Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Smoothie King Franchise Costs (2017 FDD)

by Franchise Chatter on April 19, 2014

in Franchise Costs, Smoothie Franchise

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Smoothie King Interior Photo

This post was updated on July 9, 2017 to reflect information from Smoothie King’s 2017 FDD (Item 7).

Detailed Estimates of Smoothie King Franchise Costs Based on Item 7 (Estimated Initial Investment) of Smoothie King’s 2017 Franchise Disclosure Document

  • The figures below are estimates of the complete investment in establishing a Smoothie King Business and it is possible to significantly exceed these costs in many of the areas listed below.

For End-Cap or In-Line Location

1.  Initial Franchise Fee:  $25,000 to $30,000 ($15,000 for a Non-Traditional Location)

  • Your initial franchise fee is $30,000 for your first Unit.
  • If you have 1 Unit open and operating, and you desire to purchase more Units under new Franchise Agreements, the franchisor currently charges $25,000 for the second or subsequent Unit you purchase.
  • The initial franchise fee for all Non-Traditional locations is $15,000.
  • If you are eligible for the Vet Fran discount, you qualify for a 20% discount off your initial franchise fee.

2.  Three Months’ Rental and Deposit:  $8,000 to $20,000

  • Typical traditional locations for Smoothie King Businesses are shopping centers within suburban shopping areas.
  • Typically, you would lease an existing location in a strip center or other commercial shopping center and remodel the location to conform to the current design specifications of Smoothie King Businesses.
  • For a typical Unit at an end-cap or in-line location, you will typically lease approximately 800 to 1,600 square feet of building space. Rental rates for this type of Unit may range from $2,000 to $5,000 per month ($24,000 to $60,000 per year), excluding additional charges such as common area maintenance (CAM), insurance, and taxes.
  • For a Unit at a Non-Traditional location, you will typically lease approximately 200 to 600 square feet (although certain locations, such as mall kiosk, food court, or university settings may range from 100 to 500 square feet). Rental rates vary for a Non-Traditional location.

3.  Technology Systems:  $10,000 to $13,500

  • This amount includes the cost of telephone and data setup and installation, internal data lines, technology setup, installation of music system, computer equipment, and Point-of-Sale (POS) system(s) installation and equipment.

4.  Grand Opening Marketing:  $5,000

5.  Travel and Training Expenses:  $2,700 to $4,200

  • Smoothie King provides instructors and instructional materials, but you must arrange for transportation, lodging, and meals for yourself and for any costs incurred by your employees. Typically, only one person attends training.
  • The estimate above assumes that one person attends the one-day orientation and the training program (currently 11 days) and includes meals and hotel rates at the franchisor’s recommended hotels.
  • The low end assumes that the individual attending training will drive to the site of the training program and will not incur airfare or car rental expenses in attending the training program. The high end reflects the airfare and car rental expenses that the individual will incur in attending the training program.
  • The costs do not include wages paid for employees attending training.
  • You also are responsible for your employees’ and your costs associated with on-location training before Unit opening.
  • The estimates also include $200 to attend a ServSafe course locally.

6.  Insurance (First Year’s Premium):  $3,500 to $7,500

  • You must obtain comprehensive general liability, food borne illness, cyber, property, and other types of insurance coverage as provided in your Franchise Agreement and lease, and as required by law. The estimate given in the chart is for the first year’s premium for all policies currently required.

7.  Other Prepaid Expenses:  $1,000 to $2,500

  • These costs include installation charges and deposits for a business telephone line, utilities, occupational licensing, and health and other permits.

8.  Start-Up Supplies, Inventory:  $16,000 to $22,000

  • This is the estimated amount to cover an initial supply of smoothie ingredients, paper products, cleaning supplies, and retail inventory for your Unit for at least two weeks to one month of business operations, depending upon your sales level.
  • Smoothie King franchisees entering new markets will likely incur higher freight costs than franchisees in established markets, and may need additional storage space and higher levels of inventory.

9.  Furniture, Fixtures, Equipment, Millwork, and Graphics:  $64,350 to $96,285

  • This amount includes the costs of all furniture, millwork, equipment, decorative ceiling elements, graphics/artwork, light fixtures, interior menu boards, stainless sinks, shelving, and other miscellaneous items.

10.  Architectural and Engineering Professional Services:  $3,500 to $14,500

  • The referenced amount includes estimated costs of all architectural and engineering services (including those of third parties) needed to localize the design documents into construction drawings as required by local code and governing authorities.
  • The referenced amount excludes any civil, structural, or landscaping professional services.

11.  Signage:  $4,500 to $14,000

  • This amount includes the costs of exterior building and monument panel signage.

12.  Leasehold Improvements:  $65,600 to $137,500

  • This amount includes the costs to alter the existing interior space to the requirements of a Smoothie King store.
  • The high end of the estimate includes costs for permits, carpentry, drywall, painting, tile, ceilings, HVAC, plumbing, electrical, and other miscellaneous costs.
  • This amount excludes costs for major exterior improvements, materials testing, and zoning or impact fees.

13.  Legal, Accounting, and Organizational Costs:  $500 to $4,000

14.  Miscellaneous Costs:  $1,000 to $5,000

  • Smoothie King recommends that you budget an additional amount of cash to cover miscellaneous costs incurred with the opening of the Unit.

15.  Drive-Thru:  $0 to $25,200

  • Some Units may include a drive-thru window. The low end of the estimate assumes that your Unit will not include a drive-thru window. The high end of the estimate assumes that your Unit will include a drive-thru window.
  • If the Unit will include a drive-thru window, additional costs for Traditional stores with a drive-thru window range between $12,500 and $25,200.

16.  Additional Funds – 3 Months:  $15,000 to $25,000

  • This amount reflects the minimum amount of additional funds you will need for the first three months you operate a Smoothie King Business. This amount includes salaries and wages, payroll taxes, advertising, product purchases, line of credit, payment of royalties, uniforms, utility bills, ongoing professional fees, freight, and other miscellaneous administrative and operating expenses.

17.  Total:  $225,650 to $426,185

  • Smoothie King relied on its many years of experience in this business to compile these estimates.
  • Smoothie King does not offer, either directly or indirectly, financing to you for any items.
  • Calculation of this total investment figure does not include the initial franchise fee for a Non-Traditional location.

For Free-Standing Drive-Thru Locations

  • The total estimated initial investment necessary to begin operation of a Smoothie King store in a free-standing drive-thru location ranges from $548,150 to $778,150.

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