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

Section I – Estimated initial investment (franchise costs) for a Rita’s Italian Ice franchise, based on Item 7 of the company’s 2022 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Rita’s Italian Ice franchise, based on Items 5 and 6 of the company’s 2022 FDD

Section III – Number of franchised and company-owned Rita’s Italian Ice outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

Section IV – News updates on the Rita’s Italian Ice franchise opportunity

Section V – Presentation and analysis of Rita’s Italian Ice’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average, median, highest, and lowest gross sales for the top tier, middle tier, and bottom tier of the 482 Rita’s Italian Ice shops that were continuously operating during at least the 2021 season and reported gross sales during the 2021 season

• 2021 product percentages (i.e., sales mix) for Italian ice, gelati, frozen custard, Blendini/concrete, milkshakes, Misto, frozen beverages, and miscellaneous items, as a percentage of total systemwide sales

Section VI – Key ratios, comparables, computations, and analyses for the Rita’s Italian Ice franchise opportunity (exclusive content for Platinum subscribers)

Section I – Rita’s Italian Ice Franchise Costs

• Rita’s Italian Ice (standard shop) franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $35,000
• Lease Deposit:  $0 to $6,750
• Leasehold Improvements:  $103,000 to $240,731
• Equipment:  $89,744 to $114,213
• Permits and Licenses:  $1,200 to $5,870
• Signs and Awnings:  $5,500 to $17,989
• Insurance:  $200 to $3,500
• Initial Order:  $8,000 to $17,500
• Minimum New Shop Marketing Expenditure:  $12,000
• Training:  $50 to $5,000
• Architect and Attorney Fees:  $3,500 to $13,487
• Additional Funds (3 months):  $20,000 to $30,000
• Total Estimated Rita’s Italian Ice Franchise Costs:  $278,194 to $502,040

Section II – Rita’s Italian Ice’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Rita’s Italian Ice’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $10,000 to $35,000
• Royalty:  6.5% of estimated sales on Rita’s Mix Items and/or 6.5% of Gross Sales on Menu Items that are Non-Mix Items or Non-Mix Items charged as an additional fee
• Advertising Contribution:  3.0% of estimated sales on Rita’s Mix Items and 3.0% of Gross Sales on Menu Items that are Non-Mix Items or Non-Mix Items charged as an additional fee
• Minimum Local Advertising Expenditure:  currently, 2.0% of Gross Sales (but 3.0% ceiling)
• Advertising Cooperative Program:  not to exceed the Minimum Local Advertising Expenditure

Section III – Number of Franchised and Company-Owned Rita’s Italian Ice Outlets

Franchised

2019

• Outlets at the Start of the Year:  565
• Outlets at the End of the Year:  564
• Net Change:  -1

2020

• Outlets at the Start of the Year:  564
• Outlets at the End of the Year:  532
• Net Change:  -32

2021

• Outlets at the Start of the Year:  532
• Outlets at the End of the Year:  537
• Net Change:  +5

Company-Owned

2019

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

2020

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

2021

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

Section IV – News Updates on the Rita’s Italian Ice Franchise

• Rita’s Italian Ice and Frozen Custard Brings Back Free Italian Ice to Kick Off Spring

• Rita’s Italian Ice & Frozen Custard Featured on Hit CBS Series Undercover Boss

• Rita’s Italian Ice & Frozen Custard Opens New Location in St. Johns

• Rita’s Italian Ice and Frozen Custard Holds Official Grand Opening

• Rita’s Italian Ice Did Not Rank on Entrepreneur’s 2022 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Rita’s Italian Ice Franchise (Item 19, 2022 FDD)

• This Item 19 presents information about the financial performance of certain Shops that operated at a minimum during the period starting March 1, 2021 and ending September 30, 2021 (the “2021 Season”).

• Rita’s Italian Ice has not made permanent, material changes to its concept as a result of the COVID-19 pandemic (the “Pandemic”).

Part 1 – Reported Gross Sales for 2021 Calendar Year for 2021 Sample

• Except as noted below, Part 1 reflects reported Gross Sales data for Shops Systemwide that were continuously operating during at least the 2021 Season and reported Gross Sales for the 2021 Season. Rita’s Franchise Agreements require all Shops operating under the System to operate for the entire Season.

• Shops that are Seasonal are only required to operate for the Season, and Shops that are Year Around must operate the entire year. Shops that are Seasonal are permitted, at their option, (i) to open before the Season starts and (ii) to close after the Season ends.

• The reported Gross Sales data in Part 1 includes Gross Sales for both Seasonal and Year Around Shops. There were 78 Year Around Shops and 393 Seasonal Shops operating during the 2021 calendar year.

• Some Shops that are Seasonal (i) are located in resort towns/cities and operated for less than the 2021 Season, and (ii) operated for longer than the 2021 Season (in some cases, the entire 2021 calendar year). The data reflects the Gross Sales for the entire period that each Shop operated in 2021.

