Smoothie King is a popular smoothie franchise with over 1,300 locations across the United States and internationally. For many entrepreneurs, owning a Smoothie King franchise is an appealing business opportunity. However, a common question for prospective Smoothie King franchisees is “How much money can I make by owning a Smoothie King franchise?”
The Initial Investment
The first cost to consider is the initial franchise fee and total investment to open a new Smoothie King location. According to the Smoothie King franchise disclosure document (FDD), here are the initial investment ranges:
| Initial Franchise Fee | $40,000 |
|---|---|
| Total Initial Investment | $277,850 – $ 587,300 |
As you can see, the total amount to open a new Smoothie King franchise ranges from $277,850 to $587,300. This covers all the startup costs, including:
- Franchise fee
- Real estate and leasehold improvements
- Equipment and fixtures
- Signs
- Initial inventory and supplies
- Working capital and reserves
- Training expenses
- Grand opening marketing
- Professional fees
- Licenses and permits
- Furniture and decor
- Point of sale system
- Other miscellaneous costs
As you can see, opening a new Smoothie King requires significant upfront capital. But this investment is necessary to launch your new business and start generating revenue.
Royalty Fees
In addition to the initial franchise fee, Smoothie King franchisees pay an ongoing royalty fee. This is a percentage of gross sales that you pay to the franchisor on a weekly basis. According to the FDD, Smoothie King franchisees pay the following royalties:
- 6% of gross sales from the Smoothie King store
- 2.5% of gross sales to the Smoothie King national advertising fund
So in total, franchisees pay 8.5% of gross sales to the franchisor. The advertising fund is used for national marketing campaigns and materials to promote the Smoothie King brand.
Other Recurring Expenses
On top of royalty fees, here are some other regular expenses Smoothie King franchisees incur:
- Cost of goods sold (ingredients, supplies, etc.)
- Payroll expenses
- Rent payments
- Utilities
- Insurance
- Maintenance and repairs
- Local advertising
- Accounting and legal fees
These costs can range quite a bit depending on your location, store size, number of employees, and local regulations. But expect them to take a significant chunk of your gross revenue.
Profit Margin
So after paying all your ongoing expenses, what kind of profit margin can you expect as a Smoothie King franchise owner? Unfortunately, Smoothie King does not share exact financial performance data in its FDD. However, we can estimate potential profits based on some useful info provided.
First, the FDD states that the average gross sales for Smoothie King stores were $767,038 in 2019. It also says the average total expenses were around 45% of gross sales. Doing some quick math:
- Average gross sales: $767,038
- Average total expenses: 45% x $767,038 = $345,167
- Average gross profit = $767,038 – $345,167 = $421,871
So based on the avg. gross sales and expenses, the average gross profit for Smoothie King stores was around $421,871. Out of this, you would then have to pay 8.5% royalties equaling $68,859. That leaves a net profit before taxes of $353,012.
Assuming a 30% tax rate, the final average net profit for a Smoothie King franchise would be around $247,108 annually.
Owner Salary
As a franchise owner, you can choose to pay yourself a salary out of the net profits. Many franchisees pay themselves in the range of $60,000 to $100,000 depending on their personal financial needs.
You may also choose to reinvest a portion of profits back into the business for upgrades, improvements, and growth. It’s a balancing act between taking earnings versus building equity in your business.
Return on Investment
To determine the return on investment (ROI) for a Smoothie King franchise, you would compare your net profit to your total initial investment. Let’s use the average scenario:
- Average total initial investment: $432,575
- Average annual net profit: $247,108
With these conservative estimates, the average ROI for a Smoothie King franchise would be around 57%. This is a very good return compared to many other franchise opportunities and an attractive incentive for franchise buyers.
Putting it All Together
In summary, here are the key financial figures for a Smoothie King franchise owner:
- Total initial investment: $277,850 – $587,300
- Net worth requirement: $275,000
- Initial franchise fee: $40,000
- Royalty fee: 8.5% of gross sales
- Average gross sales: $767,038
- Average annual net profit: $247,108
- Return on investment: 57%
Of course, your specific results will depend on your store’s sales, costs, location, competition, and operational efficiency. But in general, Smoothie King offers franchisees a proven business model and strong brand to generate substantial profits from a growing health-conscious consumer market.
