FDD Talk: Mrs. Fields Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

• Section I – Background information on the Mrs. Fields franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Mrs. Fields franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Mrs. Fields franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Mrs. Fields outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Mrs. Fields’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average, median, high, and low gross revenue for the upper quartile, second highest quartile, third highest quartile, lowest quartile, and all 74 franchised traditional Mrs. Fields stores that reported their revenue for the full 52-week period ended June 30, 2018 and have not closed since June 30, 2018

Section I – Background Information

16 Things You Need to Know About the Mrs. Fields Franchise

Launches Keurig Partnership

1.  In September 2018, Mrs. Fields launched a partnership with Keurig that allows customers to enjoy their favorite K-Cup pods alongside their favorite Mrs. Fields treats. Of the more than 40 participating locations nationwide, most offer a variety of beverages including the following core flavors:

• Newman’s Own Organics Special Blend: 100% Arabica blend of medium-roasted Central American and darker-roasted Indonesian coffee beans that deliver full-bodied flavor.
• Green Mountain Coffee Roasters Breakfast Blend Decaf: Light roast coffee that is bright, crisp, and clean.
• Swiss Miss Milk Chocolate Hot Cocoa: Rich and creamy cocoa made with real milk and premium cocoa.
• Bigelow English Breakfast Tea: Robust black tea that is meant to be enjoyed any time of day and is made from tender, hand-picked tea leaves from high-elevation gardens.

2.  Select locations also offered a pumpkin spice beverage to celebrate the fall season. While pricing varies by location, the price per cup ranges between $1.49 and $1.99 a serving.

Introduces Chocolate-Dipped Strawberries

3.  While Mrs. Fields specializes in fresh-baked cookies, the brand offers a variety of other items, including Chocolate-Dipped Strawberries, which were introduced in mid-January 2018, just in time for Valentine’s Day. Dipped in real dark, white, or milk chocolate, Mrs. Fields’ latest innovation is made with large, succulent Grade A strawberries, making them a unique Mrs. Fields treat.

4.  Dustin Lyman, CEO of Mrs. Fields, said, “As a brand, we are always thinking of new products for our loyal fans and thought the Chocolate-Dipped Strawberries were the perfect complement to our current lineup of cookies and treats. Valentine’s Day is a popular gift giving opportunity and we’re excited to offer fans a new Mrs. Fields indulgence for the holiday.”

5.  The Chocolate-Dipped Strawberries weigh in at a hefty 1 oz. per berry and are available in three different designs in half or full dozen. The Divine Valentine Chocolate-Dipped Strawberries are adorned with hearts and delicate red stripes. The Scrumptious Stripe Chocolate-Dipped Strawberries are dipped in real dark chocolate, milk chocolate, and white chocolate, then embellished with elegantly contrasting chocolate stripes. The Nuts About Chocolate-Dipped Strawberries are a sweet and salty dream, engulfed in delicately smooth chocolate and coated in either chopped peanuts or almonds.

6.  All Mrs. Fields Chocolate-Dipped Strawberries are carefully shipped and packaged in protective insulation with ice, so they arrive in perfect condition. Mrs. Fields Chocolate-Dipped Strawberries are available online starting at $24.99.

Company History

7.  Mrs. Fields was founded in 1977 by Debbi Fields and her husband Randy in Palo Alto, California. After marrying Randy, Fields realized that she didn’t just want to be a housewife; she wanted to start a business for herself doing something she enjoyed. Fields had grown up baking chocolate chip cookies and she improved upon the basic recipe found on the back of Nestle Toll House chocolate chip bags.

8.  Although Randy and his friends, who also worked in finance, enjoyed Fields’ cookies, they didn’t think that her idea could succeed. However, Randy went ahead and helped Fields acquire the money she needed to open the first Mrs. Fields shop.

9.  On the first day that Fields opened her store, initially no one showed up, but she was determined not to fail. So Fields went out with samples to entice customers and the tactic worked – giving out free samples is still something that every Mrs. Fields location does.

