Freddy's Frozen Custard & Steakburgers has become one of the most beloved better-burger concepts in the United States. Known for its made-to-order steakburgers, hand-dipped shakes, and award-winning frozen custard, Freddy's appeals to franchisees who want to operate a high-quality fast-casual brand with a loyal customer following. If you are exploring the Freddy's franchise cost and wondering how to fund your investment, you have come to the right place.
Getting into a Freddy's franchise requires meaningful capital. Like many established QSR (quick-service restaurant) brands, Freddy's has a multi-layered cost structure that includes a franchise fee, build-out costs, equipment, working capital, and more. For most prospective owners, the path forward runs through franchise financing - specifically small business loans, SBA programs, and equipment financing options.
This guide will walk you through everything you need to know about financing a Freddy's franchise: total startup costs, available loan products, lender expectations, and step-by-step guidance for putting together a funding package that works.
Before you can seek financing, you need to understand exactly what you are financing. The Freddy's Frozen Custard & Steakburgers franchise disclosure document (FDD) outlines the estimated initial investment range for a new franchise location. These figures can shift based on construction costs in your region, local labor markets, and real estate conditions - but they give you a solid baseline for planning.
According to publicly available FDD data and reporting from franchise industry sources like Forbes and CNBC, here is what prospective Freddy's franchisees should budget for:
The Freddy's franchise cost is meaningful, but this is a nationally recognized brand with over 450 locations and growing. Lenders familiar with the franchise industry view established brands like Freddy's favorably when underwriting loans - particularly for applicants with restaurant experience and strong personal credit.
There is no single loan product built specifically for Freddy's franchise financing. Instead, most franchisees layer together multiple funding sources to cover different components of the startup cost. Here is a breakdown of the main financing options available to Freddy's franchise candidates:
SBA 7(a) loans are the gold standard for franchise financing. They offer long repayment terms (up to 10 years for working capital, up to 25 years for real estate), competitive interest rates, and loan amounts up to $5 million. Many franchise lenders have pre-vetted Freddy's with the SBA, making the approval process faster than financing an independent restaurant concept.
Traditional bank loans and online lender term loans can supplement SBA financing or serve as a standalone solution for franchisees with significant equity and strong financials. These typically carry shorter terms (3 to 7 years) and may have higher rates than SBA loans.
Since Freddy's kitchens require specialized custard machines, flat-top grills, refrigeration units, fryers, and POS systems, equipment financing is a natural fit. The equipment itself serves as collateral, which makes approval easier and often results in lower rates than unsecured business loans.
A revolving business line of credit is invaluable during the pre-opening and early operating phases. Use it to manage inventory, cover payroll during ramp-up, and handle unexpected expenses without dipping into your emergency reserves.
Some franchisees tap personal resources - home equity lines, retirement savings (via ROBS structures), or personal loans - to cover the equity injection required by SBA lenders (typically 10-30% of total project cost).
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Apply Now - Free ConsultationThe U.S. Small Business Administration does not lend money directly. Instead, it guarantees a portion of loans made by approved lenders - banks, credit unions, and alternative lenders - which reduces risk and encourages lenders to offer better terms on franchise and small business loans.
For Freddy's franchise financing, two SBA programs stand out:
The SBA 7(a) is the most flexible and widely used franchise financing tool. Key features include:
The SBA 504 is ideal if you are purchasing real estate for your Freddy's location or making a large fixed-asset investment. The 504 structure pairs a conventional bank loan (50% of project cost) with a Certified Development Company (CDC) loan (40%) and your down payment (10%). This allows you to lock in long-term fixed rates on the real estate component, reducing rate risk over the life of the investment.
To learn more about SBA financing options, see our complete guide to SBA loans for small business owners.
One important consideration: the SBA maintains a list of pre-approved franchise brands. When a franchise brand is on this list, lenders can skip the review of the FDD and franchise agreement, which speeds up underwriting significantly. Freddy's has been active with franchise lenders, and many SBA-approved lenders are familiar with the brand - ask your lender specifically whether they have processed Freddy's loans before.
