A&W Restaurants lowers franchise royalties for new operators

New financial incentive kicks off our Second Century Growth Initiative

A black and white photo above a color photo showing A&W Restaurant from many decades ago and an A&W Restaurant today.

As we approach our 100th anniversary in business as America’s first restaurant chain, we’re launching a new franchise growth program with reduced franchise royalties to entice more entrepreneurs to join our growing franchise system. The Second Century Growth Initiative reduces royalties for new U.S. franchise partners. An incentive program for current operators will be introduced in February at A&W’s National Convention.

Since 2011, A&W has been owned by its franchisees. Our popular quick-service chain is known for freshly made A&W Root Beer, 100% U.S. beef burgers and other all-American food, and we have more than 600 locations in the United States.

First-year royalties for new operators will be reduced from 5% to 2%. The royalties are adjusted to 3% in the second year and to 4% in the third, before returning to 5% in the fourth year.

President Paul Martino said the program underscores the company’s long-term focus. “Reducing royalties enables operators to spend more on their operations in those crucial first years,” he says, adding that the discounts will save the owner of a restaurant with $1 million in sales $60,000 in royalties. “As a franchisee-owned brand, A&W is in a unique position to make decisions that are best for the brand and its operators over the long haul, not the next quarter.”

Since being acquired from YUM! Brands in 2011, A&W has opened more than 60 new U.S restaurants; 15 are planned for 2019. Same-store sales on average have grown more than 32%, with AUVs also up by a third.

As part of the Second Century Growth Initiative, Martino was promoted from COO to president and given development responsibilities. Dave Crowley was hired as director of Franchise Recruitment, and the development department was restructured to add more resources to drive significant new store growth. A new flagship franchise training center is underway.

“The last seven years have brought a remarkable turnaround, and the system has been energized with more than 60 new restaurants,” says CEO Kevin Bazner. “Now, as we enter our second century, it’s time to really accelerate A&W’s expansion.”

America’s first and oldest restaurant chain, A&W still makes Root Beer fresh in each restaurant from real cane sugar, water and a proprietary blend of herbs, bark, spices and berries that are served in a frosty mug alongside burgers, fries, chicken tenders and other All American Food® favorites. There are nearly 1,000 locations worldwide.

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