,800 to $3,291,800. The current FDD’s Item 7 table breaks that range into line items; the categories to review typically include:
- Initial franchise fee
- Land purchase or lease deposits
- Site work, building construction or leasehold improvements
- Kitchen and drive-thru equipment
- Furniture, fixtures, decor and signage
- Point-of-sale and technology systems
- Training, opening inventory and supplies
- Grand opening advertising
- Insurance, deposits and professional fees
- Additional funds for the initial operating period
Ongoing Fees and How They Affect Your Loan
Royalty. Runza’s royalty is 5% of sales.
Advertising. Franchisees contribute 1% of sales to the Brand Building Fund. The FAQ describes other advertising of up to 4% of sales and says the current average is under 2%.
How lenders factor these costs in. Royalty and advertising together can take a meaningful share of every sales dollar before food, labor and occupancy. Lenders deduct these fees from projected sales, add debt service on the business and real estate loans, and test whether the restaurant still covers its obligations if sales come in below plan. Owning the real estate adds a debt payment but also creates collateral that can make a lender more comfortable.
Franchisor Requirements for New Owners
- Liquidity and net worth: Runza’s FAQ calls for at least $500,000 in liquid assets and a net worth of at least $1,000,000 for you and your partners.
- Ownership: the operating owner must hold at least 51% of the business.
- Active involvement: owners must be involved in day-to-day operations, and Runza says it will only consider candidates fully committed to it as a career.
- Experience: recent foodservice experience is preferred.
- Market: development is focused on communities near existing Runza restaurants in the target states.
The approval process. Candidates submit a franchise inquiry form and application, which asks for liquid cash and net worth, then move through Runza’s review, the FDD and training. The FAQ says a restaurant can possibly open less than six months after a franchisee completes Phase One of training, and that building construction typically takes 120 days.
For financing, the 51% rule means the borrower is usually the operator, and lenders underwrite that person’s experience plus the ownership group’s combined strength.
Ways to Own a Runza
Build a new restaurant on purchased land. The owner buys the lot, builds to the Runza prototype and owns the real estate. This is the most capital-intensive path and typically involves separate financing for real estate and for the business.
Lease from Runza or another landlord. Runza says it will consider owning the real estate and leasing it back. A landlord-owned site reduces the up-front loan to the business components but adds rent that lenders will underwrite carefully.
Convert a second-generation building. Runza lists second-generation buildings among its location types. A conversion can shorten construction and reduce cost, but lenders will want a clear scope of work and an inspection of existing systems.
Buy an existing restaurant. When a franchised restaurant changes hands, the buyer needs Runza’s approval, and lenders can underwrite actual sales and expenses. Our guide to buying a franchise resale covers transfer approval and timing.
Financing Options for a Runza Franchise
Conventional term loans. Because Runza is not on the SBA Franchise Directory, a conventional business loan is the primary tool for the franchise fee, equipment, signage, opening costs and working capital. Lenders size the loan to projected cash flow and the borrower’s strength, and typically require personal guarantees.
Commercial real estate loans. If you buy the land and build, a conventional real estate loan secured by the property can finance land and construction separately from the business loan. Construction financing usually converts to a term loan once the restaurant opens. Learn more about restaurant real estate financing and how franchise real estate financing fits a drive-thru project.
Build-out and construction. For leased or converted buildings, leasehold improvement financing covers construction inside the space. Our article on restaurant build-out financing explains draw schedules and contingencies.
Equipment financing. Ovens, fryers, grills, refrigeration, ventilation, drive-thru systems and point-of-sale technology can be financed or leased separately, which preserves cash for working capital. See our restaurant equipment financing and leasing options.
Working capital and lines of credit. Payroll for a new crew, weekly food purchases and grand opening marketing all come before steady sales. A working capital loan or line of credit can cover the ramp-up and seasonal swings. Learn about restaurant working capital.
SBA 7(a) and 504 loans. These programs generally require a listed brand, so they are not the practical route for a Runza franchise today. See the SBA section below.
Seller financing on resales. In some sales of existing restaurants, the seller may carry part of the price. A seller note is typically subordinate to the senior lender and must be acceptable to it.
SBA Loans for Runza Franchisees
SBA lending for franchises runs through the SBA Franchise Directory, a list of brands whose franchise agreements have been reviewed for SBA eligibility. SBA lenders generally require a brand to appear on the directory before making an SBA 7(a) or SBA 504 loan to one of its franchisees. A listing never approves a borrower; it only clears the franchise relationship.
Runza is not on the SBA Franchise Directory. In plain terms, SBA-guaranteed financing is generally not available for a Runza franchise as things stand, and buyers should plan on conventional business and real estate loans. Directory status can change, so ask your lender to check when you apply. If Runza were added, the SBA 7(a) program maximum is currently $5 million, though program rules can change.
Planning without SBA. Conventional lenders generally expect a larger equity injection and stronger collateral, so treat Runza’s liquidity and net worth requirements as a floor and keep reserves after closing.
How Lenders Evaluate a Runza Deal
Personal credit and financial history. Lenders review credit, tax returns and a personal financial statement for every significant owner and typically require personal guarantees.
Net worth and liquidity. Beyond Runza’s minimums, lenders look at what remains after closing. Our article on how much franchise you can afford walks through the math.
Industry and management experience. Runza prefers recent foodservice experience, and lenders do too. Multi-unit restaurant management or prior franchise ownership carries weight.
Business plan and projections. Projections should reflect the specific site, its traffic and drive-thru capacity, the 5% royalty, the 1% Brand Building Fund and a realistic advertising budget, plus rent or mortgage payments. Runza’s FDD includes a financial performance representation showing average sales and expenses for company-owned restaurants open the entire prior year; lenders may review it, but they will rely on your own site-specific projections.