A Freddy's Frozen Custard & Steakburgers location requires specialized commercial kitchen equipment that can represent $150,000 to $350,000 of your total investment. This includes:
Equipment financing allows you to fund these purchases with the equipment itself serving as collateral. This has several advantages for Freddy's franchisees:
Many franchisees pair an SBA 7(a) loan for real estate and build-out with a separate equipment financing line to optimize rates and terms across different asset types.
Even after your Freddy's location opens, cash flow management remains critical. Restaurant businesses typically run on thin margins in the early months as they build customer traffic and staff efficiency. A working capital buffer prevents a slow week or unexpected repair from disrupting operations.
Working capital financing options for Freddy's franchisees include:
A business line of credit gives you revolving access to funds up to your credit limit. You draw what you need, repay it, and the credit becomes available again. This is ideal for covering payroll between payroll cycles, stocking up on seasonal inventory, or handling equipment repairs.
If you need a one-time infusion of cash to cover a specific expense, a short-term business loan may be appropriate. Terms typically run 3 to 18 months with daily or weekly repayment schedules tied to your revenue.
SBA 7(a) loans can include a working capital component, allowing you to bundle your equipment, build-out, and operating reserve into a single long-term loan - simplifying repayment and reducing your monthly payment burden.
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Get Funded FastUnderstanding what lenders evaluate when you apply for a Freddy's franchise loan helps you prepare a stronger application and avoid common pitfalls. Here is what most SBA lenders and conventional franchise lenders scrutinize:
Most SBA-preferred lenders require a minimum personal FICO score of 680 to 700. Some alternative lenders will work with scores as low as 620, but you will pay higher rates. Scores above 720 put you in the best position to negotiate favorable terms. If your score needs work, spend 3 to 6 months improving it before applying.
Lenders want to see that you have the personal financial resources to weather a downturn. Many SBA lenders require a personal net worth of at least 1 to 1.5 times the loan amount, plus liquid assets (cash, brokerage accounts) sufficient to cover your equity injection plus 3 to 6 months of projected debt service.
Freddy's and most SBA lenders look favorably on applicants with prior restaurant ownership or management experience. If you have operated a food service business before, document your results. If you are new to the industry, having a strong management team with relevant experience can partially offset this.
A detailed business plan is non-negotiable for most franchise loans. Your plan should include: market analysis for your territory, projected revenue and expense statements for the first 3 to 5 years, staffing plan, build-out timeline, and a break-even analysis. Many lenders have templates - ask yours for guidance.
SBA 7(a) loans require lenders to take all available collateral. This typically means a lien on business assets (equipment, fixtures, leasehold improvements) and, if the business assets do not fully secure the loan, personal assets such as your home. Do not be surprised if your lender asks for a personal guarantee and a mortgage on personal real estate.
Lenders will review your executed franchise agreement and Freddy's FDD as part of underwriting. Make sure you have received your FDD at least 14 days before signing (as required by law) and that you have had an attorney review both documents.
Sources: Freddy's FDD data, SBA.gov program guidelines, Crestmont Capital franchise lending experience
The franchise loan application process can feel overwhelming, but breaking it into steps makes it manageable. Here is a proven sequence that maximizes your chances of approval and minimizes delays:
Pull your personal credit reports from all three bureaus (Equifax, Experian, TransUnion) and dispute any errors. Calculate your liquid net worth. Identify which personal assets you are willing to pledge as collateral. If you have retirement accounts, consult a Rollover for Business Startups (ROBS) specialist to determine whether tapping those funds is appropriate.
Contact Freddy's franchise development team to confirm territory availability, complete the initial application, and receive your FDD. You must have an executed area development agreement or franchise agreement before most lenders will process your loan application. Freddy's has a dedicated franchising team that can walk you through their process.
Create a comprehensive business plan that includes a site analysis, financial projections (3 to 5 years), competitive analysis, staffing plan, and marketing strategy. Many SBA lenders provide templates. Working with a franchise consultant or SCORE mentor can strengthen your plan considerably.
