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FDD Talk 2016: The Lemon Heaven Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on May 5, 2016

in Beverage Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings

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Lemon Heaven Photo by 'the girl behind the lens'

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Lemon Heaven franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Lemon Heaven franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Lemon Heaven’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • period of operation, operating days, total gross receipts, total cost of goods sold, total gross profit, and gross profit margin percentage for each of the 5 Site Specific Businesses (3 in the U.S., 2 in Canada) operating at permanent mall locations on a year-round or seasonal basis at any time during 2015 (“Permanent Businesses”)

Section I – Background Information

Lemon Heaven Focuses on U.S. Mall Expansion

Lemon Heaven, whose low-overhead locations sell fresh-squeezed lemonade, cotton candy and snow cones in both Canada and the United States, opened its newest mall kiosk in October 2015 in Tampa, Florida, at the Tampa Premium Outlet Mall. Charles and Maxine Ashford run the location, which is open year-round.

The mall is owned by Simon Property Group, which also has seasonal Lemon Heaven operations in place at other Simon Premium Outlet Malls in Minnesota, Montreal and Toronto. Lemon Heaven is currently seeking franchisees to move into Simon outlet malls in several locales in Florida, Texas, Mississippi and Georgia. The company also has other franchise opportunities across Canada and the U.S.

Business Started on Small Scale

Lemon Heaven was founded in 1996 by Marty and Mirjam Bennett, newlyweds whose business was then called Observ Novelty Food and Event Merchandising. They sub-contracted fresh-squeezed lemonade and cotton candy to venues such as stadiums, arenas and convention centers. The first event they booked was the Cloverdale Rodeo in Vancouver, British Columbia, in May 1996.

The business quickly grew in popularity, and in 1997 the Bennetts took Lemon Heaven as the trademark for their lemonade. That same year, the couple set up operations in Toronto as well, opening at the National Trade Centre in September 1997. While business grew in Toronto, Vancouver operations were also expanding under Barry and Maureen Bennett, Marty’s parents.

In 1999, Marty and Mirjam chose to franchise their Toronto operations and return home to Vancouver to be closer to family and continue developing the initial Lemon Heaven operation. Franchising began in 2000 as the company name was converted to Lemon Heaven Beverages Inc.

Company Moves Into U.S.

The franchise system grew across Canada, and in 2005 Marty and Mirjam started proceedings to expand to the United States. A snag developed when the Lemon Heaven trademark was already held, but in 2008 the trademark was abandoned and Lemon Heaven was free to start franchising in the U.S.

The company brought in Charles Ashford as president and CEO; formed Delaware-based Lemon Heaven International Inc.; and signed their first franchisee in Washington, D.C., with a location at the National Zoo. System sales continued to grow even during the recession, surpassing $5 million in 2011.

Outdoor and Indoor Sales

The company sells fresh-squeezed lemonade in a variety of flavors, cotton candy and snow cones from portable kiosks, carts and trailers in high-traffic areas such as shopping malls and venues for sporting events, music festivals, conventions, fairs and more. In addition to outdoor facilities, Lemon Heaven also has a mall kiosk and a stadium cart for indoor sales.

Franchisees can work full time or seasonally and will pay lower product and labor costs than they would within most other food and beverage operations. Capital costs are also lower. Veterans can get a 33 percent discount off their initial franchise fees if they qualify as VetFran candidates.

Customers Can Watch Their Treats Being Made

Customers are able to watch the food and beverages be made in front of them. The lemonade is shaken (not stirred, the company’s website is quick to point out), and served in 12-, 24- and 32-ounce sizes in original, cherry, lime, iced tea, strawberry, watermelon and blue raspberry flavors. The lemon is served in the lemonade. A diabetic version of the lemonade is available.

Some franchisees also expand to serve Cin City Donuts, which can be served plain or loaded in gourmet cups. The mini donuts are cooked in oil that has no trans fats.

Section II – Estimated Costs

  • Please click here for detailed estimates of Lemon Heaven franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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