Menchie’s Franchise in 2024: Costs, Fee & FDD
Explore rise and fall of Menchie’s, a prominent frozen yogurt franchise with roughly 300 locations. Uncover essential details on startup costs, earnings, and why it is a franchise opportunity to be wary of.
Table of Contents:
Menchie’s is a self-serve frozen yogurt franchise that was founded in 2007 by Danna and Adam Caldwell. The couple wanted to create a place where families could gather and share moments over delicious frozen yogurt. Since its inception, Menchie’s has grown to become one of the most popular frozen yogurt brands, with a focus on providing a memorable and customizable dessert experience. The brand has carved out a niche in the dessert franchise world by emphasizing a family-friendly atmosphere and a welcoming environment for all ages.
At its core, Menchie’s offers self-serve frozen yogurt, with a wide variety of flavors and toppings that customers can mix and match to create their own unique treats. Additionally, Menchie’s offers smoothies, sorbets, and frozen cakes, catering to diverse dietary preferences, including dairy-free, gluten-free, and vegan options. The core customer base spans from children to adults, with a special appeal to families and groups looking for a fun outing. Menchie’s thrives in communities where people seek an interactive and personalized dessert experience.
In terms of its scale, Menchie’s has expanded significantly, boasting over 500 locations across more than 15 countries, including the U.S., Canada, and the UAE. With thousands of customers visiting daily, it has become a globally recognized brand in the frozen yogurt market. The franchise has maintained steady growth over the years, adapting to different markets and constantly expanding its menu to meet customer demands.
Menchie’s offers franchisee support, starting with comprehensive initial training, which includes operational and marketing guidance, followed by ongoing support to ensure success. Franchisees benefit from national and local marketing campaigns, in-store technology support, and product sourcing. Menchie’s also provides seasonal product rotations to keep offerings fresh and exciting. This strong support system is a key part of its success, making it easier for franchisees to build and maintain profitable stores.
Menchie’s Franchise Insights
- Menchie’s has 298 U.S. locations, with 297 being franchised and only 1 being corporate-owned, indicating a strong focus on franchise growth and ownership opportunities.
- The initial franchise fee is $40,000, with a total investment range between $165K and $425K, making it relatively affordable compared to other dessert franchises.
- Founded in 2008, Menchie’s has been expanding for over 15 years, offering potential stability for franchisees.
- The average Menchie’s location serves around 200 to 300 customers daily, providing steady foot traffic and consistent revenue potential for franchisees.
Menchie’s Franchise Key indicators
Growth YOY (%)
-1%
vs industry 0%
Total U.S. Franchised Units
297
3-Year Failure Rate
40%
vs industry 10%
Sales-to-Investment ratio
1.6:1
How much does it cost to open a Menchie’s franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Menchie’s 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 Menchie’s 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 Menchie’s below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $40,000 | $40,000 |
| Travel and Living Expenses While Training | $0 | $3,500 |
| Lease Deposit and Rent | $3,600 | $8,845 |
| Leasehold Improvements | $56,230 | $205,570 |
| Furniture, Fixtures, and Equipment | $46,593 | $97,328 |
| Computer (POS) System | $15 | $4,548 |
| Signage | $4,832 | $10,680 |
| Opening Inventory | $5,040 | $7,400 |
| Uniforms, Merchandise, Equipment, and Sales | $600 | $1,000 |
| Grand Opening Marketing | $1,000 | $3,000 |
| Utility Deposits, Professional Fees, etc. | $200 | $3,700 |
| Insurance (3 months) | $1,000 | $1,500 |
| Inspection Fee | $0 | $1,500 |
| Additional Funds (3 months) | $6,000 | $36,000 |
| Total Investment | $165,110 | $424,571 |
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 Menchie’s franchise, the required capital involves both the initial investment costs and a net worth requirement set by Menchie’s. Let’s take a closer look below:
- Initial Investment This is generally within the total investment range provided, which includes costs like franchise fees, equipment, initial inventory, and setup costs. For Menchie’s, this would be between $165,110 and $424,571. 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 While the exact figure is not specified, a common requirement for dessert franchises like Menchie’s is to have liquid assets in the range of $75,000 to $150,000. This is an estimate based on similar franchises in the food and dessert industry.
- Net Worth Dessert franchises often look for a minimum net worth of $250,000 to $500,000. Again, this is an estimate and can vary depending on location and specific franchise requirements.
How much does a Menchie’s franchise owner make?
Calculating the salary of a Menchie’s 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 Menchie’s 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.
Menchie’s Revenue & Gross Sales
Based on most recent analysis, Menchie’s franchises have a median gross sales of $460,973. This strong financial performance underscores the brand’s robust consumer demand and potential for significant revenue generation.
Which key factors impact the average revenue performance of Menchie’s franchisees?