• Gross Sales for each Shop includes any sales through Mobile Units and/or Satellites operating under such Shop’s Franchise Agreement. Many System franchisees actively pursue Catering Activities and Mobile Events at a location other than the Shop. The reported Gross Sales data in Part 1 includes Catering Activities and Mobile Events for Shops that engage in those opportunities. Franchisees who do not pursue these opportunities may be negatively affected and have less Gross Sales.

• The figures reflected in Part 1 (i) reflect 482 Shops that reported Gross Sales during the 2021 Season (the “2021 Sample”), and (ii) do not include 42 Shops (excluded from the Sample) that operated for the 2021 Season but closed at some point in 2021 or were terminated at some point in 2021 (because such Shops were generally in winddown mode and/or operating with a reduced staff and a product offering limited to their remaining inventory).

• Of the 2021 Sample, (a) 7 Shops in the 2021 Sample reported sales through a Satellite, (b) 43 Shops in the 2021 Sample reported sales through one or more Mobile Units, and (c) 0 Shops in the 2021 Sample reported sales through both a Satellite and one or more Mobile Units.

• Part 1 divides the 2021 Sample into three categories (Top Tier, Middle Tier, and Bottom Tier), based on their Gross Sales as compared with the sales for the 482 total Shops considered in arriving at these figures. Each average represents the average Gross Sales for Shops within each Tier. High sales and low sales represent the Shops within each tier that attained the highest and lowest Gross Sales.

Top Tier

• Number of Shops in Tier:  161
• Highest Gross Sales for Tier:  $992,642
• Lowest Gross Sales for Tier:  $318,667
• Average Gross Sales for Tier:  $414,972
• Number of Shops in Tier That Obtained or Exceeded Average Gross Sales for Such Tier:  65 (40.4% of the Top Tier and 13.5% of the 2021 Sample)
• Median Gross Sales for Tier:  $392,397

Middle Tier

• Number of Shops in Tier:  160
• Highest Gross Sales for Tier:  $318,476
• Lowest Gross Sales for Tier:  $235,168
• Average Gross Sales for Tier:  $276,219
• Number of Shops in Tier That Obtained or Exceeded Average Gross Sales for Such Tier:  78 (48.8% of the Middle Tier and 16.2% of the 2021 Sample)
• Median Gross Sales for Tier:  $275,038

Bottom Tier

• Number of Shops in Tier:  161
• Highest Gross Sales for Tier:  $235,130
• Lowest Gross Sales for Tier:  $32,222
• Average Gross Sales for Tier:  $177,769
• Number of Shops in Tier That Obtained or Exceeded Average Gross Sales for Such Tier:  96 (59.6% of the Bottom Tier and 19.9% of the 2021 Sample)
• Median Gross Sales for Tier:  $189,783

Part 2 – Mix of Menu Items Sold Systemwide in 2021

• Part 2 reflects the mix of menu items sold systemwide during the 2021 calendar year. The figures in the table below reflect the sales of each menu item as a percentage of total systemwide sales during the 2021 calendar year.

• Italian Ice:  27.5%
• Gelati:  25.8%
• Custard:  19.7%
• Blendini/Concrete:  6.5%
• Milkshakes:  4%
• Misto:  3.8%
• Frozen Beverages:  1.4%
• Miscellaneous:  11.2%
• Total:  100.0%

• Rita’s and its affiliates do not own any Shops and, therefore, the financial performance representation is not based on any company or affiliate-owned Shops.

• The financial performance representation figures do not reflect the cost of goods, operating expenses, or other costs or expenses (i.e., rent) that must be deducted from the Gross Sales figures to obtain potential net income or profit. You should conduct an independent investigation of the costs and expenses you will incur in opening and operating a Shop.

• Many of the Shops included in this data have been open and operating for years. These franchisees have achieved their level of sales after spending many years building customer goodwill at a particular location. A newly-opened business should not be expected to achieve sales volume (or maintain expenses) similar to those of an established business.

• The sales results for a Shop are affected by a number of factors including but not limited to:

• whether the Shop has a Satellite and/or engages in Mobile Events and Catering;
• weather conditions in the market;
• the physical location of the Shop;
• local demographics (including daytime and residential population and income levels);
• site characteristics (i.e., visibility, traffic count, ease of ingress and egress, parking availability);
• seating;
• the offering of online ordering and/or curbside service;
• the presence of a walk-up window and/or drive thru;
• seasonality (particularly in colder climates);
• local competition;
• brand and product awareness in the market;
• the number of Shops in the market;
• the use of third-party delivery apps in the market;
• the presence of a Cooperative in the market; and
• your individual marketing efforts.

• Sales may also be affected by other factors such as the length of the seasons, unusual weather events, and road construction affecting traffic patterns.

• Sales may also be affected by the strength of and public reception to the Rita’s brand in the market, the length of time the Rita’s brand has been in the market, by overall brand marketing within the market (which is determined by the number of Shops in the media market and whether there is a Cooperative in the media market), by flavor availability, by the overall public familiarity with Italian ice in the market, and by the overall public desire for Italian ice and custard in the market.

• Rita’s does not make any promises or representations of any kind that you will achieve any particular results or level of sales or profitability or even achieve break-even results in any particular year of operation.

Section VI – Rita’s Italian Ice Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️