Franchising Since: 2006
Headquarters: Scottsdale, Arizona
Estimated Number of Units: 60
Franchise Description: Kahala Franchising, L.L.C. is the franchisor. Pinkberry franchises provide a health-conscious, customer-oriented environment that specialize in frozen yogurt with fresh fruit and other toppings, and may offer a choice of yogurt, yogurt drinks, smoothies, frozen desserts, beverages, and other products and services. Qualified parties may (i) construct a new Pinkberry restaurant; (ii) purchase one of the franchisor’s Pinkberry franchises by acquiring an existing business from another franchisee or from the franchisor; or (iii) convert all of their existing retail operations from another brand to the Pinkberry brand.
Territory Granted: The franchise is granted only for the location specified in the Franchise Agreement or a location to be approved by the franchisor. Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls.
Obligations and Restrictions: The franchise must be personally managed with on-premises supervision and directly operated by the franchisee or another partner, shareholder or member of the business organization, or a manager who must have successfully completed the training program. Spouses of franchisees must sign agreements as well. Additionally, franchisees must employ on a full time basis at least one on-premises supervisor (manager) for the restaurant. The manager of the restaurant must at all times be a person who meets the franchisor’s criteria as a qualified restaurant operator. The franchisor requires that the business is solely that of a Pinkberry restaurant, and franchisees may not conduct any other business or activity at the site of the restaurant without the franchisor’s prior written approval. For traditional Pinkberry franchises, franchisees must offer the full menu prescribed by the franchisor, subject to change from time to time in its sole discretion. Non-traditional Pinkberry franchises may offer a more limited menu than the traditional Pinkberry franchises, as detailed in the confidential manual.
Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If franchisees are not in default and satisfy certain conditions, they may renew for a single renewal term of five years.
Financial Assistance: The franchisor does not offer any direct or indirect financing or financing arrangement, nor will it guaranty a franchisee’s obligations under any note or other obligation, except potentially for the lease for the site or if franchisees purchase a restaurant corporate-owned “as-is” by one of its affiliates, and only in its sole and absolute discretion. If franchisees are currently an active or active reserve member of the U.S. Armed Forces, have been honorably discharged from the U.S. Armed Forces, or are a 501(c)(3) organization, they will receive a 20% discount on the initial franchise fee.
Estimated Initial Investment
| Name of Fee | Low | High |
| Initial License Fee | $14,000 | $35,000 |
| Lease Review Fee | $0 | $2,500 |
| Architect, Engineer and Other Design Professionals | $10,000 | $21,000 |
| Expenses While Training | $3,000 | $7,500 |
| Acquisition of Real Estate / Deposits and Initial Rent (minimum five year lease) | $9,340 | $23,350 |
| Construction | $82,000 | $215,000 |
| Furnishings | $11,000 | $28,000 |
| Equipment | $92,000 | $235,000 |
| Inventory | $10,000 | $15,000 |
| Utility Deposits and Fees | $0 | $3,000 |
| Business License | $300 | $600 |
| Insurance | $2,000 | $3,000 |
| PCI Compliance Costs (per year) | $150 | $1,300 |
| Catering/Delivery Service | $0 | $7,500 |
| Information Systems | $3,000 | $5,000 |
| Telephone | $150 | $300 |
| Signage | $8,000 | $17,000 |
| Legal and Accounting | $2,500 | $5,000 |
| Additional Funds - 3 months | $25,000 | $25,000 |
| Grand Opening Marketing | $10,000 | $10,000 |
| Depository Account | $3,000 | $3,000 |
| ESTIMATED TOTAL* | $285,440 | $663,050 |
Other Fees
| Type of Fee | Amount |
| Royalty Fee and Surcharge | 6% of gross sales. Surcharge is a maximum of $10 per week in addition to the royalty fee. |
| Advertising Fees | Up to 4% of gross sales. |
| Pinkberry Loyalty Program | Up to $140 per month per location. Required equipment, scanner; (part of POS package) and network switch $0-$420. |
| Hosted Services Fee | $115 per month. |
| Additional Persons Training Fee (KTEC) | $750 per person per day. |
| Additional Persons Training Fee | $1,750 per person per person ($1,000 per person ($500/40 hour week) for the in-store portion of the training program, and $750 per person for the new owner training portion of the training program). |
| Additional Training Fee | $300 per person per day. |
| Assistance Provided at the Franchisee’s Request | The franchisor’s out-of-pocket expenses and its employees’ travel expenses, wages and other expenses. |
| Annual Meeting Registration Fee | Up to $1,000 plus incidental costs to attend. |
| Depository Account | $3,000 (Must be replenished on a regular basis.) |
| Training Cancellation / Rescheduling Fee | Franchisees must pay the then-current per-day training fee plus travel expenses for each day the franchisor’s on-site trainers are on site but unable to train because they are not ready or must otherwise delay the on-site training. |
| Information Systems | The then-current reasonable charges. The franchisor has not begun to collect this fee. |
| POS System Annual Warranty Service | $1,000 to $2,000 per annum. |
| Brink Par Tech Systems | $85 to $200 per month based upon number of terminals/troubleshooting package. |
| Data Fees | Up to $75 per month (Subject to reasonable annual and/or service enhancement increases.) The franchisor has not yet begun to collect this fee. |
| Renewal Franchise Fee | 50% of the then-current initial franchise fee (not including any potential discounts or reductions). |
| Gift Card Redemption Fee | 11% of the amount of the gift card redemption. |
| Transfer Franchise Fee | $7,500 plus the then-current training fees (and reimbursement of the franchisor’s expenses) if the transferee/assignee must attend the initial training program. |
| Relocation Fee | $500 |
| Transfer Training Fee | $2,500 for two individuals ($500 for each additional individual). |
| Document Administration Fee | $500 |
| Private Offering | The greater of (a) $5,000 or (b) the franchisor’s reasonable costs and expenses associated with reviewing the proposed offering. |
| Default Interest | $50 plus interest at 1.5% per month or maximum legal rate, if less. |
| Late Report Fee | $100 per report. |
| Sublease Late Charge | 5% of the late or unpaid amount plus any late charges and interest incurred under the master lease as a result of the late payment (where applicable). |
| Collection Costs | All collection costs including reasonable attorneys' fees. |
| Non-Sufficient Funds Fee | $50 for each electronic funds transfer returned for non-sufficient funds; $25 for each check or draft returned for non-sufficient funds. |
| Audit | Cost of audit plus interest at Default Rate on underpayments or the maximum rate permissible by law. |
| New Supplier Approval Fee | A charge not to exceed the reasonable cost of the inspection and the actual cost of the test not to exceed $5,000. |
| Non-Participation Fee | $100 per day. |
| Reimbursement of the Franchisor’s Expenditures | Actual expenditures made on the franchisee’s behalf and its costs and expenses resulting from the franchisee’s default. |
| Early Termination Fee | The average monthly royalty and advertising fees paid for any consecutive 12 month period within the preceding 48 month period multiplied by the number of months remaining in the term of the Franchise Agreement, and the product is divided by 2. |
| Management Fee | 6% of the franchised business’ gross sales (in addition to the royalty fee and advertising fee) plus the franchisor’s direct out-of-pocket costs and expenses. |
| On-Line Ordering Program | $60 per month. |
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