About Little Sheep Hot Pot Franchise
Little Sheep Hot Pot is a casual dining restaurant franchise specializing in Inner Mongolian hot pot cuisine, where diners cook fresh meats, vegetables, and other ingredients at their table in a flavorful broth filled with herbs and spices.
The concept has its roots in Inner Mongolia, China, and is operated under the parent company Inner Mongolia Little Sheep Catering Chain, Company, Ltd.
The franchise fee is $50,000, and Little Sheep Hot Pot has been franchising in the United States since 2018.
Little Sheep Hot Pot Franchise Cost & Fees
Minimum Investment
$796K
Average Investment
$1.4M
Maximum Investment
$1.9M
| Fee Type | Amount | Notes |
|---|---|---|
| Initial Franchise Fee | $50,000 | One-time payment upon signing |
| Royalty Fee | 5% of all Revenues of gross sales | Ongoing; paid monthly |
| Marketing/Ad Fund | Currently 1%-3% of Revenues (once the Marketing Fund has been established) | National brand fund |
| Total Investment Range | $796,000 – $1,937,500 | Includes build-out, inventory, working capital |
The investment range of $796K–$1.9M reflects variability in build-out costs, store size, lease terms, and market. The combined royalty (5% of all Revenues) and marketing fee (Currently 1%-3% of Revenues (once the Marketing Fund has been established)) are ongoing costs paid as a percentage of gross sales.
Investment Breakdown (Item 7)
| Item | Low | High |
|---|---|---|
| Initial Franchise Fee | $50,000 | $50,000 |
| Service Fee | $50,000 | $50,000 |
| Deposit | $15,000 | $15,000 |
| Rent (3 months); Lease; Utility and Security Deposits | $10,000 | $50,000 |
| Design & Architectural Fees | $15,000 | $45,000 |
| Restaurant Décor and Signage | $8,000 | $20,000 |
| Leasehold Improvements (after Landlord allowances) | $300,000 | $600,000 |
| POS System Fee | $3,000 | $10,000 |
| Equipment | $100,000 | $300,000 |
| Furniture & Fixtures | $7,500 | $20,000 |
| Initial Inventory | $100,000 | $100,000 |
| Business License and Permits | $50,000 | $100,000 |
| Liquor License | $500 | $400,000 |
| Professional Fees, Dues and Deposits | $20,000 | $80,000 |
| Restaurant Insurance | $5,000 | $10,000 |
| Initial Training Expenses | $0 | $0 |
| Grand Opening Advertising | $7,500 | $7,500 |
| Additional Funds 3 Months | $55,000 | $80,000 |
Additional Fees (Item 6)
| Fee Type | Amount |
|---|---|
| Transfer Fee | $5,000 |
| Renewal Fee | $25,000 |
| Technology Fee | $200 per month |
| Audit Fee | All of our expenses related to the audit |
| Alternative Fixed Maintenance Fee | $2,000 per month; Minimum $20,000 per year; both adjusted annually for inflation |
| Local Marketing Requirement | Currently 3% of Revenues, will not exceed 3% |
| Additional Training Fee | up to $1000 per day per trainee |
| Annual Conference Fee | Will not exceed $1000 per person, per conference |
| Temporary Management Fee | $500 per temporary Restaurant Manager, per day and our travel-related expenses |
| Late Fee | $250 |
| Interest on Overdue Amounts | 0.05% per day interest on overdue amounts or the maximum rate allowed by law |
| Insurance Procurement Fee | 150% of the cost of insurance premiums the Franchisor pays for the Franchisee |
| Cost of Enforcement | All costs, including attorneys’ fees |
| Liquidated Damages | $100,000 |
| Holdover Fees | 150% of the fees which would have been due to us under the agreements had the agreements neither terminated nor expired (e.g., Maintenance Fee, Marketing fee) |
| On-Site Evaluation Fee | Our actual costs of conducting an on-site evaluation, but not less than $750 |
| Relocation Fee | $5,000 |
| Management Information Systems Fee or MIS Fee | Currently $350 per Restaurant, subject to change with 30 days’ notice |
| NSF Fee | currently $150 per returned check or dishonored draft |
| Manual Replacement Fee | $500 |
| Extended or Additional Onsite Support Fee | $1,250 per person per additional week |
| Deficiency Reimbursement Fee | Our costs associated with executing our obligations or in enforcing our rights on your behalf |
| Secret Shopper/Customer Insight Program Fee | Our costs associated with executing our obligations or in enforcing our rights on your behalf |
| Quality Assurance Fee | Our costs associated with executing our obligations or in enforcing our rights on your behalf |
| Additional Ongoing Assistance Fee | Our costs associated with executing our obligations or in enforcing our rights on your behalf |
| Tax Reimbursement Fee | Our costs associated with executing our obligations or in enforcing our rights on your behalf |
| Indemnification Fee | Our costs associated with executing our obligations or in enforcing our rights on your behalf |
| Force Majeure Relocation Fee | Our costs associated with executing our obligations or in enforcing our rights on your behalf |
Training Program (Item 11)
| Detail | Information |
|---|---|
| Total Duration | Initial training program for 20 classroom hours and 116 on-the-job hours. Ongoing training may be required at least twice per calendar year. |
| Classroom Training | 20 |
| On-the-Job Training | 116 |
| Training Location | Shanghai, China |
| Additional Training | We may require the Designated Owner, the Manager, and/or other employees to attend ongoing additional training at locations we specify or online, at least twice per calendar year. Franchisees are responsible for all travel, meal, lodging, and salary expenses for trainees, and may be charged an Additional Training Fee of up to $1000 per day per trainee. |