The performance of Menchie’s U.S. franchisee median gross sales in recent years is likely influenced by several key factors. First, the post-pandemic recovery has driven higher foot traffic in family-oriented businesses like Menchie’s, as more customers seek out social experiences and treats. Additionally, Menchie’s commitment to rotating flavors and new product launches has helped attract repeat customers, while the rise of delivery services has expanded their customer reach. Another factor could be rising inflation, which may have driven up prices, contributing to increased gross sales, even if customer volume remained steady. Lastly, effective marketing campaigns and community engagement likely played a role in bolstering sales performance compared to the prior year.
Menchie’s Franchise Operational Costs
When opening a Menchie’s franchise, key primary ongoing operational costs to consider include:
- Labor Costs Paying staff for day-to-day operations, including front-end employees, store managers, and shift supervisors, will be one of the largest recurring expenses.
- Inventory and Ingredients Keeping a steady supply of frozen yogurt, toppings, and ancillary items such as cups, napkins, and spoons is essential to maintaining operations and customer satisfaction.
- Utilities Since frozen yogurt requires refrigeration, expect higher electricity costs to keep machines and storage units running efficiently.
- Lease or Rent Depending on the location, commercial real estate rent will be a significant ongoing cost.
- Equipment Maintenance Frozen yogurt machines and other kitchen equipment will need regular upkeep and occasional repairs to ensure smooth operations.
These are crucial operational costs to budget for when managing a Menchie’s location.
Menchie’s Franchise Fees
When considering a Menchie’s franchise, it’s important to be aware of the ongoing fees associated with the operation. These fees play a crucial role in maintaining brand consistency and supporting franchise operations.
- Royalty Fee Menchie’s charges the greater of $125 or 6% of gross sales, which is payable each week on Friday. This helps cover the cost of brand management and support provided by the franchisor.
- Marketing Fee A 2% marketing fee based on gross sales is also due weekly on Friday, ensuring that franchisees benefit from national and local advertising campaigns.
Additionally, there might be other fees involved, such as equipment maintenance, local marketing contributions, or technology fees, depending on the specific franchise agreement.
Understanding these ongoing fees will help you plan your budget more effectively as a franchisee.
Menchie’s Franchise Earnings
Based on the most recent data, Menchie’s franchisees with owner-operator status likely had $69,000 in earnings based on industry profit margins and median gross sales of $460,973. This shows a relatively strong earning potential for owner-operators who are actively involved in the day-to-day operations of the business. The earnings reflect the profitability of a well-managed Menchie’s location, where operational efficiency and local marketing strategies can further boost income.
It’s important to consider that these figures represent an average, and individual performance may vary depending on factors such as location, market demand, and operational costs. With the right strategy and support from Menchie’s franchise system, owner-operators have the potential to achieve these earnings while benefiting from brand recognition and established customer loyalty.
How to Open a Menchie’s Franchise
The process of becoming a Menchie’s franchisee follows a series of structured steps that guide you from the initial inquiry to the opening of your own store:
- 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).
- Review and Discovery After your inquiry, you’ll engage in an initial conversation with a franchise representative to discuss your goals, financial qualifications, and suitability for the franchise. If both parties feel it’s a good fit, you’ll receive a Franchise Disclosure Document (FDD) to review all the necessary details.
- Application and Qualification Once you’ve reviewed the FDD and are comfortable with the opportunity, you’ll complete an official franchise application. This step involves financial checks to ensure you meet the capital, liquid asset, and net worth requirements.
- Discovery Day Menchie’s typically invites prospective franchisees to a Discovery Day at their headquarters. This is an opportunity to meet the team, learn more about the brand, and see how the operation works first-hand.
- Signing the Agreement After Discovery Day, if both you and Menchie’s decide to move forward, you’ll sign the franchise agreement and pay the initial franchise fee to secure your location.
- Site Selection and Build-Out The next step is finding a suitable location for your store. Menchie’s assists with real estate selection, lease negotiations, and the store build-out process to ensure it meets brand standards.
- Training Before opening, you’ll undergo an extensive training program that covers store operations, marketing strategies, customer service, and more. Menchie’s provides ongoing support to ensure you are fully prepared.
- Grand Opening With the location set up, trained staff, and everything in place, you’ll officially open your Menchie’s store. Menchie’s assists with marketing the grand opening to attract customers right from day one.
Pros & Cons
Pros
Strong Brand Recognition: Menchie’s is a well-established, globally recognized brand with a loyal customer base, making it easier to attract foot traffic.
Lower Initial Investment: Compared to many other dessert franchises, Menchie’s has a relatively affordable initial investment range, making it more accessible to first-time franchisees.
Customizable Experience: The self-serve model allows for a highly personalized customer experience, which tends to drive repeat business and customer satisfaction.
Product Flexibility: With rotating flavors, dairy-free, and vegan options, Menchie’s adapts well to changing consumer trends, which keeps the menu fresh and relevant.
Cons
Seasonal Business: Frozen yogurt tends to be a seasonal product, which could result in slower sales during colder months, depending on your location.
High Competition: The dessert and frozen yogurt industry is highly competitive, with many similar brands and independent shops in the market.
Operational Oversight: While Menchie’s has a flexible business model, as an owner-operator, you’ll need to be heavily involved in the day-to-day management, especially at the start.