Advantages of Owning a Smoothie King Franchise
What are some of the benefits that make Smoothie King an attractive franchise investment opportunity?
- Popular and Growing Brand – Smoothie King is the leading smoothie bar franchise with over 40 years of brand power.
- Strong Unit Economics – The smoothie store model generates good profits on modest revenue due to the product’s high margins.
- Differentiated Products – Smoothie King focuses on nutritious blended fruit and vegetable drinks you can’t easily replicate at home.
- Scalable Business Model – Operations are easy to maintain with the right crew and systems in place.
- Franchise Support – Smoothie King provides training, site selection assistance, marketing resources, and ongoing operational guidance.
- Corporate Growth – As Smoothie King continues expanding, individual franchises benefit from growing national brand awareness.
Smoothie King has built an appealing franchise opportunity in the growing health and wellness food sector. Their strong corporate team provides the tools and support to help franchisees succeed with the proven Smoothie King concept.
Challenges of Owning a Smoothie King Franchise
Like any small business, operating a Smoothie King has inherent challenges franchisees need to prepare for. Here are some of the most common difficulties:
- Initial Investment – Coming up with $200k+ in startup capital is not easy and requires strong savings or financing.
- Employees – Hiring, training and retaining good staff is essential but often difficult in food retail.
- Inventory Management – Keeping ingredients stocked while minimizing waste takes careful planning.
- Health Regulations – Meeting local health codes and nutrition labeling rules requires close attention.
- Location Dependence – Smoothie sales are heavily influenced by picking the optimal site.
- Competition – Many other smoothie and juice bar options have emerged to compete for market share.
While Smoothie King offers a time-tested business model, franchise owners must execute well in all aspects of store operations, marketing, and management. It’s not a completely passive investment. Successful operators need to work hard and overcome these inherent challenges.
Steps to Opening a Smoothie King Franchise
If you’re up for the challenge, here is a general timeline of the steps involved in launching a new Smoothie King franchise location:
- Research – Spend at least 6 months thoroughly researching the brand, business model, costs, and your local market.
- Apply – Complete the Smoothie King application detailing your background, financials, and franchise goals.
- Interview – If accepted, you’ll meet with the corporate team to discuss opportunities further.
- Discovery Day – Attend a Discovery Day event to view operations first-hand at existing stores.
- Sign Agreement – Negotiate and sign your franchise agreement and pay the initial fee.
- Site Selection – Work with real estate broker and Smoothie King to locate and secure your store site.
- Lease & Permits – Finalize your lease contract and acquire local building permits.
- Build Out – Hire contractor to construct your store interior per Smoothie King’s specifications.
- Training – Complete 3 weeks of hands-on training at the Smoothie King University.
- Hiring – Recruit and train your store’s management team and employees.
- Inventory – Stock up on all ingredients, supplies, and equipment needed.
- Marketing – Promote your grand opening to attract customers.
- Opening Day – Welcome your first customers and start operations!
The entire process takes around 6-9 months from signing your franchise agreement to opening day. It requires hard work but the result is your own thriving Smoothie King store. Franchisees must bring dedication, organization, and business acumen to make their location a success.
Conclusion
In the growing $10 billion health food and beverage industry, Smoothie King provides a proven franchise opportunity with excellent profit potential. Initial investments typically range from $277,850 to $587,300 to launch a new location.
In return, the average Smoothie King unit generates around $767,000 in annual gross sales. After expenses and royalties, this results in average annual net profits of approximately $247,000 for a franchisee.
While any small business involves risk and hard work, Smoothie King offers a relatively stable franchising model with strong corporate support. For entrepreneurs interested in owning a semi-passive business in the fast-growing smoothie sector, a Smoothie King franchise merits serious consideration.
