Do you want to open an ice cream business by buying Sweet Frog franchise? If YES, here is how much it cost to open a Sweet Frog franchise successfully. If you are looking towards opening a Sweet Frog Franchise, it will be nice for you to have a of what the company represents before going ahead to enquire about opening their franchise.
Sweet Frog started operations in 2009 and they began selling franchise in 2012. They have their corporate headquarters at Scottsdale, Arizona and presently they have an estimated 330 franchise units in operation.
MTY Franchising USA, Inc. is the franchisor of Sweet Frog. The franchisor sells franchises for retail shops that offer and sell soft-serve yogurt and other authorized products and services and that use a self-service format which allows customers to create individualized yogurt-based desserts. The shops do business under the mark “Sweet Frog.”
Here are areas where you are expected to spend money and the cost associated with it;
Financial Investment Required to Open a Sweet Frog Franchise
Table of Content
- 1. Initial Franchise Fee: $30,000
- 2. Purchase of Merchandise, Furniture, and Promotional Items: $16,000 to $21,000
- 3. Royalty Fee: 5% of Net Sales
- 4. Marketing Assessment: Up to 3% of Net Sales
- 5. Advertising and Promotional Material
- 6. Website Review and Hosting Fee:
- 7. Additional Training or Training Additional, Successor, or Replacement Personnel:
- 8. Alternative Product or Supplier Inspection and Testing
- 9. Audit Fee:
- 10. Costs and Attorneys’ Fees
- 11. Costs for Correction of Deficiencies:
1. Initial Franchise Fee: $30,000
Please note that when you sign the Franchise Agreement, you will pay Sweet Frog an initial franchise fee in the amount of $30,000, which may be reduced as follows:
- 1 Shop: $30,000
- 2 to 5 Shops: $25,000
- 6 or more Shops: $15,000
Please note that Sweet Frog currently offers qualified veterans a financial incentive for newly developed franchised sweet Frog Shops. If you are a qualified veteran (as specified by Sweet Frog), sweet Frog will reduce the initial franchise fee by 20%.
2. Purchase of Merchandise, Furniture, and Promotional Items: $16,000 to $21,000
Prior to opening the Shop, you must acquire from the franchisor a start up package (“Start Up Package”), which includes the items noted in the Manual (i.e., logoed merchandise, tables and chairs, interior signage, decor items, and costumes).
The estimated cost for the standard Start Up Package for Franchised Shops ranges from $16,000 to $21,000. Please note that The franchisor or its affiliate may charge an average margin of 50% on the items in the Start Up Package to cover administrative and warehousing costs.
3. Royalty Fee: 5% of Net Sales
Due Date: On or before each Wednesday for the preceding week (Sunday through Saturday). Please note that you must pay the royalty fee by electronic funds transfer. So also, Sweet Frog may modify the weekly period and the due date for the royalty fee and the Net Sales reports, and publish any modifications in the Manual.
4. Marketing Assessment: Up to 3% of Net Sales
To be divided among the System Marketing Fund and Local Advertising (or a Cooperative). Currently, your total Marketing Assessment will be 2.5% of Net Sales as follows: 1.5% for System Marketing Fund and 1% for Local Advertising
Due Date: System Marketing Fund – same as royalty fee; Cooperative – as required by the Cooperative; Local Store Marketing – these amounts are not paid to Sweet Frog, payments for local advertising are due when billed.
Sweet Frog will not increase the Marketing Assessment by more than 1/2% in any 12-month period. It may increase the System Marketing Fund to 2% in the next 12-month period. It can change the allocation of the Marketing Assessment at any time.
Sweet Frog has the right, in its sole discretion, to establish regional Cooperatives in the geographic area that covers your Shop to which you will be required to contribute. Please note that Sweet Frog will have one vote for each Shop operated by it or its Affiliates in the geographic area covered by a regional Cooperative.
5. Advertising and Promotional Material
Reasonable fee, which currently will not exceed $1,000 for each set of materials and the Due Date for this is as invoiced. Please note that Sweet Frog may provide you promotional and advertising materials that it develops.
