In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Orange Leaf Frozen Yogurt franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for an Orange Leaf Frozen Yogurt franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Orange Leaf Frozen Yogurt franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Orange Leaf Frozen Yogurt 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 Orange Leaf Frozen Yogurt’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average unit volume and median unit volume, by category (i.e. top 10%, top 25%, top 50%, top 75%, bottom 10%, and all), of the 79 franchised Orange Leaf Frozen Yogurt Stores that were open for at least 360 days during the 2018 calendar year and sold at least one additional Orange Leaf product offering (smoothies, cakes, mixes (frozen yogurt mixed with toppings), and pop-up party box for catering) in addition to frozen yogurt, but did not offer all additional products currently part of the System
- 2018 average unit volume and median unit volume, by category (i.e. top 10%, top 25%, top 50%, top 75%, bottom 10%, and all), of the 17 franchised Orange Leaf Frozen Yogurt Stores that had at least 12 months of operating history as of December 31, 2018, were open for at least 360 days during the 2018 calendar year, and offered all Orange Leaf product offerings currently part of the System
Section I – Background Information
19 Things You Need to Know About the Orange Leaf Frozen Yogurt Franchise
Gains Positive Same-Store Sales Momentum in 2018/2019
1. In mid-February 2019, Orange Leaf Frozen Yogurt announced that it was celebrating a very strong finish to 2018 and continued success into 2019. In 2018, Orange Leaf had two months of positive same-store sales growth during the summer, ended the year with comp sales up 6% in December, and kicked off 2019 with comp sales up 4% in January.
2. According to Kendall Ware, president and COO of Orange Leaf Frozen Yogurt, “The positive same-store sales are attributed to successfully executing on strategies focused around bold brand partnerships, enhancing high quality products and expanding off-premises sales through catering and mobile delivery.”
3. The 2018 summer sales were driven by the launch of a new flavor partnership with Jolly Rancher, followed by the nationwide launch of real fruit smoothies and made-to-order shakes. “Our differentiator was being the first frozen yogurt franchise to offer two of Jolly Rancher’s most popular flavors as dairy-free froyo. Our Guests went crazy for it and our Franchise Partners are ready for us to bring it back,” said Ware. “We also learned that mandating smoothies and shakes was the right strategy to create more reasons for guests to visit more often and for different occasions.”
4. To combat one of the slowest months, December, Orange Leaf partnered with Dove to offer a Mint Chocolate Chip Gelato and gave away 4 tickets to Walt Disney World. The limited-time offer (LTO) flavor and ticket giveaway helped Orange Leaf break through the noise during the holiday season and achieve the brand’s best December yet.
5. In addition to flavor promotions, Orange Leaf focused on opportunities to increase off-premises sales through catering and mobile delivery. Through partnerships with multiple mobile delivery platforms and an online catering service, ezCater, Orange Leaf has created even more opportunities to drive sales.
6. “Offering catering and mobile delivery in every store is a top priority for our brand as we see the positive impact it can make by increasing traffic and building brand awareness,” said Ware. 2019 was looking bright for Orange Leaf as they planned to launch new flavor and catering partnerships, enhanced store designs, new product LTOs, and provide co-brand opportunities.
Celebrates Off-Premises Sales Success
7. At the beginning of October 2019, Orange Leaf Frozen Yogurt highlighted its off-premises success over the past year through its catering and mobile delivery options. In 2019, Orange Leaf was up 68% in off-premises sales compared to 2018. Strategies to expand the brand’s online catering presence, get into schools, and elevate third-party delivery partnerships have been a driving force for this increase.
8. Orange Leaf’s catering opportunities range from simple delivery packs using its Pop-Up Party Box to full-service froyo pop-up shops. The Pop-Up Party Box is designed to make catering a simple set-up. It brings the self-serve froyo experience anywhere, anytime.
9. According to Kendall Ware, president and COO of Orange Leaf Frozen Yogurt, “We’re focused on truly making life sweeter for any occasion whether big or small. The focus on off-premises has pushed us to be in our communities more to celebrate all occasions with our Guests.”
10. Additionally, two major partnerships have been influential in increasing catering opportunities for Orange Leaf stores – ezCater and the Alliance for a Healthier Generation Smart Snacks Program. At the end of 2018, Orange Leaf partnered with ezCater to support the off-premises initiative and to date, a majority of Orange Leaf locations now have pages via ezCater to accept online orders. Orange Leaf has a web page on orangeleafyogurt.com that serves to drive traffic to each store’s ezCater page and educate customers on the different catering opportunities available.
11. The partnership with Alliance for a Healthier Generation for Smart Snacks took off early in 2018 in response to franchisee requests for more opportunities to be in schools. Smarts Snacks are a national nutrition standard for foods and beverages sold outside of the school lunch program. Orange Leaf now offers over 17 Smart Snack-approved froyo flavors as well as 8 approved smoothies. These products are now listed on the Healthier Generation online tool, Smart Food Planner.
12. Ware added, “These partnerships have been crucial to our off-premises success over the last year. Also building stronger relationships with the major players for Mobile Delivery – UberEats, DoorDash, GrubHub, Postmates, and Favor – has allowed us to develop a strong mobile delivery strategy. Mobile Delivery continues to show incremental growth, but in some markets, it’s taking off driving over $40,000/year in additional revenue. Our goal is to continue supporting our Franchisees through this evolving Guest journey and focus additional marketing efforts around driving more off-premises sales to make life sweeter.”
