Smoothie King
Date of Incorporation: 1987
Franchising Since: 1988
Headquarters: Covington, Louisiana
Country: U.S.
Description: Smoothie King offers a retail business offering smoothies and other nutritional drinks and general nutritional products. Smoothie King, which has been in operation for 36 years, does business on a national and international level. Smoothie King offers their original Smoothie King smoothies, a meal replacement item that is custom made to order. Smoothie King offers consumers the benefit of nutritional retail merchandise, which includes: vitamins, herbs, minerals, a myriad of supplements, and healthy snack items, among many others.
Franchise Offer: Smoothie King provides the franchisee with certain confidential information and methods for managing a Smoothie King Nutritional Lifestyle Center. The franchisee will use Smoothie King's trademarks, logos, brand and overall developed intellectual property. Smoothie King operates under its corporate name and under the service marks “Smoothie King.”
Financial Assistance: The franchisor does not offer any direct or indirect financing nor do they guarantee any note, lease or obligation.
Training and Assistance: The franchisee must attend Smoothie Kings orientation and pre-opening training program as soon as reasonably possible after signing the Franchise Agreement and before beginning site selection. This program is mandatory and held at Smoothie Kings Home Office in Covington, Louisiana, and is scheduled as needed. The initial management training course is up to 14 days, averaging 10 hours per day plus additional homework assignments. Smoothie King will send one Smoothie King representative to the Unit location, at no cost to the franchisee, for on-site training and assistance when the franchisee opens the Unit. The length of time the representative is on-site may vary, but it is expected to be up to 7 days. On-site training and assistance includes additional blending training, consultation and training on hiring of personnel, training of personnel, purchasing and inventory management, product promotion and merchandising, bookkeeping and reporting management, analysis of sales and product mix and other matters necessary to the opening and operation of the Unit.
Territory: The franchisee can operate a Smoothie King Nutritional Lifestyle Center only from a specified location approved by Smoothie King. Smoothie King may designate a general geographic area solely to limit the area within which the franchisee may seek a site location for the Unit. Until the franchisee has secured a lease and a Protected Territory is designated, Smoothie King may establish franchised or company-owned Smoothie King Businesses at any time in the General Area that may compete with the Unit that the franchisee operates and limit their ability to seek a site in certain parts of the General Area. Once the franchisee has secured the lease for a Smoothie King Nutritional Lifestyle Center, Smoothie King will designate a geographical area surrounding the Unit that will be called the Protected Territory.
Term of Agreement and Renewal: The term of the franchise agreement for a traditional location is 10 years with an option to renew for three consecutive terms of five years each. The fee for renewal is $5,000.
Obligations and Restrictions:: The franchisee does not have to conduct on-premises supervision or personally participate in the direct operation of the Unit. The Unit that the franchisee develops and operates must at all times be under the direct, full-time, on-location supervision of the franchisee or a trained and competent team member acting as a full-time manager who has satisfactorily completed Smoothie King-Is initial management training program. The franchisee must offer all goods and services at retail that Smoothie King designates as required for all franchisees, including new products or services that Smoothie King develops in the future. There are no limits on Smoothie King’s right to change the types of goods and services or add new products or services.
Total Number of Units: 615 units.
Investment Tables:
Initial Investment for traditional location:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $20,000 | $25,000 |
| First Month’s Rental & Deposit | $3,000 | $9,000 |
| Computer Equipment/ POS System | $7,500 | $9,500 |
| Grand Opening Marketing | $2,500 | $2,500 |
| Travel and Training Expenses | $1,200 | $4,000 |
| Insurance (First yearns premium) | $1,500 | $5,000 |
| Other prepaid expenses | $1,000 | $2,500 |
| Start-up supplies, inventory | $5,500 | $14,000 |
| Equipment, Millwork, Fixtures/ Signage and Graphics | $49,000 | $90,000 |
| Leasehold improvements | $34,700 | $104,000 |
| Legal, accounting & organizational costs | $500 | $4,000 |
| Miscellaneous costs | $1,000 | $5,000 |
| Drive-Thru | $0 | $24,000 |
| Additional funds—3 months | $15,000 | $25,000 |
| Total | $140,400 | $329,500 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Operating fee | 6% of gross sales |
| Marketing and Promotional fees System National Regional fund |
Up to 5% of gross sales Up to 3% of gross sales 1% of gross sales 1% of gross sales |
| Local Marketing and Advertising Cooperative Contribution | Minimum of 2% of gross sales |
| Site Application and Evaluation | No charge for first evaluation. After first evaluation, the franchisee will reimburse Smoothie King for their reasonable actual expenses incurred in conducting the evaluation. The franchisee may be required to pay for an impact study, ranging from $4,000 - $6,000 if the franchisees proposed site may affect sales of another Smoothie King Business |
| Interest on Late payments | 18% per annum or maximum rate allowed by law, if less than 18% |
| Training Fees | No charge for initial training programs for the first two trainees. After first training program the franchisee may have to pay Smoothie King a reasonable fee for attending the same, or other, training programs for other personnel, currently set at $1000 for additional initial management training and $200 for regional training. |
| Remodel Costs | $15,000 to $75,000; None for Non-Traditional locations during term of agreement. |
| Audit Fees | Audit discrepancies and reasonable actual costs of conducting audit. |
| Transfer Fees | 30% - 50% of the then-current initial franchise fee. |
| Securities Offering Fee | Up to $5,000. |
| Supplier Approval Fee | Actual costs of inspection and testing |
| Monthly Financial Report Deviation Fee | Maximum of $20 per hour |
| Legal Fees/ Arbitration Costs | Reasonable expenses associated with enforcement of agreements. |
| Construction Plans for New and Relocated Stores | Up to $2,500 |
| Local Architect and Local Mechanical/Electrical/Plumbing Engineers | $1,500 to $7,500 |
| NSF Checks or Draft | $50 for first occurrence; $75 for each occurrence thereafter. The franchisor may change this fee on notice. |
| Product and Service Purchases | Varies |
| Extra Operational and Marketing Support, Including Visits to Cure Operational Issues | Reimbursement of reasonable actual expenses. |
| Replacement Fee for Manuals | $2,500 for Recipe Manuals/Books/Panels. $500 for each other Manual. |
| POS Cash Register Reporting System Fees | Not to exceed $75 per month. |
| Relocation Fee | $1,000 (site package and plans may be an additional charge) |
| Renewal Fee | $5,000 |
| Monthly Package Reporting Late Fee | $25-$300 |
| Late Income Portion of Paperwork Fee | $50 or as Smoothie King adjusts from time to time |
| Resale Assistance Fee | Greater of $10,000 or 10% plus any advertising costs |
Date of FDD: 2011
The above information has been taken from the UFOC/FDD and online sources of Smoothie King.
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