Not all lenders are familiar with Freddy's. Prioritize SBA Preferred Lenders (PLPs) that have experience with restaurant franchise loans. You can search for SBA-approved lenders on the SBA's Lender Match tool. Alternatively, work with a franchise financing specialist like Crestmont Capital who can match you with the right lender for your specific situation.
A complete loan package typically includes:
SBA loans typically take 30 to 90 days from application to funding. Conventional bank loans may close faster. Alternative lenders can sometimes fund in 1 to 2 weeks for smaller amounts. Plan your timeline around your real estate obligations - do not sign a lease without confirming your financing is on track.
At closing, your lender will fund the loan and you will begin construction or renovation of your Freddy's location. Keep detailed records of all draw requests and expenditures, as your lender may require periodic reporting on how funds are being deployed.
For a deeper dive into the loan application process, see our guide on small business loans for entrepreneurs and our complete overview of small business financing options.
Lenders approve hundreds of franchise loan applications every year, but they also decline many. Here are the key factors that separate approvals from denials, based on industry data and Crestmont Capital's franchise lending experience:
Pay down revolving debt to bring your credit utilization below 30%. Avoid applying for new credit in the 6 months before your franchise loan application. If you have late payments or collections, address them with written explanations and documentation showing resolution.
Lenders want to see that you have cash beyond your down payment. Ideally, you should have enough liquid assets to cover your equity injection, plus 6 months of projected debt service, plus a personal living expense buffer. Lenders interpret low liquidity as high risk.
If you have never operated a restaurant, consider working a few months at an existing Freddy's location (many franchisors encourage this) or documenting related business management experience in detail. Partnering with an experienced operating partner can also strengthen your application.
Lenders evaluate your site selection as part of underwriting. A site with strong demographics, good traffic counts, and a favorable lease (reasonable rent, sufficient term length, renewal options) will support your loan approval. A site that looks risky - high rent relative to projected revenue, poor location, short lease - can kill an otherwise strong application.
Lenders who have never financed a Freddy's loan before will spend time reviewing brand financials, FDD provisions, and royalty structures that a franchise-experienced lender already understands. Working with a lender who knows the franchise space saves time and reduces the risk of a denial based on unfamiliarity rather than actual credit risk.
Be ready to explain why your specific market will support a Freddy's location. Population density, household income, proximity to competitors, and your territory exclusivity all matter. Having supporting data - traffic studies, demographic reports, competitive analysis - shows lenders you have done your homework.
According to Bloomberg research on small business lending, franchise applicants with prior relevant experience and net worth exceeding 1.5 times the loan amount have significantly higher approval rates across both SBA and conventional loan products. Building toward those benchmarks before you apply substantially improves your odds.
Many Freddy's franchise agreements are multi-unit area development deals. If you sign an area development agreement obligating you to open 3, 5, or 10 locations over several years, your financing strategy needs to account for the full scope of your commitment - not just the first location.
Some lenders will finance the first two or three locations under a single credit facility, allowing you to draw down capital as each location progresses through construction. This reduces the administrative burden of applying for a new loan each time you open a location.
Once your first Freddy's location has 12 to 24 months of operating history, you can use its cash flow and collateral to support financing for location 2. Lenders are much more willing to finance expansion once you have proven results at the unit level. Keep detailed financial records from day one, as you will need 2 to 3 years of business returns for your next loan application.
If you own multiple locations and need significant capital to accelerate expansion, portfolio lenders and private credit funds may offer creative structures - term loans against the portfolio as a whole, preferred equity arrangements, or franchisee-specific credit facilities - that are not available through traditional SBA channels. These are typically available only to operators with 5+ locations and demonstrated revenue. Reach out to long-term business loan specialists to explore these options.
Strategies used by successful Freddy's franchisees share common threads with what works across the better-burger franchise space. For perspective on how comparable franchisees approach financing, see our guides for Smashburger franchise financing and Habit Burger franchise loans.