Territory Rights (Item 12)
| Detail | Information |
|---|---|
| Territory Type | Non-exclusive |
| Exclusive Territory | No |
| Description | The Franchise Agreement grants the right to operate a Little Sheep Hotpot Restaurant at a particular street address known as the “Premises”, subject to franchisor approval. Franchisees will not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, or other channels of distribution or competitive brands controlled by the franchisor. |
Renewal, Termination & Transfer (Item 17)
| Detail | Information |
|---|---|
| Initial Term | 10 years |
| Renewal Term | 2 additional 5-year or 10-year terms |
| Renewal Fee | $25,000 |
| Renewal Conditions | To renew, the franchisee must give written notice 6-12 months prior to expiration, not be in default, complete required maintenance/renovation, satisfy all monetary obligations, sign a new franchise agreement (which may have materially different terms), comply with then-current qualifications and training, and execute a general release of claims. |
| Transfer Fee | $5,000 |
| Transfer Conditions | Transfers require prior written consent from the franchisor. Conditions include full compliance with all agreements, transferee meeting franchisor's standards, purchase price not negatively impacting profitability, continuous operation during transfer, transferee signing new franchise agreement and personal guaranty, transferee upgrading the restaurant to current standards, transferee and owners providing a waiver and release of liability, and transferee/designated owner/manager completing training. |
| Termination for Cause | Termination by franchisor with cause includes failure to make payments, failure to comply with agreement provisions or operating procedures, violation of environmental/food safety/sanitation/data security laws, failure to complete initial training, failure to open within 180 days, material misrepresentation, felony conviction, unauthorized use/disclosure of manuals/confidential information, failure to relocate, loss of premises, failure to pay taxes, default under other agreements, failure to maintain insurance, failure to operate for 3+ consecutive days or minimum hours, software misuse, or breach of Sections 9.L and 9.O. If multiple restaurants, termination of one may lead to termination of others. |
| Non-Compete Period | 24 months |
| Non-Compete Details | During the term of the franchise, the franchisee and its owners cannot engage directly or indirectly in any Competitive Business. After termination or expiration, for 24 months, they cannot engage in any Competitive Business at the Premises or within a 10-mile radius of the Premises or any other Little Sheep Restaurant. 'Competitive Business' is defined as a restaurant or food service business that offers Mongolian food or similar fare, and is operated as a quick service, fast food, or fast casual restaurant. |
Operations & Supply (Items 8 & 15)
| Detail | Information |
|---|---|
| Owner-Operator Required | No |
| Participation Details | The franchisor does not require personal participation in the operation of the Restaurant. However, the Restaurant must at all times be under the direct supervision of an approved Restaurant Manager who devotes full-time energy to management. The Restaurant Manager is not required to have an equity interest. The Restaurant Manager must be under the supervision of a Designated Owner (an individual owner of the franchisee entity approved by the franchisor) who is responsible for compliance with the Franchise Agreement. If the Designated Owner is not also the Restaurant Manager, they must spend at least 5 hours per week at the Restaurant. |
| Required Suppliers | standard clear white powder bag soup base; standard powder bag spicy soup base; roasted-fried spices; chili oil; and temperature concentrated broth (collectively, “Required Inventory”), directly from designated suppliers. |
| Supply Restrictions | The franchisor may designate the specific brand and/or manufacturer of any of the Required Inventory, and may designate a single source or sources from whom franchisees must purchase any Approved Supplies. The franchisor has the right to designate the specific brand and/or manufacturer, and/or the single source of supply (which may be or include the franchisor or one of its affiliates), of condiments, lamb, signage, and pots. |
| Franchisor Revenue from Suppliers | During our last fiscal year that ended December 31, 2023, we did not receive any revenues or rebates from the sale of required products and services to our franchisees. |
Financing (Item 10)
| Detail | Information |
|---|---|
| Financing Available | No |
| Description | We do not offer any direct or indirect financing in connection with a Restaurant. We do not guarantee your notes, leases or any other obligation. |
Little Sheep Hot Pot Franchise Earnings — Item 19
Little Sheep Hot Pot does not make an Item 19 financial performance representation in their FDD. This means they do not disclose revenue, profit, or earnings data for franchised locations. Before investing, ask the franchisor directly for franchisee contact information so you can speak with existing owners about their actual financial performance.
