In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the Smoothie King franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Smoothie King franchise, based on Item 7 of the company’s 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Smoothie King franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Smoothie King’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016, 2015, and 2014 average, median, high, and low net sales for franchised Smoothie King units that had been open for the 13-month period ending December 31, 2016, December 31, 2015, and December 31, 2014, respectively
- 2016 vs. 2015, 2015 vs. 2014, and 2014 vs. 2013 average and median net sales percentage (same-store sales) increase for Smoothie King units based on a comparison of net sales for a comparable period in both years
Section I – Background Information
11 Things You Need to Know About the Smoothie King Franchise
Successful First Quarter of 2017
1. Smoothie King had a successful first quarter of 2017, opening 28 new stores in 15 states, signing 34 franchise and development agreements for 48 new stores, and achieving a 4.5% average same-store sales increase. The company said that it is on track to reach its goal of opening 125 new stores by the end of the year.
2. March was a record-breaking month for franchise sales with 18 franchise and development agreements signed for 26 stores, which was the most signed in one month without incentives in Smoothie King’s history.
3. Kevin King, Chief Development Officer for Smoothie King, says that franchisees are attracted to the brand because of a “simple business model; lower initial investment, labor and food costs relative to other QSRs; and a commitment to inspiring people to live a healthy and active lifestyle.”
First Responders Initiative
4. In April, Smoothie King launched the Smoothie King First Responders Initiative, which will help law enforcement officers, firefighters and emergency medical technicians open a franchise business that aligns squarely with their desire to give back to the community. The program is designed for first responders who have completed at least 10 years of service. Qualified candidates will receive a 20% discount off their initial franchise fee.
5. Chad Tramuta, Franchise Development Manager for Smoothie King, says that the brand’s “community service-oriented culture, combined with the process of following a system and training store teams, parallels closely with the mindsets of first responders.”
First National TV Campaign and New Loyalty Program
6. In March, Smoothie King rolled out its first national TV campaign with 12 weeks of 15-second and 30-second commercials across nine networks. The ads highlighted Smoothie King’s new and improved Slim-N-Trim line, which features high-protein smoothies under 250 calories per 20 oz. cup.
7. Also during Q1 of 2017, Smoothie King launched a new loyalty program called Smoothie King Healthy Rewards. For every $10 a customer spends, they will receive 1,000 points, which can be redeemed immediately for a $1 off reward or saved up to 7,000 points for a free smoothie worth up to $7. Customers can download the loyalty rewards app for free from the Apple or Google Play app stores and receive a $2 off reward upon sign up and also for their birthday and the sign up anniversary.
8. Smoothie King was founded in 1973 by Steve Kuhnau in Kenner, Louisiana after Kuhnau, who is lactose intolerant, developed a smoothie recipe as an alternative to the ice cream-based drinks of the era. During the 70s, Kuhnau opened Smoothie King locations in 32 states.
9. Smoothie King began franchising in 1989. To celebrate the brand’s 30th anniversary in 2003, the company opened its first international franchised store in South Korea. In 2012, Kuhnau sold Smoothie King to Wan Kim, the master franchisee for South Korea, and Standard Chartered Bank. Today, there are over 850 Smoothie King locations around the world.
Entrepreneur’s Franchise 500
10. Smoothie King has ranked on Entrepreneur’s annual Franchise 500 list every year in the last decade. The company’s highest rank was No. 67 in 2009, while its lowest rank was No. 123 in 2017.
11. Smoothie King has also appeared on several other lists put out by Entrepreneur, including the Fastest Growing Franchises of 2009 (No. 37) and 2010 (No. 87), as well as the Top Global Franchises of 2008 (No. 99), 2009 (No. 57), 2010 (No. 67), 2011 (No. 60), and 2012 (No. 100).
Section II – Estimated Costs
- Please click here for detailed estimates of Smoothie King franchise costs, based on Item 7 of the company’s 2017 FDD (updated).
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Smoothie King’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
- Under Part A below, Smoothie King has provided unaudited statements of average annual Unit Net Sales as of December 31, 2016, December 31, 2015, and December 31, 2014.
- Under Part B below, Smoothie King has provided information on the average annual Net Sales percentage increase for Units comparing the 2016 and 2015 calendar years, the 2015 and 2014 calendar years, and the 2014 and 2013 calendar years.
- All Units offer substantially the same products and services to the public. New franchisees will receive substantially the same services as those offered to existing franchisees.
- Smoothie King obtained these historical financial results from the information submitted by its franchisees. Neither Smoothie King nor an independent certified public accountant has independently audited or verified the information.
Part A – Statement of Average Net Sales for 2016, 2015, and 2014
- The three tables below provide information on average Net Sales of Units during each of the 12-month periods starting January 1, 2016 and ending December 31, 2016; starting January 1, 2015 and ending December 31, 2015; and starting January 1, 2014 and ending December 31, 2014. The Units are limited to Units operated by franchisees.
- The term “Net Sales” is defined as all products and services sold in or from the Unit, including off premises catering and delivery, but excluding excise or sales taxes, as well as returns, allowances, and discounts.
- The data below is a representation of average Net Sales for Units broken into 9 segments: top 10%, top 25%, top 50%, top 75%, bottom 10%, bottom 25%, bottom 50%, bottom 75%, and total/all.
- Net Sales information is provided on Units open for the consecutive 13-month period ending on December 31st of the period presented, including those Units closed for a period of less than 8 weeks for remodeling purposes.
- Units presented exclude those stores not scheduled to be open daily throughout the period (excluding holidays), such as stores within office buildings that close for the weekend and stores on college campuses that close for the summer period.
Table A-1 – Average Net Sales of USA Units (January 1, 2016 to December 31, 2016)
- As of December 31, 2016, there were 717 Units operated by franchisees and 26 Units operated by Smoothie King. Of the 743 Units, 612 Units operated by franchisees and 26 Units operated by Smoothie King had been open for the 13-month period ending December 31, 2016, meaning stores opened prior to December 1, 2015.
- Of those 612 franchised Units, 27 Units were excluded since they were not scheduled to be open daily during the reporting period, or were closed for more than an 8-week period during the calendar year 2016, including 16 Units that closed during the 2016 calendar year and one Unit that opened and closed during the 2016 calendar year.
- Of the 585 Units referenced in the table below, all reported sufficient financial performance information to be included in this financial performance representation.