FDD Talk 2019: Marble Slab Creamery 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 Marble Slab Creamery franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Marble Slab Creamery franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Marble Slab Creamery franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Marble Slab Creamery outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Marble Slab Creamery’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average net sales, same store sales growth, cost of goods sold, labor costs, rent, owner count, and store count for the 137 traditional Marble Slab Creamery Stores that were open for all of 2018 and were not co-branded

• 2018 average net sales, same store sales growth, owner count, and store count for the 99 Marble Slab Creamery Stores owned by franchisees with 1 to 2 traditional Stores each, that were open for all of 2018 and were not co-branded

• 2018 average net sales, same store sales growth, owner count, and store count for the 28 Marble Slab Creamery Stores owned by franchisees with 3 to 5 traditional Stores each, that were open for all of 2018 and were not co-branded

• 2018 average net sales, same store sales growth, owner count, and store count for the 10 Marble Slab Creamery Stores owned by franchisees with more than 5 traditional Stores each, that were open for all of 2018 and were not co-branded

• 2018 average net sales, owner count, store count, and number above average net sales for the 50 franchised Great American Cookies-Marble Slab Creamery Co-Brand Stores that had been continuously in operation for the entire 2018 calendar year, that were not supplemented with a Satellite, and that provided the franchisor with the presented financial information for the full calendar year 2018

• 2018 average net sales broken down by brand for the 36 Stores that initially commenced operating as either a Great American Cookies or Marble Slab Creamery Store and then added on the other brand to become a Co-Brand Store, and the 14 Stores that initially commenced operating as a Co-Brand Store (separately stated). All Stores in the respective samples have been continuously in operation for the 2018 calendar year as a Co-Brand Store.

Section I – Background Information

16 Things You Need to Know About the Marble Slab Creamery Franchise

Introduces Majestic Milkshakes

1.  In mid-March 2019, Marble Slab Creamery and Maggie Moo’s Ice Cream and Treatery launched handspun, over-the-top Majestic Shakes in Cookie Dough and Cotton Candy. The milkshakes are handcrafted fresh in-store and were being advertised as showstoppers meant to be shared on social media.

2.  Annica Kreider, executive vice president of Marble Slab Creamery, said, “At Marble Slab Creamery and Maggie Moo’s, we believe in ‘Originality in Every Scoop’ and our new Majestic Shakes take that ethos to another level. Majestic Shakes are full of flavor and big on fun. They are visually stunning and we can’t wait to see our customers post lots of selfies with these popular shakes.”

3.  The Cookie Dough Majestic Shake is a combination of Cookie Dough shake served in a glass jar rimmed with vanilla frosting and chocolate sprinkles. The shake is topped with a mountain of vanilla frosting, brownies, Oreo Cookie, cookie dough pieces, chocolate pirouette, and finished with Hershey’s Chocolate Drizzle and a colorful, fun wide-mouth straw.

4.  The Cotton Candy Majestic Shake is a dreamlike creation of Blue Cotton Candy shake served in a glass jar rimmed with vanilla frosting and rainbow sprinkles. The shake is creatively capped with lots of vanilla frosting, a rainbow swirl lollipop, marshmallows, cotton candy, and mini gumballs.

5.  Both Majestic Shakes retail for $9.99. At the time of the announcement, Marble Slab Creamery and Maggie Moo’s said that additional Majestic Shake flavors were currently being developed and will be revealed throughout 2019.

Offering a Wide Variety of Franchise Models

6.  Marble Slab Creamery offers a few different types of franchise models beyond just traditional locations. In addition to a traditional store, there are non-traditional, co-branded, and licensed locations. More details on each franchise type are as follows:

• Traditional – Mable Slab Creamery’s very first store was located inside of a mall, and traditional locations are still found in malls and shopping centers. These areas have steady foot traffic and a high concentration of people.

• Non-Traditional – The biggest difference between a traditional and non-traditional Marble Slab Creamery store is the location. Both store types feature Marble Slab’s fresh ice cream and unlimited mix-ins, but the non-traditional franchise opportunity gives franchisees more flexibility with their location. Non-traditional locations are in other high-traffic spots that are not part of a mall or shopping center, such as an airport, college campus, office buildings, train stations, community centers, big box retailers, and entertainment venues.

• Co-Branded – Since 2014, Global Franchise Group (GFG) has been offering co-branded franchises featuring Marble Slab Creamery and Great American Cookies. According to GFG, Marble Slab Creamery’s ice cream pairs perfectly with Great American Cookies’ fresh baked treats. Some of the perks of owning a co-branded location include: double the brands means two sources of potential income; overhead costs of only one location; discount on second franchise fee; customers are introduced to new treats from both brands; catering options for both brands; and the ability to drive new traffic with Cookie Cake and ice cream cake offerings.

• Licensed Locations – Licensed locations or fractional franchises allow even more flexibility than non-traditional units. Whether it’s a kiosk, a food truck, or an in-line location, Marble Slab Creamery is adaptable to a variety of locations. Marble Slab Creamery stores can be as small as 400 square feet. Some of the unique conditions that the brand can adapt to include: shared kitchen/prep space; small spaces; high traffic in a short amount of time; seasonal opening and hours; and unique lease terms. The following are examples of ideal licensed locations: stadiums and arenas; military bases; travel centers; theme parks and attractions; movie theaters; and hotels, casinos, and resorts.

Company History

7.  Marble Slab Creamery was founded in 1983 by Sigmund Penn and Tom LePage in Houston, Texas. Penn had worked in the food industry for several years, while LePage had spent years in marketing and sales.