6. Website Review and Hosting Fee:
Reasonable fee per Website review and per year for hosting services. Currently, no charge. The Due Date for this fee is As invoiced. Please note that Sweet Frog may charge you a fee for developing, reviewing, and approving your Website and/or for hosting the Website.
7. Additional Training or Training Additional, Successor, or Replacement Personnel:
Reasonable fee, which is currently $1,000 per training session and the Due Date for this fee is Before training. Please note that Sweet Frog does not charge a fee for two management personnel to attend the management training program. For any additional, successor, or replacement personnel or any additional training programs, Sweet Frog may charge you a reasonable fee.
8. Alternative Product or Supplier Inspection and Testing
Cost of inspection and of the test (including Sweet Frog’s administrative expenses), which currently will not exceed $2,000 for each new supplier or product. Due Date: Before Sweet Frog approves the supplier, as invoiced.
Please note that If you wish to use any item or service that Sweet Frog has not yet evaluated or if you wish to purchase or lease any such item from a supplier that Sweet Frog has not yet approved, you must submit a written request for approval to Sweet Frog.
Sweet Frog may require you to submit information, specifications, and samples to it to enable it to determine whether the item complies with its standards and specifications and that the supplier meets its criteria. Sweet Frog may send its representatives to inspect the supplier’s facilities or require you to have samples from the supplier delivered to Sweet Frog or to an independent laboratory designated by Sweet Frog for testing.
9. Audit Fee:
All costs and expenses Sweet Frog incurs, which currently will not exceed $5,000 and the Due Date for this fee is as invoiced. Please note that these costs and expenses include reasonable accounting and attorneys’ fees and costs. Payable if an examination or audit discloses you have understated any amount owed to Sweet Frog by 2% or more.
10. Costs and Attorneys’ Fees
Sweet Frog’s costs and expenses and the Due Date for this fee is as incurred. Please note that if Sweet Frog prevails in a judicial or arbitration proceeding regarding enforcement of the terms of any agreement, you must pay Sweet Frog’s attorneys’ fees and costs.
11. Costs for Correction of Deficiencies:
Reasonable fee for Sweet Frog’s expenses in taking corrective action (including costs of re-inspection), which currently will not exceed $1,500 per violation. The Due Date for this cost is Upon demand.
Please note that Sweet Frog may conduct inspections of the Shop and you must promptly correct any deficiencies. If you fail to correct such deficiencies, Sweet Frog may correct the deficiencies and charge you a reasonable fee for its expenses.
- Customer Satisfaction Programs: All costs related to the Shop for these programs, which currently include up to $100 per visit for secret shoppers. The Due Date for this is Upon demand.
Please note that you must participate in programs initiated to verify customer satisfaction and/or your compliance with all operational and other aspects of the System, including (but not limited to) secret shoppers.
- Enforcement Costs and Expenses: Any and all costs and expenses incurred by Sweet Frog in enforcing the terms of the Franchise Agreement. Sweet Frog can collect these costs and expenses upon your default without filing an action against you. The Due Date for this is on demand.
Please note that these costs and expenses include, but are not limited to, costs and commissions due a collection agency, reasonable attorneys’ fees (including attorneys’ fees for in-house counsel employed by Sweet Frog or its affiliates and any attorneys’ fees incurred by it in bankruptcy proceedings), costs incurred in creating or replicating reports demonstrating Net Sales of the Shop, court costs, expert witnesses’ fees, discovery costs, and reasonable attorneys’ fees and costs on appeal, together with interest charges.
- Indemnification: Varies according to loss and the Due Date for this is on demand.
Please note that you must indemnify Sweet Frog when certain of your actions or omissions result in loss to it.
- Interim Management After Termination: Reasonable fee for management services, which is currently $5,000 per month and the Due Date for this is as agreed.
Please note that if Sweet Frog gives you notice that you are in default, then it may assume management of the Shop.
- Interest: Lesser of 5% per year or the maximum lawful rate and the Due Date for this is on demand.