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Talk to a Franchise Financing ExpertThe total estimated initial investment for a Freddy's Frozen Custard & Steakburgers franchise ranges from approximately $595,000 to $1,500,000 for a traditional location. This range includes the initial franchise fee ($35,000), real estate and construction costs, equipment and fixtures, signage, initial inventory, training, and working capital. Actual costs vary by market, site conditions, and construction pricing in your region.
Can I get an SBA loan to finance a Freddy's franchise?Yes. SBA 7(a) loans are widely used for Freddy's franchise financing. They offer loan amounts up to $5 million, repayment terms up to 10 years (25 years for real estate), and competitive interest rates. The SBA does not lend directly - you apply through an SBA-approved lender. Freddy's is an established franchise brand, and many SBA-preferred lenders are familiar with the franchise's FDD, which can speed up underwriting.
How much cash do I need to open a Freddy's franchise?Most SBA lenders require an equity injection (down payment) of 10% to 30% of the total project cost. On a $750,000 investment, that translates to $75,000 to $225,000 in cash or liquid assets. Beyond the equity injection, lenders also want to see liquid reserves sufficient to cover several months of operating expenses. Plan to have at least $100,000 to $200,000 in liquid assets before applying for financing.
What credit score do I need for a Freddy's franchise loan?Most SBA-preferred lenders require a minimum personal FICO score of 680 to 700 for franchise loans. Some alternative lenders will consider applicants with scores as low as 620, though typically at higher interest rates and stricter terms. The best loan terms - lowest rates, highest loan-to-value, most flexibility - go to applicants with scores of 720 or above. Before applying, pull your credit reports and address any errors or derogatory items.
Does Freddy's offer in-house financing?Freddy's Frozen Custard does not typically offer direct in-house financing to franchisees. Like most franchise brands, Freddy's directs candidates toward approved lenders and may have relationships with preferred SBA lenders who understand the brand. Some franchise systems offer deferred royalty programs or reduced fees during the ramp-up phase, which indirectly eases the cash flow burden - ask Freddy's franchise development team about any current incentives.
How long does it take to get approved for a Freddy's franchise loan?SBA 7(a) loans typically take 30 to 90 days from application submission to funding, depending on the lender, the complexity of the deal, and how quickly you can provide required documentation. Conventional bank loans can sometimes close faster. Alternative lenders may approve smaller working capital loans in as little as 24 to 72 hours. Plan your financing timeline accordingly and start the process well before your lease obligations require funding.
Can I use retirement funds to finance a Freddy's franchise?Yes, a structure called ROBS (Rollover for Business Startups) allows you to use qualified retirement funds (401(k), IRA) to finance a franchise without triggering early withdrawal penalties. ROBS is legal but complex - it requires establishing a C corporation that sponsors a new 401(k) plan, which then purchases stock in your corporation. You must work with a specialist attorney and a plan administrator. ROBS is often used to fund the equity injection required by SBA lenders.
What is the Freddy's franchise royalty fee?Freddy's charges an ongoing royalty of 5% of gross sales. Franchisees also pay into a marketing and advertising fund, typically 2% to 4% of gross sales. These ongoing fees are important inputs to your financial projections and your lender's debt service coverage analysis. Make sure your projected revenue assumptions account for these fees before calculating your projected net income.
Can I finance a Freddy's franchise if I have bad credit?It is more difficult but not impossible. Applicants with credit scores below 650 will find SBA loans very challenging to obtain. However, alternative lenders and private capital sources may consider applicants with lower credit scores if they have significant collateral, strong liquidity, relevant experience, and a compelling business case. Bad credit business loans are also available for working capital needs once your franchise is operational, even if the initial build-out loan requires stronger credit. Working on improving your credit before applying is always the best strategy.
Does the location affect my franchise loan terms?Yes. Lenders evaluate the site as part of underwriting. Strong locations - high-traffic areas with favorable demographics, reasonable rent-to-revenue ratios, and long lease terms - support better loan terms. Risky locations with high rent relative to projected revenue, poor visibility, or very short lease terms can lead to loan denials or require additional collateral. Site selection is not just a marketing decision - it is a financing decision.