8.  The friends decided that they wanted to open an ice cream shop and visited several high-end brands for inspiration. One of the shops Penn and LePage visited was Herrell’s Ice Cream in Boston, which pioneered the idea of mixing in toppings directly into the ice cream.

9.  Following Hurricane Alicia, the Penns moved in with the LePages, which gave Penn and LePage an opportunity to test recipes using Penn’s new cone-making machine. Two months later, Penn and LePage opened Cones ‘n Cream. After failing to trademark the name Cones ‘n Cream, Penn and LePage changed the business’s name to Marble Slab Creamery.

10.  While Penn and LePage initially did use marble slabs to keep the ice cream cold during the mixing process, they discovered that the slabs were prone to breaking after being repeatedly chilled and warmed back up to room temperature. They switched to granite slabs, but kept the Marble Slab Creamery name.

11.  In 1984, Penn and LePage began franchising the Marble Slab Creamery concept and one of the first franchisees was Ronald J. Hankamer. Over the next two years, Marble Slab Creamery grew across Texas and expanded to Oklahoma and Iowa. Hankamer, who had concluded that a greater emphasis on store operations was needed for the franchises to thrive, ended up buying the company from Penn and LePage.

12.  Under Hankamer’s leadership, Marble Slab Creamery’s franchisee training program was updated to unify and standardize the stores. Hankamer’s changes were effective and he expanded Marble Slab Creamery, mostly through the Sun Belt states, over the next decade.

13.  By the beginning of the 2000s, there were over 179 Marble Slab Creamery stores across 21 states. Also in the early 2000s, Marble Slab Creamery opened its first international locations in Canada, followed by the Middle East.

14.  In 2007, as Marble Slab Creamery continued to grow, Hankamer sold the company to NexCen Brands, Inc., which simultaneously acquired another ice cream shop brand, Maggie Moo’s Ice Cream and Treatery. Three years later, all of the franchised brands owned by NexCen Brands were acquired by Los Angeles-based Levine Leichtman Capital Partners.

15.  After the acquisition, Levine Leichtman established Global Franchise Group to oversee its franchise brands, including Marble Slab Creamery, Maggie Moo’s Ice Cream and Treatery, and Great American Cookies. Today, Marble Slab Creamery often appears in co-branded franchise locations.

Entrepreneur’s Franchise 500

16.  Marble Slab Creamery did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Marble Slab Creamery franchise costs, based on Item 7 of the company’s 2019 FDD.

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

• Please click here for detailed information on Marble Slab Creamery’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  217
• Outlets at the End of the Year:  222
• Net Change:  5

2017

• Outlets at the Start of the Year:  222
• Outlets at the End of the Year:  224
• Net Change:  +2

2018

• Outlets at the Start of the Year:  224
• Outlets at the End of the Year:  231
• Net Change:  7

Company-Owned

2016

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

2017

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

2018

• 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, 2019 FDD) and Analysis

• The data below was taken from financial reports submitted by franchisees. The franchisor has not audited or verified these financial reports nor has it asked questions of the submitting franchisees to determine whether they are in fact accurate and complete, although it has no information or other reason to believe that they are unreliable.

• The franchisor did not use any reports that were incomplete or for which the information was presented in a manner that prohibited it from applying the information to one of the stated categories.

• There are other expenses in operating a Store that are not identified in the table below.

Part 1 – Financial Information for Single-Brand Stores

• The data below presents historical revenue and limited expense information for calendar year 2018 for certain Marble Slab Creamery Stores.

• In the chart below in this Part I, the franchisor discloses the average and median Net Sales generated over the 2018 calendar year (the “Measurement Period”) for the 137 Traditional Stores that (a) continuously operated over the entire Measurement Period, and (b) are not co-branded with another concept or supplemented with a Satellite.

• In addition to this Net Sales data, the table below in this Part I discloses the average and median of certain costs incurred over the Measurement Period by the 9 Traditional Stores that: (i) met the conditions discussed in subparts (a) and (b) of the prior paragraph; and (ii) reported their respective cost information to the franchisor in time for such information to be included in this Item.

• There were 231 franchise Stores open and operating as of December 31, 2018. Of these, 137 are Traditional Stores that were open the entire calendar year 2018 and were included in the computation. Of the 94 Stores that were not included in Part 1, 29 were Non-Traditional Stores, 53 were Co-Branded Stores, and 32 Stores were not open for the entire 2018 calendar year.

• The computation for same unit sales includes the 137 locations that were open for the entire calendar year for 2017 and 2018.

• Cost of Goods Sold includes costs such as the cost of food ingredients used to make finished products, shipping charges, etc. Cost calculations are for the period ending December 31, 2018.

• Labor Costs may include costs such as salaries and wages for full-time and part-time employees, employer contributions for F.I.C.A taxes, federal unemployment taxes, state unemployment taxes, workers’ compensation, group health insurance (if any), 401(k) (if any), wages for contracted labor, expense of “help wanted” ads, employee training expenses, etc. Cost calculations are for the period ending December 31, 2018.

• Rent may include costs such as flat rent, percentage rent, common area maintenance, depreciation of leasehold improvements, depreciation of fixtures and equipment, real estate commissions, real estate taxes, real estate insurance, utilities, etc. Cost calculations are for the period ending December 31, 2018.

• A franchisee may be a multi-store operator but counted in the 1-2 Store category because of all his or her Stores, only 1 or 2 satisfied all required criteria (applicable to larger Store categories also under the same rationale).

Overall Sample