Verified — real FDD extraction
SBA-eligible · directory code S2888 since 2018
SMASHBURGER
Food & Dining · independent · est. —
Smashburger is a fast-casual burger restaurant known for smashing beef patties on a hot griddle for a seared crust, plus fries, shakes, and chicken sandwiches. Customers order made-to-order burgers to eat in or take out. A franchisee operates a restaurant, managing kitchen and counter staff and daily service.
SMASHBURGER net unit count declined -3.7% from 2021–2023 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Showing strain
Distress
The disclosed record shows weakness — shrinking units, elevated exits, or churn — worth reading closely before going further.
Exit rate · latest year
7.3%
vs 8.6% across 137 food & dining systems
Cost to open
$1.2M–$2.2M
Item 7 total investment range
SBA loan defaults
Too few resolved
13 loans exist; too few resolved to rate
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2021–2023
Survival record
FDD Item 20 · outlet status by year
In fiscal 2023, 6 of 82 franchised outlets left the system — a 7.3% annualized exit rate, vs 8.6% across 137 food & dining systems. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2021 | 2022 | 2023 |
|---|---|---|---|
| Outlets at start | 213 | 219 | 217 |
| Opened | 1 | 2 | 2 |
| Transfers | 0 | 7 | 0 |
| Terminations | 0 | 0 | 0 |
| Non-renewals | 0 | 0 | 0 |
| Reacquired by franchisor | 0 | 2 | 0 |
| Ceased — other reasons | 8 | 9 | 6 |
| Outlets at end | 219 | 217 | 211 |
| Net change | +6 | -2 | -6 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 13 SBA-backed loans to SMASHBURGER franchisees since 2011. Most are still open, so there is not yet a resolved cohort large enough to rate.
—
8 resolved · too thin to rate
—
avg. charged-off $ ÷ approved $
—
default rate × loss severity
$509,020
what recent franchisees borrowed
57 mo
approval → charge-off, defaulted loans
3 vs 5
distinct banks still lending
Charge-off rate by loan approval year (%)
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO SMASHBURGER BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $40K franchise fee (Item 5) and a total investment of $1.2M–$2.2M (Item 7). The franchisor publishes no earnings claim (Item 19) — ask current and former franchisees for real numbers.
To open (Item 7)
$1.2M–$2.2M
all-in investment range
Franchise fee (Item 5)
$40K
upfront, one-time
Royalty (Item 6)
5.5%
of sales, ongoing
Your figure — this brand discloses no Item 19 earnings; validate with current & former owners.
Royalty you'd pay / yr
$55K
5.5% of sales, before profit
Over a 10-yr term
$550K
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for SMASHBURGER with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 7 wage cases against operators of this system, recovering $17K in back wages for 91 workers, including 2 child-labor cases. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
7
Back wages owed
$17K
Employees affected
91
Since 2020
0
2 of these cases involved child-labor violations, covering 4 minors across the system's franchised locations.
Read this carefully. The employers in these cases are individual SMASHBURGER franchisees — separately owned businesses operating under the brand name — not SMASHBURGER itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2019.
Modeled risk
FDD Risk Score · modeled from the public record
The public record puts this brand toward the middle of the systems we score — but the evidence is thin, so treat it as a range, not a number.
Risk percentile (range)
37–61 / 100
Directional
Modeled SBA charge-off
12.3%
Observed SBA charge-off
25.0%
Top drivers: Investment ceiling (log) (lowers) · System size (log units) (raises) · Net unit growth (raises) · Royalty rate (raises). Thin loan history — treat this as a range, not a number. A linear scorecard built from this brand's own disclosure figures plus the federal loan record behind its franchisees; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
No recent closures, bankruptcies, or major lawsuits found in the news for SMASHBURGER. That's a good sign — but it reflects news coverage, not a guarantee.
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing SMASHBURGER's numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →SMASHBURGER franchise questions, answered from the filings
What percentage of SMASHBURGER franchises closed last year?
In SMASHBURGER's latest FDD Item 20 (fiscal 2023), 6 of 82 franchised outlets left the system — an annualized exit rate of 7.3% — compared with 8.6% across 137 food & dining systems tracked here. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a SMASHBURGER franchise cost?
Per SMASHBURGER's 2024 FDD, buying in requires an initial franchise fee of $40K (Item 5) and a total initial investment of $1.2M–$2.2M (Item 7).
What royalty does SMASHBURGER charge?
SMASHBURGER charges an ongoing royalty of 5.5% of gross sales, per Item 6 of its 2024 FDD.
Does SMASHBURGER disclose earnings (Item 19)?
No — SMASHBURGER's 2024 FDD makes no financial performance representation in Item 19. That is legal and common, but it means the franchisor publishes no earnings claim; ask current franchisees for real numbers.