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Richard Leveille has been employed by Smoothie King for 23 years and has seen it grow to a national brand with more than 500 stores nationwide. But lately, he feels as though the company has only just begun to franchise, due to a recent deal that will take Smoothie King from an American brand to a global one.
“There’s never been a better time to get involved in this brand,” said Leveille, executive vice president of franchise development and real estate for Smoothie King.
Last July, SK USA Inc., headed by Chief Executive Officer Wan Kim, agreed to purchase Smoothie King Franchises Inc. from the company’s co-founders Steve and Cindy Kuhnau, who opened the first Smoothie King in New Orleans in 1973. The acquisition has resulted in a new business plan that calls for a major expansion of the brand, not only in the United States, but in the Middle East, Korea, and other parts of Asia.
Growth Already Under Way
And the growth has already begun. In November, the company announced that it saw 51 openings in 2012 and 48 new franchise agreements. The new units include 17 in the U.S., 33 in Korea, and the company’s first store in Singapore. Of the new agreements, 22 will be developed in the U.S. and 26 in Korea.
And even though it has been franchising since 1989 and has units in 32 states, there is still plenty of room for expansion in the Southeast, Mid-Atlantic, and Northeast regions, as well as Texas, according to the company.
“Our business was very profitable and our founder and owner was very content with what we were doing,” Leveille said. “Now, we have new owners who say we have a mission to accomplish.”
That mission is to add 1,000 new franchised and corporate locations domestically over the next five years, with an immediate goal of opening 40 franchises and 20 corporate locations in 2013.
Brand Built on Life-Changing Product
Much has changed since Steve Kuhnau first developed the smoothie in the late 1960s to deal with his allergies and low blood sugar. Today, the smoothie has become part of the mainstream, available at every juice bar in the country, as well as fast food drive-through windows.
But Smoothie King distinguishes itself as the industry’s “premier smoothie bar and nutritional lifestyle center.” It offers guests the original nutritional fresh-blended smoothie and healthy retail products, including sports beverages, energy bars, healthy snacks, vitamin supplements, herbs, minerals, and other sports nutrition products.
“Our point of differentiation is that what we offer in our stores is something that changes your life,” Leveille said. “Not a beverage. Not a fruit drink. Not a milkshake. We sell a life-changing product that usually has to do with some ailment that you have. Maybe you can’t get enough protein. Maybe you’re trying to lose weight. Maybe you’re trying to gain weight.”
“One of the other differentiators for our brand is that typically people will drink us in place of a meal. We’ve taken the smoothie and moved it to the center of the plate. It provides you with the nutrition you need and that’s really been our focus for so many years. We are a meal in a cup.”
Potential franchisees should take note of the company’s strength as indicated by the rankings of various industry publications. In 2013, Smoothie King was ranked No. 1 by Entrepreneur magazine in the juice bar category for the 20th year. It was also ranked No. 104 overall on this year’s Franchise 500 list and was listed as part of the most recent QSR Global 30.
Franchisees Must Carry Mission
Leveille said the company is looking for franchisees to carry on the company’s mission.
“We’re here to relentlessly influence and help more and more people achieve a healthier lifestyle. So, that’s what we try to do with our products, and every franchisee that gets involved in our system must buy into that mission statement,” he said.
The estimated initial investment to own a traditional Smoothie King is between $144,400 and $336,200, including a franchise fee of between $20,000 and $36,000, according to the company’s Franchise Disclosure Document. The total investment to begin operation of a non-traditional Smoothie King is between $100,200 to $196,700, including a franchise fee ranging from $16,000 to $22,000. The average store size is 1,200 square feet, with 8 to 11 part-time employees, one full-time employee, and two people working per shift at all times.
Until last summer’s sale of the company, Smoothie King did not aggressively recruit new franchisees, Leveille said. Most of its candidates were customers who became passionate about the concept, or were existing single-unit franchisees interested in opening additional stores. The company generated leads from a phone number printed on Smoothie King cups, he added.
“I’d say 90 percent of our franchisees started out as smoothie drinkers in a store, got passionate about the product, and said this is a business that they could put their name on, get behind, and feel good about using as a vehicle to make money for their families.”