Smoothie King

Date of Incorporation: 1987

Franchising Since: 1988

Headquarters: Covington, Louisiana

Country: U.S.

 

Business Description: Smoothie King offers a retail business offering smoothies and other nutritional drinks and general nutritional products. Smoothie King offers their original Smoothie King smoothies consisting of all natural blends of real fruits, pure fruit juices, and fruit and vegetable purees combined with nutritional supplements, other blended products, and meal replacement items that are custom made to order. Units also offer 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 Unit. 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.” Smoothie King offers franchises for “Traditional” and “Non-Traditional” locations. Traditional locations are full-service, franchised Units that typically operate in strip centers or other commercial shopping centers.

 

Financial Assistance:Smoothie King does not offer direct or indirect financing. Smoothie King does not guarantee your note, lease or obligation. Franchisees may be eligible for a streamlined review process for Small Business Administration (SBA) loan applications through the SBA's Franchise Registry Program.

 

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 mandatory for all franchisees and managers. 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 seven 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. Smoothie King also offers optional regional management training programs, including refresher training, for the franchisee and team members. Smoothie King may designate certain additional training courses for the franchisee or team members as mandatory.

 

Territory: The franchisee can operate a Smoothie King Unit 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. Smoothie King will not establish or operate a full-service Smoothie King Business, nor grant a franchise to any person other than the franchisee to establish or operate a full-service Smoothie King Business in the Protected Territory. Franchisees will not receive a Protected Territory nor have any rights to an area or Protected Territory if the Unit is located at a Non-Traditional Location or a Special location.

 

Term of Agreement and Renewal: The term of the franchise agreement for a traditional location is 10 years and five years for a non-traditional location (under addendum or less at the franchisee’s election if the lease term is less than five years). The agreement can be renewed for three additional terms of five years each.

 

Obligations and Restrictions: The franchisee does not have to conduct on-premises supervision or personally participate in the direct operation of the Unit. Smoothie King recommends, however, that the franchisee is actively involved in the 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’s 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.

 

Estimated Number of Units: 660

 

Investment Tables:

Initial Investment

Traditional location:

Name of Fee Low High
Initial Franchise Fee $15,000 $25,000
Three Month’s Rental & Deposit $6,000 $18,000
Computer Equipment/ POS System $8,500 $12,000
Grand Opening Marketing $2,500
Travel and Training Expenses $2,700 $4,200
Insurance (First year's premium) $1,500 $5,000
Other prepaid expenses $1,000 $2,500
Start-up supplies, inventory $7,000 $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 $25,000
Additional funds—3 months $15,000 $25,000
Estimated Total $144,400 $336,200

Non Traditional Location:

Name of Fee Low High
Initial Franchise Fee $12,500
Three Month’s Rental & Deposit $1,000 $10,000
Computer Equipment/ POS System $8,500 $12,000
Opening Advertising $1,000
Travel and Training Expenses $2,700 $4,200
Insurance (First year's premium) $1,500 $3,000
Other prepaid expenses $1,000 $2,500
Start-up supplies, inventory $7,000 $14,000
Equipment, Millwork, Fixtures/Signage and Graphics $39,000 $58,000
Leasehold improvements $10,000 $47,500
Legal, Accounting & Organizational Costs $500 $4,000
Miscellaneous costs $500 $3,000
Additional funds—3 months $15,000 $25,000
Estimated Total $100,200 $196,700

 

Ongoing Fees:

Name of Fee Amount
Operating fee 4% to 6% of Gross Sales
National Marketing Fee Currently 2% of Gross Sales; Smoothie King has the right to increase the Fee to 5% of Gross Sales upon 60 days’ notice
Regional Marketing Fee If established in a region where the Unit is located, Smoothie King will determine the amount of the Fee, not to exceed 2% of Gross Sales
Local Marketing Cooperative Contribution If established in an area where the Unit is located, Smoothie King will determine the amount of the Fee, not to exceed 2% of Gross Sales
Local Marketing Requirement Minimum of 2% of Gross Sales
Grand Opening Advertising Minimum of $1,000 for Non-Traditional locations Minimum of $2,500 for Traditional locations
Site Application and Evaluation No charge for first evaluation. After first evaluation, Smoothie King’s costs plus $4,000 to $6,000 for an impact study, if necessary.
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. Between $200 and $ 1,000 for each additional trainee.
Remodel Costs 5 Years: $0-$15,000 for materials
Transfer: $0-$10,000 for materials
Renewal: $75,000 for materials
Non-Traditional locations are not subject to a mid-term upgrade but are subject to transfer and renewal upgrades.
Late Remodel Fee $150 per month for each month after required to remodel
Audit Fees Audit discrepancies and reasonable actual costs of conducting audit.
Transfer Fees 30% to 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.
Design Documents for New and Relocated Stores Up to $2,500
Local Architect and Local Mechanical/Electrical/Plumbing (MEP) Engineers Range from $ 1,500 to $7,500
NSF Checks or Draft $50 for first occurrence; $75 for each occurrence thereafter.
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.
Technology Fee Up to $200 per month; currently not charged
Relocation Fee Up to $2,500 (site package and plans may be an additional charge)
Renewal Fee $5,000
Monthly Package Reporting Late Fee $25 to $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: 2013

The above information has been compiled from the FDD of Smoothie King.

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