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Yogurt in Love Waives Initial Franchise Fee for First 25 Franchisees, Says Founder Sylvan Newby (Q&A)

by Franchise Chatter on June 4, 2012

in Franchise Chatter Exclusive, Frozen Yogurt Franchises, Q & A Interview

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Sylvan Newby, Founder and Operations Officer of Yogurt in Love, has an undergraduate degree in biology and a masters degree in physical therapy. Sylvan became an entrepreneur directly after graduate school, developing Sylvan Inc., a product design and marketing company that manufactures a premium line of soft-serve machines.

Franchise Chatter (FC):  Can you tell us how Yogurt in Love got its start?  What are some of the key milestones in your company’s history to date?

Sylvan Newby, Founder of Yogurt in Love

Sylvan Newby, Founder of Yogurt in Love

Sylvan Newby (SN):  I started Yogurt in Love about 8 months ago as a joint venture with my wife Priny. We have always been frozen yogurt enthusiasts with ties to the industry.

My wife has a background in franchising. She was the founder of a coffee franchise in her home country of Thailand called Black Cherry, which she sold when she left to come live in the U.S.

Sylvan Inc., the product design and marketing company that I started after graduate school, manufactures a premium line of soft-serve machines with NSF, UL, and ISO-9000 approvals.

Between the two of us, we saw the opportunity to create a frozen yogurt franchise that has the unique advantage of being able to subsidize the cost of equipment.

We have franchisee-owned shops that are enjoying great sales and high profitability. We should have over 15 shops in operation in the next 90 days, with more on the way.

Right now, we are offering a special promotion where we waive the initial franchise fee. We will continue to offer this promotion until we reach our goal of 25 initial franchisees, and there are literally only a few spots left.

FC:  What sets Yogurt in Love apart from other frozen yogurt franchise opportunities?

SN:  Our concept is self-serve (not entirely novel) with a focus on interactive, family fun and a superior product. What really distinguishes Yogurt in Love is that our franchisees have flexibility in the design process. Our franchisees work directly with our designers and 3D modelers until we have designed the dream shop for them.

We also have the ability to travel to the location and complete the build out of the shop if the franchisee chooses this option. We can do on-site training for the franchisee and employees before the shop opens, or they can come to our Myrtle Beach flagship store for our training camp.

We have two product options. The first is a powdered mix, with over 200 flavor options, made with fructose instead of glucose, giving an extremely low glycemic index with the superior taste. The second is a premium liquid yogurt from our quality dairy partner.

Because of our partnerships with our suppliers, we are able to supply product at a cost lower than virtually any other franchise. Consequently, our franchisees can enjoy up to 86%+ gross profit margins.

Moreover, our customers don’t need to find multiple vendors for self-serve machines, toppings bars, dispensers, and other equipment.

Our machines come with a full service warranty on service and parts during the warranty period. Any needed parts are shipped via FedEx Next Day Air free of charge for the first 3 years of operation.

The franchisee has a choice of pump fed machines, where they can control the overrun, or gravity fed machines which are more commonly found in the industry.

FC:  Please describe the 2 types of packages that you offer to prospective frozen yogurt shop operators.  Who are you targeting for each of these packages?

SN:  First, we offer the Yogurt in Love franchise package that I just described, which is by far the best deal we have going.

The other option is our “special license” offer which is for customers who have their own trademark and motif that they would like to use. We can outfit their shop with the help of our designers, and provide the equipment, yogurt, and training for their store. The second option is a little more expensive because you won’t be able to take advantage of the promotion we are offering to our first 25 franchisees.

FC:  Can you tell us about the estimated initial investment and ongoing expenses, if any, for each of the packages?

Yogurt in Love PhotoSN:  It depends on the number of machines, but for a standard package of 6 machines for Yogurt in Love’s initial franchisees, the full package cost is only about $50,000. This includes everything except the leasehold improvements, which would be a separate expense.

The ongoing expenses will include cost of product sold (approx $0.06/ounce), payroll, lease, utilities, and other miscellaneous expenses. Right now, our franchisees are seeing gross margins of around 80-85% and net margins of 40-50%. Average sales are between $1,000 and $2,000 per day.

FC:  How are you positioning the Yogurt in Love brand to effectively compete against the more established frozen yogurt franchises and gain market share?

SN:  Our franchisees can realize their dream of opening a frozen yogurt shop for significantly less money. We have created a concept that is unique in design and products, more comprehensive than the competition, and we continue to work diligently to continue to improve our concept and product offering.

We are relying heavily on word of mouth at this time so we can keep our marketing costs low. This allows us to waive the franchisee fee for our 25 initial franchisees. Once we reach that threshold, our franchise package prices will have to increase and we will start focusing on more brand marketing with radio, television, and print.

Right now, our primary strategy is to offer a product that speaks for itself and to take advantage of the “viral” component that a truly great product will enjoy.

FC:  Can you name the top 3 factors that contribute the most to the success of a frozen yogurt shop?

SN:  Location, product quality, and customer experience.

FC:  What steps have you taken to help Yogurt in Love become a viable year-round business despite the seasonal nature of the frozen yogurt business?

SN:  First, let me say that our locations that were open during the winter months of 2012 remained profitable during that time.

How much of a seasonal flux you will find in a Yogurt in Love shop will vary depending on your geographical location. In addition to geography and seasons, the space that is chosen is critical.

So our first objective when working with our franchisee is to select a good location. We work with local commercial realtors and use our proprietary algorithm to assist our franchisees in selecting a location that has the potential to be profitable during any time of the year.

That being said, contrary to most franchises, we currently offer our customers the flexibility to add complementary products (if approved by us) that may increase sales. For example, one of our customers is putting in a self-serve coffee section in his Yogurt in Love shop in Nashua, NH.

FC:  What can you tell us about the profit potential of a Yogurt in Love franchise?

Sylvan Newby, Founder of Yogurt in LoveSN:  A premium location would make average sales of $2,500 a day or more, with a net profit margin of 40-50%.

FC:  Can you name a few franchises (inside or outside your category) that you admire, and why?

SN:  I like the business model of recycling franchises (like Junk King) who are making a profit while cleaning up the environment. As for franchises within our industry, I like the design elements of the Snog franchise, and I think Yogurtland has done a great job in capitalizing on the right locations with the right products.

FC:  What are your growth plans for Yogurt in Love over the next 2 to 3 years, and beyond?

SN:  Truthfully, I do not really dwell on long term growth targets. Instead, I focus on what I can do right now to improve the customer experience and product quality of Yogurt in Love.

FC:  How do you see the frozen yogurt industry evolving over the next five years, and what are you doing to keep Yogurt in Love ahead of the curve?

SN:  I can’t predict the future but I think that, with more and more people choosing a healthier lifestyle and natural products, the 5-year outlook for frozen yogurt is very bright. I foresee at least another 8 years of strong growth for frozen yogurt, and those who choose their locations correctly will be handsomely rewarded.

That being said, I do think the growth we are experiencing now will eventually slow down and reach a plateau, where players without the right elements and real profits will find it difficult to grow or even stay in business. We at Yogurt in Love can only do what we feel is best for the industry and our brand. We continue to look for ways to improve the customer experience through our unique design, the quality of our machines, the quality of our service, but most of all our yogurt.

FC:  Is there anything else you wish to share about Yogurt in Love?

SN:  Interested franchisees should fill out the form on our website so we can give them a call to discuss their options.

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