Launches Acai Bowls for the Summer
13. In early June 2019, Orange Leaf Frozen Yogurt introduced Acai Bowls to offer customers a healthier treat. Orange Leaf took this superfood and created its very own Acai Bowl recipe to offer customers a quick on-the-go snack or meal replacement any time of day. The bowls were blended with organically grown acai, banana, and almond milk to provide a smooth, creamy, and fruity base. All bowls could be topped with a variety of fresh fruit, granola, coconut, or whatever a customer desired.
14. Orange Leaf offered 3 Signature Bowls: Very Berry, Tropical Coconut, and Nutty Chocolate, as well as a completely customizable option that allowed the customer to choose up to three toppings. There was also a nut-free recipe to allow customers with dietary restrictions to still enjoy this sweet new snack. Acai Bowls were available at participating Orange Leaf locations from June 3 to July 28.
15. Kendall Ware, president and COO of Orange Leaf Frozen Yogurt, said, “We’ve been testing Acai Bowls since 2017, when a franchisee brought this product suggestion to the team. They saw great success quickly, so we expanded the test to see its full potential and the bowls have been a hit. It provides a new product offering to our Franchise Community that allows us to grow a new daypart and attract a different demographic. We’re excited to launch Acai Bowls across the brand this summer to be a part of this growing trend.”
16. Orange Leaf Frozen Yogurt first opened in 2008 in California under the name Orange Tree Frozen Yogurt. Mike Liddell and Reese Travis noticed that an Orange Tree franchise was doing good business in Edmond, Oklahoma and decided to purchase a franchise of their own in 2009.
17. A year later, in 2010, Liddell decided to buy Orange Tree and changed its name to Orange Leaf Frozen Yogurt. Liddell also moved the company’s headquarters from California to Oklahoma and hired Travis as CEO.
18. Over the next few years, Orange Leaf Frozen Yogurt grew steadily and by 2013, there were 300 locations around the country. In recent years, Orange Leaf has closed many locations, but has expanded into Australia.
Entrepreneur’s Franchise 500
19. Orange Leaf Frozen Yogurt did not rank on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Orange Leaf Frozen Yogurt 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 Orange Leaf Frozen Yogurt’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
- Outlets at the Start of the Year: 269
- Outlets at the End of the Year: 211
- Net Change: -58
- Outlets at the Start of the Year: 211
- Outlets at the End of the Year: 185
- Net Change: -26
- Outlets at the Start of the Year: 185
- Outlets at the End of the Year: 158
- Net Change: -27
- Outlets at the Start of the Year: 9
- Outlets at the End of the Year: 5
- Net Change: -4
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 2
- Net Change: -3
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 2
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- Orange Leaf Frozen Yogurt’s financial performance representation contains (1) the actual 2018 average unit volume of franchised Orange Leaf Frozen Yogurt Stores in operation during the 2018 calendar year that sold at least one additional Orange Leaf product offering (smoothies, cakes, mixes (frozen yogurt mixed with toppings), and pop-up party box for catering) in addition to frozen yogurt, but did not offer all additional products currently part of the System (Part I, below); and (2) the actual 2018 average unit volume of franchised Orange Leaf Frozen Yogurt Stores in operation during the 2018 calendar year that offered all products currently part of the System (Part II, below).
- All figures are based on full-service outlets. The performance of the 4 Orange Leaf Kiosks and the 2 Mobile Units opened during 2018 is not included in the Financial Performance Representations described in this Item 19. Orange Leaf Frozen Yogurt does not know what the financial performance of an Orange Leaf Kiosk will be and this performance representation is no indication of what an Orange Leaf Kiosk or Mobile Unit may experience.
- There were 31 franchised Orange Leaf Frozen Yogurt Stores that closed during this time period that were not included in the Financial Performance Representation. There were no outlets that both opened and closed during the 2018 calendar year.
Part I – Actual 2018 Average Unit Volume and Median Unit Volume of Franchised Orange Leaf Frozen Yogurt Stores Offering Limited Products
- The financial performance representation in this Part I contains the actual 2018 average unit volume and median unit volume, by category, of 79 franchised Orange Leaf Frozen Yogurt Stores that were open for at least 360 days during the 2018 calendar year.
- These 79 outlets represent 50% of the total 158 franchised outlets open for business as of December 31, 2018.
- Outlets that had fewer than 12 months of operating history or that were closed for more than 5 days during the calendar year have been excluded because their partial-year performance is not indicative of the performance Orange Leaf Frozen Yogurt would reasonably expect to see over an entire calendar year.
- These statements have not been audited, and may not be based on generally accepted accounting principles.
- The actual average unit volume numbers do not reflect the costs of sales, operating expenses, or other costs or expenses, that must be deducted from revenue to obtain net income or profit.
- Each column identified as “Top 10%,” “Top 25%,” “Top 50%,” “Top 75%,” and “Bottom 10%” refer to the respective percentage of outlets ranked by their unit volume in descending order.
- The “Number of Outlets” refers to the number of outlets within the respective category.
- “Unit Volume” refers to the total of all sale transactions reported, without any deductions.
- “Average Unit Volume” refers to the average unit volume of all outlets within the category.
- “Median Unit Volume” refers to the median unit volume of all outlets within the category.