The FDD and franchise agreement. Lenders read the 10-year term, the renewal option, transfer conditions, territory and any franchisor real estate arrangements. Our guide to how lenders read a Franchise Disclosure Document explains the key items.
Site and real estate. Lenders compare the site against Runza’s criteria: a residential population of 2,500 or more, a median income of $55,000 or more, traffic counts of 10,000 or more and a highly visible “A” site with easy access. For owned real estate, expect an appraisal and environmental review; for leases, the term should cover the loan.
Historical financials for resales. For an existing restaurant, provide several years of profit and loss statements and tax returns, and expect the lender to adjust for your rent, staffing and any planned remodel.
Drive-Thru Real Estate and Equipment
Runza’s site profile reads like a classic drive-thru deal: a freestanding pad with room for 10 or more stacked cars and 15 or more parking stalls. Owning the land and building takes the most equity and adds a mortgage, but it builds equity and gives lenders hard collateral. A Runza-owned lease-back lowers the capital need to the operating business, and lenders will then review the lease term and rent closely. Inside, the kitchen combines production for the signature sandwich with a fry line, grill and drive-thru technology; financing that package separately can keep the main loan smaller and match payments to the equipment’s useful life.
Multi-Unit Growth and Development
Runza focuses development on communities near existing restaurants, which suits operators who want to build a cluster in one region. Once a first restaurant has a track record, lenders can underwrite its cash flow alongside the next project. Each new restaurant requires Runza’s approval and its own site analysis. Our article on multi-unit franchise financing explains how lenders view a growing group.
Real-World Scenarios
A restaurant operator building on owned land. An experienced restaurant manager in Iowa, near an existing Runza market, buys a lot that meets the site criteria. He finances land and construction with a conventional real estate loan and the equipment and opening costs with a separate term loan, keeping working capital in reserve.
A franchisee leasing from Runza. A candidate in Kansas works with Runza on a site the franchisor agrees to own and lease back. Her conventional loan covers the franchise fee, equipment, signage and opening costs, and the lender underwrites the lease payment as a fixed cost.
Common Mistakes to Avoid
- Assuming SBA financing is available for a brand that is not on the SBA Franchise Directory
- Budgeting at the low end of the investment range while planning to buy land and build
- Modeling advertising at the current average instead of the permitted maximum
- Choosing a site that falls short of Runza’s traffic, lot size or stacking criteria
- Signing a lease shorter than the loan term
- Overlooking the 51% ownership and active-owner rules when building an investor group
For more pitfalls that apply across the industry, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Runza Franchise
Step 1: Confirm you meet Runza’s requirements. Verify liquid assets of at least $500,000, net worth of at least $1,000,000, recent foodservice experience and your willingness to operate full time.
Step 2: Submit the inquiry form. Start Runza’s application process and request the current FDD.
Step 3: Review the FDD with advisors. Study Items 5, 6, 7, 10, 17, 19 and 20 with a franchise attorney and accountant.
Step 4: Decide on your real estate strategy. Compare buying land, leasing, a Runza lease-back and a conversion, and price each one.
Step 5: Talk with a financing specialist early. Learn how conventional lenders will size your business and real estate loans. Our conventional loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
Step 6: Apply and coordinate approvals. Submit your package with the site plan, budget, projections and personal financial documents, and align the lender’s timeline with Runza’s approval and construction schedule.
Runza Franchise Loan FAQs
How much does it cost to open a Runza franchise?
Runza estimates the initial investment at $956,800 to $3,291,800, depending on real estate ownership, building model and site factors.
What is the Runza franchise fee?
The initial franchise fee is $30,000 for the 10-year term, with a 10-year renewal option for $15,000, subject to terms.
What royalty does Runza charge?
The royalty is 5% of sales. Franchisees also contribute 1% of sales to the Brand Building Fund and may spend up to 4% of sales on other advertising.
How much liquid capital and net worth do I need?
Runza requires at least $500,000 in liquid assets and a net worth of at least $1,000,000 for you and your partners.
Can I get an SBA loan for a Runza?
Runza is not on the SBA Franchise Directory, and SBA lenders generally require a listing, so a Runza franchise loan will usually be conventional. Confirm current directory status with your lender.
Does Runza offer financing?
Runza says it does not offer financing, but it will consider owning the real estate and leasing it back to the franchisee. Review Item 10 of the current FDD for details.
Can I buy an existing Runza restaurant?
Yes, with Runza’s approval of the transfer. Lenders will underwrite the restaurant’s actual sales and expenses.
Can a first-time owner get a Runza franchise loan?
It is possible if Runza approves the candidate, but Runza prefers recent foodservice experience, and lenders weigh that experience along with liquidity and net worth.
How long is the Runza franchise term?
The initial term is 10 years, with a 10-year renewal option for $15,000, subject to terms.
Does the FDD include financial performance information?
Yes. Runza says its FDD includes a financial performance representation with average sales and expenses for company-owned restaurants open the entire prior year. Use it alongside your own projections.
Final Thoughts
Financing a Runza restaurant starts with real estate: buy and build, lease, convert or ask Runza to own the property. Once that choice is made, a Runza franchise loan follows the usual conventional path for a drive-thru restaurant, backed by the owner’s liquidity, net worth and foodservice experience. Buyers who match their site to Runza’s criteria, budget from the current FDD and plan for the ramp-up put themselves in a strong position.
US Professional Funding helps franchise owners and buyers finance real estate, construction, equipment, working capital and acquisitions for established brands. Learn more about our franchise financing and restaurant financing solutions.
