FDD Talk 2017: What You Need to Know About the Häagen-Dazs Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk 2017 post, you’ll learn the following:

• Section I – Background information on the Häagen-Dazs franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Häagen-Dazs 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 Häagen-Dazs franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Häagen-Dazs’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average gross sales for the 175 traditional Häagen-Dazs Shops that:  (1) were in operation during all of the 2016 calendar year; and (2) with respect to which the franchisor received sales information for all of the 2016 calendar year

• number and percentage of traditional Häagen-Dazs Shops in the sample that generated 2016 sales of over $1 million; from $900,001 to $1 million; from $800,001 to $900,000; from $700,001 to $800,000; from $600,001 to $700,000; from $500,001 to $600,000; from $400,001 to $500,000; from $300,001 to $400,000; from $200,001 to $300,000; and less than $200,000, respectively

Section I – Background Information

10 Things You Need to Know About the Häagen-Dazs Shops Franchise

New Menu Items

1.  In July, Häagen-Dazs ice cream shops introduced their new customizable Brownie Cookie Ice Cream Sandwiches, which are available at participating locations through September. The new treats feature the customers’ choice of ice cream and toppings sandwiched between a pair of baked brownie cookies.

2.  Toppings available include chocolate sprinkles, rainbow sprinkles, cookies and cream pieces, cookie crunch, peanuts, waffle cone pieces, and hot fudge. Prices for the Brownie Cookie Ice Cream Sandwiches vary by location, but the average price is around $6 per sandwich.

3.  In addition to the new ice cream sandwiches, Häagen-Dazs shops are offering two new flavors of ice cream: White Chocolate Raspberry Truffle and Toasted Coconut Caramel. White Chocolate Raspberry Truffle features a pure white chocolate ice cream base swirled with chunks of chocolaty fudge truffles and a tangy raspberry ribbon; and Toasted Coconut Caramel features a coconut ice cream base with swirls of dulce de leche caramel and flakey hints of toasted coconut.

Uses Free Cone Day to Raise Awareness for Honey Bees

4.  Häagen-Dazs used its annual Free Cone Day celebration on May 9 to showcase the brand’s ongoing commitment to helping honey bees. On Free Cone Day, customers were invited to visit participating Häagen-Dazs Shops in the U.S. between 4 p.m. and 8 p.m. to receive a free scoop of ice cream or sorbet in a cup, sugar cone, or cake cone. In return, Haagen-Dazs asked customers to pay it forward by planting wildflowers native to their region to help local honey bees.

5.  Adam Hanson, The Häagen-Dazs Shoppe Company, Inc. President and General Manager, said, “Free Cone Day is our favorite day of the year because we can take time to thank our loyal fans. This year, we want to take it a step further and call attention to the bees who also support us year-round in a much different way. Without bees, many of our indulgent flavors would disappear from our shops, including Vanilla Swiss Almond, Strawberry and Rocky Road.”

6.  According to Alex Placzek, Director of the Häagen-Dazs brand, in 2016, the company installed one of the world’s largest, privately-funded pollinator habitats on the farm that supplies its almonds, one of the brand’s most popular ingredients. Placzek also said, “The habitat consists of six and a half miles of hedgerow and 11,000 native drought-tolerant shrubs and flowering plants, impacting 840 acres of farmland.”

7.  Customers who came in to receive their free scoop of ice cream were able to find out which of their favorite flavors rely on bees and also learned how they could help by creating more bee-friendly habitats around the country.

Company History

8.  The first Häagen-Dazs ice cream shop was opened in 1976 by Doris Mattus in Brooklyn Heights, New York. Doris Mattus, the daughter of Reuben Mattus, who started the Häagen-Dazs ice cream company in 1961, wanted to sell her dad’s ice cream in its own branded shop.

9.  Häagen-Dazs started franchising in 1977 and continued to open locations around the U.S. throughout the late 70s and early 80s. In 1986, Häagen-Dazs introduced its signature bars and began offering the new treats in its ice cream shops. Around this same time, the brand launched its products internationally for the first time. Today, there are over 800 Häagen-Dazs locations around the world.

Entrepreneur’s Franchise 500

10.  Häagen-Dazs Shops has appeared on Entrepreneur’s annual Franchise 500 list five times in the past decade (it did not rank in 2008, 2010, 2011, 2013, and 2017). The company’s highest rank was No. 223 in 2009, while its lowest rank was No. 459 in 2016.

Section II – Estimated Costs

• Please click here for detailed estimates of Häagen-Dazs franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Häagen-Dazs’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

• The data below reflects historical top-line sales information, based on the performance of a subset of Häagen-Dazs Shops during the 2016 calendar year.

• The franchisor did not operate any corporate Häagen-Dazs Shops during 2016.

• The subset of Shops used to compile this information consists of traditional Häagen-Dazs Shops that:  (1) were in operation during all of the 2016 calendar year; and (2) with respect to which the franchisor received sales information for all of the 2016 calendar year.

• For most Shops, the franchisor received sales information from the Shops’ point-of-sale cash register system. If the franchisor did not receive the sales information from a Shop’s point-of-sale cash register system, then it relied on sales data the franchisee reported to it, and which it did not independently verify.

• The franchisor did not exclude Shops that were temporarily closed during the 2016 calendar year for remodeling.

• There were 205 Shops in operation at the end of 2016. The data below excludes any Shop that ceased operating during 2016.

• The data below excludes sales data for 30 of those 205 Shops, consisting of:  (1) any traditional Shop for which the franchisor does not have sales data for all of 2016 (including any new Shop that commenced operations during 2016, seasonal Shops, and other Shops that did not operate throughout the entire year); (2) any Shop operating under a Häagen-Dazs Select Agreement or a Häagen-Dazs Hospitality Agreement; and (3) one Shop that sells frozen yogurt, but no ice cream products.

• In the case of Shops operated on a management leveraged basis (where the Shop and one or more other businesses are under common ownership; and share significant operational elements, such as a common customer area, service counter, or back-of-house operational area), the franchisor only included sales data for the Häagen-Dazs Shop portion of the business, and has excluded any atypical product sales that would be inconsistent with sales it would likely permit from the Shop you might develop.

• In some cases, sales data includes catering and other off-site sales of a nature that the franchisor may or may not permit as part of the franchise for the Shop you might develop.

• In the case of a single franchise with more than one selling point (e.g. Shop with a Satellite), if the franchisor only has combined sales data for the several selling points, then the franchisor has allocated an equal portion of the sales to each selling point (i.e. 50% to Shop; 50% to Satellite).

• In the case of one Shop with a seasonally-operated Satellite, where the sales data the franchisor received was for the combined locations, it reduced the sales number to account for the sales estimated to have been attributable to the Satellite.