Little Sheep Hot Pot does not include an Item 19 financial performance representation in their FDD. Contact information for current and former franchisees is listed in Item 20 of the FDD.
Little Sheep Hot Pot Litigation & Risk Flags
Clean Litigation RecordLittle Sheep Hot Pot has no pending litigation actions listed in their FDD. There is also no bankruptcy history disclosed.
Litigation and bankruptcy data is sourced from Items 3 and 4 of the FDD. Always verify current status directly from the most recent FDD.
Little Sheep Hot Pot System Growth
Total Units
1
Franchised
1
Company-Owned
0
Little Sheep Hot Pot currently operates 1 franchised locations and 0 company-owned units. Unit count data is sourced from Item 20 of the FDD.
Unit History (Item 20)
| Year | Opened | Closed | Total |
|---|---|---|---|
| 2021 | 0 | 0 | 0 |
| 2022 | 0 | 0 | 0 |
| 2023 | 1 | 0 | 1 |
Transfers: 0 | Closures: 0
State Registrations
Registered in 14 states: CA, HI, IL, IN, MD, MI, MN, NY, ND, RI, SD, VA, WA, WI
Franchisor Financials (Item 21)
Revenue
$751K
Net Income
$51K
Total Assets
$8.7M
Audited by Allpro Certified Public Accountants for year ending December 31.
Little Sheep Hot Pot Franchise — FAQ
The total investment to open a Little Sheep Hot Pot franchise ranges from $796,000 to $1,937,500, per their Franchise Disclosure Document. This includes the initial franchise fee of $50,000. The investment covers build-out, inventory, equipment, signage, working capital, and other startup costs.
Little Sheep Hot Pot charges a royalty fee of 5% of all Revenues of gross sales, plus a Currently 1%-3% of Revenues (once the Marketing Fund has been established) contribution to the marketing/advertising fund. These fees are paid on an ongoing basis.
You can download the Little Sheep Hot Pot Franchise Disclosure Document free on this page. The FDD is a public document filed with state franchise registries. Always also request the current FDD directly from Little Sheep Hot Pot to ensure you have the most up-to-date version.
Little Sheep Hot Pot does not provide an Item 19 financial performance representation in their FDD, which means they do not disclose franchisee revenue or earnings data. Prospective investors should contact existing franchisees directly (listed in Item 20 of the FDD) to gather real-world financial performance information.
Little Sheep Hot Pot has been franchising since 2018. The FDD shows an investment range of $796,000-$1,937,500, a 5% of all Revenues royalty, and no Item 19 earnings disclosure. There is no pending litigation. Review the full FDD and contact current franchisees listed in Item 20 before making any investment decision.
The franchise fee is $50,000 and the total investment ranges from $796,000 to $1,937,500 depending on location size and market. Contact the franchisor directly for current net worth and liquid capital requirements, territory availability, and application details.
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Data Source & Disclaimer: This website is for informational purposes only. It is not an offer to sell or buy a franchise. This profile is based on publicly available FDD data sourced from state franchise registry filings. All information is for research purposes only and does not constitute legal, financial, or investment advice. Data may be outdated or contain errors. Always obtain the current FDD directly from Little Sheep Hot Pot and consult a qualified franchise attorney before making any investment decision. FranchiseOverview.com is operated by Franchising Compliance, LLC and is not affiliated with Little Sheep Hot Pot or any of its subsidiaries. To report an inaccuracy: info@franchiseoverview.com