Carvel Franchise in 2024: Costs, Fee & FDD
Looking to invest in an iconic ice cream brand? Dive into the world of Carvel, a franchise with over 90 years of history, renowned for its daily-made soft-serve and ice cream cakes. Discover costs, earnings, and franchise insights!
Table of Contents:
Carvel is an iconic name in the ice cream industry, founded in 1934 by Tom Carvel. The origin story is legendary: Tom’s ice cream truck got a flat tire during a busy holiday weekend, and instead of packing up, he sold the slightly melted ice cream to eager customers. The success of that day laid the foundation for Carvel’s unique soft-serve ice cream and its journey to becoming a beloved American brand. Tom’s commitment to freshness and his innovative spirit helped carve out a space for Carvel, making it one of the first franchised ice cream businesses in the U.S.
Carvel’s core offerings include its signature soft-serve ice cream, ice cream cakes, and sundaes, along with a range of toppings and customizable flavors. What sets Carvel apart is its focus on freshness—ice cream is made daily in-store, providing that unbeatable creamy texture customers love. Their famous ice cream cakes, featuring layers of ice cream, chocolate crunchies, and frosting, are a fan favorite at birthdays and celebrations across generations. Carvel’s customer base is wide-ranging, appealing to families and individuals looking for a nostalgic treat or a special dessert for occasions.
Today, Carvel operates over 300 locations across the U.S., with a small international presence. It’s a recognized staple in neighborhoods and shopping centers, serving millions of customers who crave its fresh, high-quality ice cream. The franchise has grown steadily, with new shops opening yearly, and its presence is especially strong in the eastern part of the U.S. With each location dedicated to delivering fresh ice cream made daily, Carvel continues to stand out in the dessert franchise industry.
For franchisees, Carvel provides a strong support system, offering comprehensive training programs covering daily operations, product preparation, and customer service. This ensures franchisees can deliver the same quality that made Carvel famous. Additionally, Carvel’s franchise model includes ongoing marketing and operational support, making it a solid investment for those looking to dive into the dessert world. With its rich history, loyal customer base, and a proven business model, Carvel is an appealing choice for anyone passionate about ice cream.
Carvel Franchise Insights
- With a franchise model emphasizing freshness, every shop makes its ice cream daily, offering a competitive edge in quality over pre-packaged alternatives. This hands-on approach has helped maintain Carvel’s reputation for over 90 years.
- Carvel’s signature ice cream cakes represent 25% of its revenue, showing the power of its product diversification beyond just soft-serve. This makes the franchise appealing for high-demand occasions like birthdays and holidays.
- Carvel’s franchise footprint includes both standalone locations and non-traditional venues like stadiums, airports, and amusement parks, giving franchisees flexible business models to choose from. This adaptability increases brand visibility and customer reach in various markets.
Carvel Franchise Key indicators
Growth YOY (%)
0%
vs industry 0%
Total U.S. Franchised Units
326
3-Year Failure Rate
10%
vs industry 10%
Sales-to-Investment ratio
0.9:1
How much does it cost to open a Carvel franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Carvel franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Carvel franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Carvel below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $30,500 | $30,500 |
| Construction and Build Out Costs | $123,600 | $185,400 |
| Permitting | $515 | $1,030 |
| Equipment Package | $128,750 | $154,500 |
| Furniture | $3,625 | $4,150 |
| Menu Board, Graphics and Interior Signage | $9,800 | $22,250 |
| Exterior Signage | $5,150 | $12,360 |
| Computer System | $7,400 | $27,400 |
| Smallwares | $7,500 | $9,270 |
| TV/Music | $1,030 | $2,600 |
| Architect/Engineer | $5,150 | $10,300 |
| Rent | $2,000 | $7,500 |
| Grand Opening Marketing | $5,000 | $6,500 |
| Legal and Accounting Fees | $5,000 | $10,000 |
| Insurance | $1,125 | $6,300 |
| Misc. Opening Costs/Office Supplies | $1,800 | $6,800 |
| Security Deposits | $0 | $15,000 |
| Management Training Program Fee | $0 | $3,000 |
| Travel and Living Expenses during Training | $3,600 | $5,700 |
| On-Site Training Fee | $0 | $5,300 |
| Opening Inventory | $5,000 | $15,000 |
| Additional Funds - 3 Months | $32,500 | $50,000 |
| Total Initial Investment | $379,045 | $590,860 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
To open a Carvel franchise, or a similar dessert franchise in the ice cream industry, there are several financial requirements you’ll need to consider. Here’s a breakdown of the necessary capital, liquid assets, and net worth:
- Initial Investment The total initial investment for a Carvel franchise ranges from approximately $379,000 to $591,000 for a traditional location. This includes expenses such as equipment, inventory, store build-out, and other startup costs. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Requirement Franchisees are typically required to have at least $100,000 to $150,000 in liquid assets (cash or easily accessible funds) to ensure they can cover initial operational costs and unforeseen expenses. This figure is based on industry estimates for similar dessert franchises.
- Net Worth Requirement Most franchises, including Carvel, recommend a net worth of around $250,000 to $400,000. This ensures the franchisee has sufficient overall financial stability to manage the business effectively.
How much does a Carvel franchise owner make?
Calculating the salary of a Carvel franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Carvel franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Carvel Revenue & Gross Sales
Carvel’s recent revenue performance highlights solid sales figures for franchisees. The median gross sales for its franchises reached $505,958, reflecting consistent demand for its signature ice cream and cakes. This steady revenue performance underscores the brand’s strong market presence, particularly in high-traffic locations. While individual results may vary based on location and management, Carvel’s established customer base and product appeal provide franchisees with a reliable foundation for profitability.