What collateral does a Freddy's franchise lender require?SBA lenders are required to take all available collateral up to the loan amount. Business collateral typically includes: equipment, fixtures, leasehold improvements, business assets, and accounts receivable. If business assets do not fully secure the loan, lenders will look to personal assets - typically a lien on your primary residence or other real estate you own. Personal guarantees are standard for all SBA loans to owners with 20% or more equity in the business.
How profitable is a Freddy's franchise?Profitability varies significantly by location, operator experience, and local market conditions. Freddy's FDD Item 19 provides financial performance representations that give prospective franchisees insight into typical revenue ranges. Established Freddy's locations can generate strong unit-level economics given the brand's positioning in the better-burger segment. Review the FDD Item 19 carefully and discuss the numbers with existing Freddy's franchisees (you have the right to contact them) to form realistic expectations.
Can I get an equipment-only loan for my Freddy's franchise?Yes. Equipment financing is available as a standalone product and does not require you to finance the entire project through a single lender. This is useful if you are financing a conversion (taking over an existing restaurant space that needs minimal build-out) or if you already have the real estate covered through other means. Equipment loans are typically faster to close than SBA loans and are secured by the equipment itself.
How many Freddy's franchise locations are there?As of recent reporting, Freddy's Frozen Custard & Steakburgers operates over 450 locations across more than 35 states, making it one of the larger better-burger concepts in the United States. The brand continues to expand both domestically and internationally, with a focus on traditional QSR footprints, drive-through formats, and non-traditional venues. The brand's growth trajectory is an important factor in lenders' willingness to finance new franchisees.
Is a Freddy's franchise worth the investment?Whether a Freddy's franchise is worth the investment depends on your specific market, your operating capabilities, and your financial goals. Freddy's is a respected brand with strong customer loyalty, a differentiated product offering (steakburgers + frozen custard), and a growing national footprint. As with any franchise investment, the key is conducting thorough due diligence - reviewing the FDD, speaking with existing franchisees, working with a franchise attorney, and building conservative financial projections. The Freddy's franchise cost is significant, but so is the potential return for well-capitalized operators in the right markets.
Pull your credit reports, calculate your liquid net worth, and identify the assets you can pledge as collateral. Know your numbers before you approach any lender.
Confirm territory availability, complete the initial inquiry form, and request the FDD. You cannot secure financing without a franchise agreement, so start this process early.
Draft financial projections, a market analysis, and an operations plan. Consider working with a franchise consultant or SCORE mentor to strengthen your plan before presenting it to lenders.
Work with an SBA-preferred lender or franchise financing specialist who has experience with QSR brands. Franchise-experienced lenders move faster and require less education about the brand.
Gather all required documents (tax returns, financial statements, FDD, business plan, site information) and submit a complete package to minimize back-and-forth and speed up approval.
Crestmont Capital has helped hundreds of franchise owners secure the financing they need to open and grow their businesses. Apply now to get started with a free consultation.
Financing a Freddy's franchise is a significant undertaking, but it is entirely achievable with the right preparation and the right lending partner. The brand's reputation, growing footprint, and loyal customer base make it an attractive investment for qualified franchisees. With a clear understanding of the Freddy's franchise cost and a solid financing strategy in place, you can move forward with confidence.
According to reporting by the Wall Street Journal, franchise businesses consistently outperform independent small businesses in loan approval rates, partly because lenders appreciate the proven business model, brand support, and operational training that come with a franchise system. Freddy's - with its strong unit economics and growing brand recognition - fits the profile of a bankable franchise investment.
Ready to take the next step? Apply with Crestmont Capital today and let our team of franchise financing specialists build a funding package tailored to your Freddy's franchise goals.
Disclaimer: The information provided in this article is for general educational purposes only and is not financial, legal, or tax advice. Funding terms, qualifications, and product availability may vary and are subject to change without notice. Crestmont Capital does not guarantee approval, rates, or specific outcomes. For personalized information about your business funding options, contact our team directly.