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Even during one of the worst economic downturns in the history of the United States, franchising continues to be a sound choice for entrepreneurs interested in owning their own business; and the $760 million frozen yogurt sector is one of the fastest-growing areas in franchising.
IBISWorld, an independent industry and market research company, estimated 3.8% average annual revenue growth for the Frozen Yogurt Stores industry from 2007 to 2012; and it has forecast continued strength in the segment with revenue growing at an average annual rate of 2.2% during the next five years.
Franchise Chatter became a resource for investors in the franchise industry by first focusing on the frozen yogurt sector, interviewing some of the leading franchisors and most successful franchisees in the country to provide practical information, helpful tips, and investment guidance to its subscribers who might be preparing to sign on the dotted line to become a franchise partner.
Using those interviews, our own research, as well as first-hand knowledge of the franchise business, we have compiled a list of the Top 10 Frozen Yogurt Franchises of 2013. We offer it as another decision-making tool for our subscribers and general readership who might be doing due diligence on their way to becoming a frozen yogurt franchisee.
Here’s our list of Top 10 Frozen Yogurt Franchises for 2013:
Yogurtland leads our list of Top 10 frozen yogurt franchises for a number of reasons. First and foremost, it has the highest sales volume in the industry.
Founder Phillip Chang propelled the emerging fro-yo segment to new heights by introducing the self-serve model, causing leading competitors to follow suit. But it has remained at the head of the pack.
As a further differentiator, Yogurtland offers proprietary flavors rather than relying on the same suppliers as most other franchises, creating the most interesting flavor choices for customers.
Plus, a smart, talented management team is dedicated to sustaining the company’s position as the leader in the industry.
Menchie’s has many things going for it, including a company culture that revolves around “doing the right thing” and bringing smiles to its customers by creating an all-around experience.
The company is led by a savvy and franchisee-friendly group of young executives who have planned for the long term by setting out to build a frozen dessert brand, not just frozen yogurt.
The company is on track to hit the magical mark of 500 units and shows no signs of slowing down.
Aside from its highly recognizable orange spoon that creates immediate brand awareness, Orange Leaf Frozen Yogurt is differentiating itself by offering something for everybody. While many of its competitors focus on attracting children and young adults, Orange Leaf markets itself as a brand for kids as well as seniors — and everyone in between.
Perhaps most important to potential franchisees is the level of investment in an Orange Leaf franchise: It has the lowest royalty fee (4%), advertising fee (1%), and initial franchise fee ($15,000) among all the major national brands.
An additional incentive to investors with altruistic aims would be the company’s emphasis on giving back to communities in the markets it enters.
One of the early leaders responsible for the resurgence of frozen yogurt in the mid-2000s, Pinkberry remains a force to be reckoned with as the brand becomes known around the globe. Credited with reinvigorating the frozen yogurt sector when it started in Los Angeles, it has now become a global brand with stores in North America, South America, Europe, the Middle East, and Asia.
Pinkberry continues to attract customers by emphasizing the health benefits of its product as a low-fat, lower-calorie alternative to ice cream, with topping selections that include only items that are 100 percent free of trans fats, hydrogenated oils, and high fructose corn syrup.
Pinkberry recently rolled out a line of all-natural, non-fat Greek yogurt (called Pinkberry Greek) in all of its stores nationwide.
A strong social media presence has also contributed to a loyal following among consumers that some have even called “cult-like.”
5. Red Mango
One of the first brands to give Pinkberry a run for its money, Red Mango has achieved success by touting a healthy product that contains less sugar, and live and active cultures rather than the mix of powder, milk, and sugar sometimes passed off as frozen yogurt by other competitors. The product is marketed as “all-natural, kosher, gluten-free & made with GanedenBC30 probiotics” and the company specializes in tart flavors.
Zagat was so impressed, it named Red Mango the No. 1 Smoothie and Frozen Yogurt chain in 2011.
The brand also offers more than just frozen yogurt with a line of smoothies, parfaits, frozen coffee drinks, and artisan hot chocolate, creating additional sales.
It, too, has a very active social media marketing campaign that has been recognized for its efficacy.
The primary strength of TCBY is its brand, which has been around for more than 30 years; and in many ways, it is seen as the originator of frozen yogurt.
TCBY stumbled in the ’90s, but has recently taken steps to resuscitate the brand and added a self-serve model that puts it back in the competitive race.
In addition to offering more choices to the consumer, it is making a concerted effort to listen to those consumers as it makes business decisions, like the introduction of its Super Fro-Yo, which is fortified with Vitamins A & D, probiotics, dietary fiber, protein, calcium, and other nutritional benefits, after studies showed such demand.
TCBY has also launched a line of soft-serve Greek frozen yogurt, now available nationwide.
U-Swirl announced in January that it has acquired Aspen Leaf Yogurt, a subsidiary of Rocky Mountain Chocolate Factory, as well as the Yogurtini frozen yogurt franchise chain, bringing the number of stores operated by the company to 76 stores in 23 states. The acquisition is expected to increase profit margins by eliminating duplicative costs and increasing savings and rebates from suppliers due to volume purchasing.
U-Swirl has stressed the healthy and nutritional aspects of its product, while Aspen Leaf has built its brand by offering consumers a choice: a healthy treat or a decadent dessert made with handmade toppings from its former parent company, which owns a chain of premium chocolate stores nationwide.
U-Swirl has not announced intentions to consolidate operations under one brand (although Aspen Leaf’s website now redirects to U-Swirl’s), but with Rocky Mountain Chocolate Factory taking a majority equity stake in U-Swirl, it’s likely that all three brands could gain an edge when it comes to toppings that appeal to true chocolate lovers.
Certainly no other brand has captured the interest and imagination of children better than sweetFrog, a company that espouses Christian values and focuses on creating a colorful atmosphere for young ones, especially through the use of two Muppet-like mascot characters, googly-eyed frogs named Scoop and Cookie.
Derek Cha, the founder of sweetFrog, plans to push the marketing envelope with children’s books using the sweetFrog characters and even dreams of creating a TV show and building entertainment complexes.
The company has also been very adept at building brand awareness with retail space devoted to sweetFrog merchandise — everything from plush dolls to watches — that also produces an additional revenue stream for franchisees.
9. Let’s YO!
While sweetFrog is targeting children, Let’s YO! is a brand aimed at drawing ‘tweens, teens, and college-age consumers with an emphasis on a sleek, modern environment outfitted with the latest high-tech gadgetry. iPads and giant flat-screen monitors in its stores allow customers to access social media and other websites while promoting the brand online, as well as watch sports and other programming.
Let’s YO! is also one of the few franchises that attracts a morning crowd with a selection of cereals and granola with fresh fruit; and a gourmet coffee station offering light brews, dark brews, decaf, cappuccinos, lattes, and cafe mochas.
The company’s greatest asset might be its high-energy, progressive founder Eric Casaburi, who cut his teeth in the franchise business as owner of a successful chain of fitness clubs called Retro Fitness.
10. Golden Spoon
One of the venerable players in the frozen yogurt sector, around since 1983, Golden Spoon is bucking a trend in the business by staying faithful to its full-service model while introducing self-service.
It’s also one of the few leading franchises that bases pricing on the size of the cup, rather than using a weigh-and-pay method. Customers can enjoy “concierge” service in which a server prepares the cup and brings it to the table; or they can opt for “artist” and fill the cup themselves with as much yogurt and toppings as they like. Toppings are included in the price of the cup; and refills are always $2, another industry anomaly.