Are you interested in the frozen yogurt industry and want to open a Sweet Frog franchise? Sweet Frog is one of the popular frozen yogurt restaurant chains to open a franchise, thanks to their extensive support for franchisees.
In this article, we will talk you through Sweet Frog and its franchise system, the costs you can expect, and any other crucial details. You will see if it’s worth opening a Sweet Frog franchise or not.
About Sweet Frog And Sweet Frog History
Sweet Frog is a frozen yogurt retail restaurant franchise chain that has been operating since 2009. The company is famous for its own soft-serve frozen yogurts that come in a variety of flavors.
The company was bought by MTY Food Group Inc. in 2018 when they were operating over 300 stores, most of which were franchised.
Currently, the company has over 350 stores and is currently franchising since 2012. They are one of the most popular frozen yogurt companies, and their franchising system is quite established, offering opportunities all across the United States.
Franchise Model Table
| Cost Or Fees | Amount |
|---|---|
| Initial Investment | $96,350-$607,000 |
| Franchise | YES |
| Franchising Since | 2012 |
| Franchise-Fee | $30,000 |
| Royalty-Fee | 5% |
| Liquidity | $120,000 |
| Estimated Outlets | 350+ |
How Much Does It Cost to Open a Sweet Frog Franchise?
The average total cost to open a Sweet Frog franchise is between $96,350 and $607,000. Actual costs will depend on different factors, the biggest difference in cost comes from the type of franchise store you want to open.
You can open a kiosk, a traditional restaurant, or a non-traditional restaurant. Each of these comes in different sizes, equipment requirements, and other cost-affecting things.
Franchise Requirements
There is no strict personal background requirement. Because they have an extensive training and support program, they don’t look for experience as a manager or in the industry.
However, you need to possess certain financial qualifications. You need a net worth of at least $250,000 and liquid assets of a minimum of $120,000. These are the only necessary requirements for the franchisee.
Sweet Frog Franchisor Profit & Revenue
The latest available financial report of the company is from 2018. According to this report, Sweet Frog had a total of $179 million in annual revenue for the fiscal year 2018. Of this $179, $11 million of it was net profit in 2018.
Sweet Frog Franchise Profit & Revenue
The average overall sales per store was $292,333. This number is the average of 236 franchised outlets that were open for the 12 months before the publishing of the report. Over 42% of 236 stores exceeded the average number.
The top 10% made $586,124 annually, and the bottom 10% made $108,711.
If we assume a profit margin of 15% as per the industry standard, then we can find that a Sweet Frog franchise owner make $43,849 in annual net profits on average.
| Financial Overview | Percentage of Revenue | Amount ($) |
|---|---|---|
| Individual Franchise Annual Revenue | 100% | 292333.00 |
| Rent | 10.63% | (31060.38) |
| Insurance | 5.31% | (15530.19) |
| Salaries | 21.25% | (62120.76) |
| Franchise Royalty Fees | 5.31% | (15530.19) |
| Utilities | 2.13% | (6212.08) |
| Cost of Goods Sold (COGS) | 26.56% | (77650.95) |
| Labor (Variable) | 13.81% | (40378.50) |
| Total (Expenses) | 85.00% | (248483.05) |
| Net Profit | 15.00% | 43849.95 |
Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.
Payback Period Of Sweet Frog
With an investment of $607,000 and an estimated 15% profit on the average net sales, the yearly profit would be $43,849.
So, to find out how long it will take to earn back the initial investment:
Payback Period = Investment / Yearly Profit = $607,000 / $43,849= 13.8 years
Based on these figures, it will take approximately 13 years to pay back the initial investment for Sweet Frog. This time period could be longer or shorter depending on your sales, revenue, and profit figures.
Failure Rate Of Sweet Frog
Franchised Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2017 | 194 | 189 | -5 |
| 2018 | 189 | 315 | +69 |
| 2019 | 315 | 289 | -26 |
For the Franchised outlets:
- In 2017, the failure rate was (5)/194×100≈2.57%
- In 2018, the growth rate was (69)/189×100≈36.50%
- In 2019, the failure rate was (26)/315×100≈8.25%
Company-Owned Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2017 | 65 | 73 | +8 |
| 2018 | 73 | 0 | +73 |
| 2019 | 0 | 0 | 0 |
For the Company-Owned outlets:
- In 2017, the growth rate was (8)/65×100≈12.30%
- In 2018, the growth rate was (73)/73×100≈100%
- In 2019, the failure rate was (0)/0×100≈0.00%
Total Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2017 | 259 | 262 | +3 |
| 2018 | 262 | 315 | -4 |
| 2019 | 315 | 289 | -26 |
For Total outlets:
- In 2017, the growth rate was (3)/259×100≈1.15%
- In 2018, the failure rate was (4)/262×100≈1.52%
- In 2019, the failure rate was (26)/315×100≈8.25%
According to the above-mentioned data, we can see that the franchised outlets for Sweet Frog grew only in 2018, showing a growth rate of 36.50%. But the company declined in 2017 and 2019, showing a failure rate of 2.57% and 8.25%.