Please note that Sweet Frog may charge interest on all overdue amounts.
- Intranet Fee: A reasonable amount based on Sweet Frog’s actual cost to support your usage (which will not exceed $700 annually). The Due Date is as invoiced.
Please note that although Sweet Frog does not currently do so, it may charge you a reasonable fee per month per Shop for using its Intranet.
- Insurance Fee: Cost of insurance, plus Sweet Frog’s reasonable expenses incurred in obtaining the insurance on your behalf. The Due Date for this is on demand.
Please note that if you fail to maintain the required insurance, Sweet Frog may (but need not) obtain it for you.
- Liquidated Damages: For early termination of Franchise Agreement, a lump sum equal to the royalty fee percentage multiplied by the weekly average of your Net Sales for the 52-week period preceding the effective date of termination multiplied by the lesser of (i) 104 weeks (2 years); or (ii) the number of weeks remaining in the term. The Due Date for this is at termination, on demand.
- Merchandise for Resale, Equipment, Decor Items: Reasonable cost, which currently ranges from $3,000 to $10,000 and the Due Date for this is as invoiced.
Please note that this cost will vary significantly based upon customer demand for these items.
So also, Sweet Frog will develop and make available to you certain merchandise using its Marks, such as hats, t-shirts, toys, and other System memorabilia, and/or certain equipment, decor items, or other products and services.
- On-site Additional or Remedial Training: Then-current per diem fee, plus expenses incurred by Sweet Frog’s representatives. Currently, the per diem is $250. The Due Date for this is before training.
Please note that if Sweet Frog determines additional or remedial training is required at your Shop, you will pay the per diem fee plus Sweet Frog’s expenses. Sweet Frog’s expenses include the costs of travel, lodging, and meals.
- Renewal Fee: 50% of Sweet Frog’s then-current initial franchise fee not including any discounts or reductions. The Due Date is prior to Sweet Frog’s execution of renewal documents.
- Relocation: The greater of (i) $5,000, or (ii) Sweet Frog’s costs and expenses connected with the relocation and the Due Date this is on demand, if required.
Please note that you may not relocate the Shop without Sweet Frog’s express prior written consent.
In limited circumstances, you may request Sweet Frog’s consent to relocate the Shop to another location in the Protected Area. If Sweet Frog grants you the right to relocate the Shop, you must comply with such reasonable site selection and construction procedures as Sweet Frog may require.
Sweet Frog may condition its approval upon the payment of an agreed minimum royalty to it during the period in which the Shop is not in operation.
- Securities Offering Fee: Sweet Frog’s reasonable costs and expenses (including legal and accounting fees and costs) associated with reviewing the offering materials. The Due Date for this fee is upon demand. Currently, the cost for this review will not exceed $2,500.
Please note that Sweet Frog limits its review to the manner in which the offering materials treat your and Sweet Frog’s relationship and the use of Sweet Frog’s Marks (if any).
- Software or Systems Modifications: Reasonable fee for any software or systems modifications enhancements made for Sweet Frog that it or its affiliates license to you and the Due Date for this is on demand.
Please note that you must purchase and use certain software programs and related computer systems that Sweet Frog requires.
- Taxes: You must reimburse Sweet Frog for any taxes imposed on it by reason of furnishing products, intangible property (including the trademarks), or services to you and the Due Date for this is within 30 days after your receipt of an invoice from Sweet Frog.
- Transfer Fee: Greater of (i) $5,000 or (ii) Sweet Frog’s costs and expenses connected with transfer and the Due Date for this fee is on request for Sweet Frog’s consent to transfer.
Please note that Sweet Frog’s costs and expenses include legal and accounting fees and costs.
If transfer is to a legal entity controlled by the same interest holders for convenience of ownership, the transfer fee is reduced to the greater of $500 or reimbursement of Sweet Frog’s out-of-pocket costs and expenses (including legal and accounting fees and costs).
- Non-Cash Payment System Reimbursement: Amounts specified in Sweet Frog’s gift card program and the Due Date for this fee is as invoiced.