10.  Business picked up and by 1979, Fields had three stores in operation. By the early 1980s, Mrs. Fields had several locations across the country and Fields decided to move the company’s headquarters to Park City, Utah in 1983.

11.  At first, Fields resisted the idea of franchising the Mrs. Fields concept because she felt that franchised locations wouldn’t be able to duplicate the “loving and caring” atmosphere she had created in her stores. However, Mrs. Fields eventually grew too big and Fields changed her mind about franchising.

12.  Over the next decade, Mrs. Fields continued to grow and in 1990, the company entered into an agreement with the Marriott Corporation which allowed Marriott to own at least 60 stores to bake and sell the popular bakery products. Through the deal, Marriott gained the exclusive right to build Mrs. Fields Cookies stores in airports, hotels, and highway travel plazas. Under the agreement, Marriott paid the cookie company approximately five percent of its gross sales at the stores.

13.  In 1993, the Prudential Group acquired almost 80 percent of Mrs. Fields in exchange for writing off $94 million in company debt, while Debbi Fields retained a minority interest, remained board chairman, and accepted a salary cut of $150,000 to $450,000.

14.  Toward the end of the 1990s, Mrs. Fields was once again under new ownership; this time, it was acquired by Capricorn Investors. Also during the 1990s, Mrs. Fields acquired several other brands, including Pretzelmaker and TCBY.

15.  Today, Mrs. Fields is owned by Famous Brands International, along with TCBY and Pretzelmaker. The brands often appear together in co-branded franchise locations.

Entrepreneur’s Franchise 500

16.  Mrs. Fields did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Mrs. Fields franchise costs, based on Item 7 of the company’s 2018 FDD.

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

• Please click here for detailed information on Mrs. Fields’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  182
• Outlets at the End of the Year:  167
• Net Change:  -15

2016

• Outlets at the Start of the Year:  167
• Outlets at the End of the Year:  162
• Net Change:  -5

2017

• Outlets at the Start of the Year:  162
• Outlets at the End of the Year:  158
• Net Change:  -4

Company-Owned

2015

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  1
• Net Change:  -2

2016

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  0
• Net Change:  -1

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• As of the end of Mrs. Fields’ most recent fiscal year (June 30, 2018), there were 158 Stores in operation, all of which were owned by third-party franchisees.

• Mrs. Fields excluded from that group 21 Stores that did not report their revenue to it or for which it was not able to poll their revenue for the full 52-week period that ended on the last day of its most recent fiscal year.

• Mrs. Fields then excluded from the remaining 137 Stores, 58 Stores that are not traditional Stores; that is, Stores that operate seasonally, that are located in non-traditional locations such as gas stations, or that are co-branded with another brand.

• From the remaining 79 Stores, Mrs. Fields excluded 5 Stores that have closed since June 30, 2018.

• The data used to formulate the information in this Item 19 was derived from the remaining 74 Stores.

• To determine the average Gross Revenue for each group shown in the chart below, Mrs. Fields took the group’s total Gross Revenue (as that term is defined in the Franchise Agreement), then divided that number by the number of Stores in the group.

• In the chart below, Mrs. Fields also reports the results by quartile. Each quartile represents 25% of the 74 Stores that form the data set. For each group, the reported average Gross Revenue (as that term is defined in the Franchise Agreement) is for the full fiscal year.

• Since the data set is comprised entirely of franchised Stores, the data is what was reported to Mrs. Fields by the franchisees or what was entered by the franchisees in the Store’s point-of-sale system and, thus, reported to Mrs. Fields. For purposes of this Item 19, Mrs. Fields assumed what they reported is accurate. It did not audit or otherwise verify their numbers.

• In the results below, Mrs. Fields also reports, for each group, the range and the median. The range reflects the low and high data point for each group. The median is the data point that is the center of all data points used for the group, except that, in the total group of Stores, there is an even number of Stores, so the median is derived by adding the two numbers in the middle of the data set for the total group of Stores, then dividing that number by two.

Upper Quartile