Which key factors impact the average revenue performance of Carvel franchisees?
Several factors likely contributed to Carvel’s U.S. franchisee performance. First, the brand’s strong recognition and long-standing reputation in the ice cream industry ensure a loyal customer base, which drives consistent foot traffic. Additionally, Carvel’s focus on freshness, with ice cream made daily in-store, sets it apart from competitors and appeals to consumers looking for high-quality, made-to-order treats. The brand’s wide range of products, including its famous ice cream cakes, also creates year-round demand, particularly for special occasions. Strategic locations in high-traffic areas like malls and suburban neighborhoods further boost sales, while seasonal promotions and limited-time offerings help sustain momentum throughout the year.
Carvel Franchise Operational Costs
When opening a Carvel franchise, there are several key ongoing operational costs you’ll need to manage to keep your business running smoothly. These costs are essential for maintaining day-to-day operations and ensuring a high-quality customer experience.
- Staffing and Payroll Wages for employees, including hourly staff and potential managers, will be one of your primary recurring expenses. Adequate staffing is critical, especially during peak seasons.
- Inventory and Ingredients The cost of maintaining a fresh supply of ingredients like milk, cream, and toppings is essential. Regularly restocking for daily ice cream production is key to maintaining product quality.
- Utilities Running a Carvel location requires electricity, water, refrigeration, and air conditioning. These utility costs will vary depending on location size and operational hours.
- Equipment Maintenance Soft-serve machines, freezers, and other kitchen equipment require regular upkeep and repairs to ensure consistent product quality and avoid disruptions.
By keeping these operational costs in check, you’ll be better positioned to sustain and grow your Carvel franchise successfully.
Carvel Franchise Fees
When opening a Carvel franchise, it’s important to understand the specific fees tied to the operation. These costs are designed to support brand consistency, marketing efforts, and operational efficiency. Below are some key fees you should be aware of:
- Royalty Fee Currently set at $3.02 per liquid gallon of mix purchased, this fee is due upon delivery. It contributes directly to the brand’s ongoing support and ensures your access to Carvel’s proprietary mix, which helps maintain product quality across locations.
- Advertising Contribution To fund marketing and brand awareness initiatives, Carvel charges an advertising fee of $2.63 per liquid gallon of mix purchased. This ensures ongoing promotions and national campaigns that drive traffic to your store.
- Additional Fees There are additional fees for training programs, technology, and other items provided by Carvel that may be applied.
By understanding these fees and how they benefit your franchise, you’ll be well-equipped to budget accordingly and take full advantage of Carvel’s established systems and support.
Carvel Franchise Earnings
The earnings of a Carvel franchise owner can vary depending on factors like location, operational efficiency, and cost control. However, for owner-operators, the potential for profitability is promising. Based on the most recent data, the median gross sales for a Carvel franchise are approximately $505,958. For an owner-operator, estimated earnings are around $76,000, reflecting a 15% operating profit margin.
By actively managing daily operations, owner-operators can drive both sales and profitability, allowing for more effective cost management and customer service. This hands-on approach tends to maximize returns as the business grows, offering strong potential for those committed to overseeing their franchise closely. These figures demonstrate the earnings potential for a well-run Carvel location.
How to Open a Carvel Franchise
Becoming a Carvel franchisee involves several steps, from your initial inquiry to finally opening your store. The process is designed to ensure that you are well-prepared and supported throughout the journey. Here’s an overview of the key steps:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Application and Review After the initial discussion, you will complete a formal application detailing your financial background and experience. Carvel will review your application to determine if you’re a good fit for their franchise model.
- Discovery Day You’ll be invited to visit Carvel’s headquarters or a designated location for Discovery Day, where you can meet the leadership team, learn about operations, and ask questions.
- Financing and Site Selection After Discovery Day, you’ll secure financing and work with Carvel’s real estate team to find a suitable location. They will assist in lease negotiations and site approval.
- Training Program Carvel offers a comprehensive training program that covers everything from product preparation to daily operations. You will undergo this training before opening your store.
- Store Build-Out and Pre-Opening With the site secured, you’ll work with Carvel to build out your store and order equipment. During this time, marketing efforts and local promotions will be prepared for the grand opening.
- Grand Opening and Start of Operations Once construction is complete, your store is ready to open! Carvel will support your grand opening with marketing materials and ongoing operational assistance.
Pros & Cons
Pros
Established Brand: Carvel is a well-known and respected name in the ice cream industry with a long history of success. Its strong brand recognition can attract customers and drive sales.
Proven Business Model: With a median gross sales figure and a solid operating profit margin, Carvel’s franchise model demonstrates a proven track record of financial success.
Product Differentiation: Carvel’s focus on fresh, daily-made ice cream and signature products like ice cream cakes helps set it apart from competitors and creates a unique selling proposition.
High Demand for Ice Cream: The ice cream industry is consistently popular, with demand peaking during warmer months and holiday seasons, providing steady business opportunities.
Cons
Competitive Market: The ice cream industry is highly competitive, with numerous established and emerging brands. Standing out and capturing market share can be challenging.
Location Sensitivity: Success is highly dependent on the location of the franchise. Finding and securing a high-traffic area can be time-consuming and may impact overall performance.
Market Saturation: In some regions, the market may be saturated with similar dessert franchises, which can affect customer acquisition and growth potential.
Seasonal Fluctuations: Ice cream sales can be highly seasonal, with peak business during warmer months and slower periods in colder weather. This fluctuation can affect overall revenue and require effective planning to manage.