On the other hand, for company-owned outlets, the growth rate of Sweet Frog was lying in the range between 12.30% and 100% for the period between 2017-2018. the company started declining in 2019.
Overall, when we combine the data of franchise and company-owned outlets, we can see that the Sweet Frog franchise has expanded in the year 2017, showing a growth rate of 1.15%. Later the company experienced failure rate between 1.52% and 8.25% from 2018-2019.
Training and Support Of Sweet Frog
Sweet Frog offers both in-store and classroom initial training before you open your store. The first training is the KTEC training that is held at Sweet Frog’s Kahala Training Center in Arizona. This portion takes five days and teaches operational things like customer service, profitability, and marketing.
Once the first one is over, you will have an In-store Training that is held at a training store of Sweet Frog located in your area. This training is for 3 days and focuses on teaching and practicing operational skills.
Sweet Frog hosts quarterly webinars to discuss any additional training or support you might need about your store. They also help with local and national marketing for the introduction of your store. You will also get a regional director of operations to visit your store occasionally to identify problems and offer solutions.
Terms of Agreement and Renewal
The length of the initial Sweet Frog franchise agreement is ten years. If the franchisor is satisfied with the franchisee and the franchisee wants to, there might be a renewal.
This renewal is for one renewal term of five years without any further right to renew again at the end of this five-year term. There might be renewal fees applicable depending on your agreement.
Obligations and Restrictions
The franchisee or a principal of the store doesn’t need to participate in the daily operations of the store, but it is highly recommended. The franchisor generally selects franchisees that can actively participate in the store’s operation. If the franchisee or a principal can’t oversee the store, an appointed manager or someone who completed the initial training must operate the store physically and oversee the operations.
The area of the building can’t be used for any other purpose than a Sweet Frog franchise. Franchisees must offer the complete menu as described in the manual by the franchisor, no matter the type of restaurant.
Financial Assistance
Sweet Frog doesn’t offer direct financial assistance but might have indirect financial assistance options. They have franchise development consultants who are ready to talk with you and explore potential financing options with you.
Sweet Frog is also on the pre-approved Small Business Administration registry. This allows you to get an SBA loan much easier and faster than normal processes.
Aspiring entrepreneurs in the ice cream franchise realm have choices like La Michoacana, Yogurtland Franchise, Rita Franchise, Kona Ice Franchise, and Twice The Ice to consider.
Sweet Frog Comparison
| Name | Franchise Fee | Royalty Fee | Initial Investment |
|---|---|---|---|
| Orange Leaf Yogurt | $15,000-$30,000 | 5% | $243,000-$575,000 |
| Menchie’s Frozen Yogurt | $40,000 | 6% | $219,116-$457,446 |
| Sweet Frog | $30,000 | 5% | $96,350-$607,000 |
Conclusion
The popular frozen yogurt franchise chain Sweet Frog has over 350 stores across the United States, and most of them are franchised. With good brand awareness, a franchise support system, and rather moderate investment cost for any type of budget, they stand as a good option.
Sweet Frog has three different types of restaurants that you can choose from based on your budget and can expect to earn close to $300,000 annually.
Looking at all the facts and the current performance of franchisees, we can say that Sweet Frog is a viable option for entrepreneurs.
FAQs
How much is it to buy Sweet Frog Franchise?
The franchise cost to open a Sweet Frog franchise varies between $96,350 and $607,000. The total cost depends on the type of franchise and other operational factors.
How do you open a Sweet Frog?
If you have the necessary requirements, then you need to apply on their website or via email. They will call you back once they receive your application.
What is Sweet Frog revenue?
Sweet Frog’s total annual revenue was $179 million in the latest available document.
Where is Sweet Frog headquartered?
Sweet Frog is headquartered in Scottsdale, Arizona.
How many locations does Sweet Frog has?
Currently, Sweet Frog has over 350 locations in the United States.
Who founded Sweet Frog?
The founder of Sweet Frog is Derek Cha. He immigrated to the United States from South Korea at the age of 12. He opened the first Sweet Frog shop in Richmond, Virginia in 2009.
Who owns Sweet Frog?
Sweet Frog was acquired in 2018 by a wholly-owned subsidiary of MTY Food Group.
Sources
https://en.wikipedia.org/wiki/Sweet_Frog