Smoothie Factory is a popular smoothie franchise with locations across the United States. As a franchise, each Smoothie Factory location is independently owned and operated. So who exactly owns Smoothie Factory?
The Smoothie Factory franchise is owned by Kahala Brands, a franchisor firm that manages a portfolio of quick-service restaurant brands. While individual franchisees own and operate each Smoothie Factory location, Kahala Brands owns the overall Smoothie Factory franchise system.
The History of Smoothie Factory
Smoothie Factory was founded in 1973 by Steve Kuhnau. He opened the first Smoothie Factory in San Diego, California as a way to bring fresh and nutritious smoothies to more people. The smoothie shop quickly grew in popularity.
By 1989, Smoothie Factory began franchising and expanding to new locations across the United States. The franchise model allowed the company to grow rapidly while local owners operated each individual location.
In 2000, Smoothie Factory was acquired by Kahala Brands. Kahala Brands is a franchise management company that oversees a number of quick-service restaurant chains. Under Kahala’s ownership, Smoothie Factory continued expanding nationwide.
Kahala Brands Owns and Manages the Franchise
As the parent company, Kahala Brands serves an important role in Smoothie Factory’s franchise system. Kahala Brands owns the Smoothie Factory trademark and intellectual property.
They have established the operating systems, procedures, menus, and branding that define the Smoothie Factory franchise experience. Kahala Brands performs many key functions for the franchise, including:
- Developing new products and marketing campaigns
- Providing operational support to franchisees
- Managing relationships with suppliers and distributors
- Running training programs for franchisees
- Ensuring brand standards and quality control
So while individual franchisees independently own and operate each location, Kahala Brands owns the overall franchise system and manages the Smoothie Factory brand.
Franchisees Own Individual Smoothie Factory Locations
Within the franchise system, Smoothie Factory locations are owned and operated by individual franchisees. These franchisees have purchased the right to open a Smoothie Factory location in a specific territory.
As small business owners, Smoothie Factory franchisees are responsible for:
- Raising capital to finance their location
- Finding and securing a suitable location
- Hiring and managing staff
- Ordering inventory and supplies
- Paying bills and expenses
- Operating their location profitably
- Remaining compliant with brand standards
The franchisees own all the equipment, furnishings, inventory, and other assets involved in running their individual smoothie shop. They also assume all the risks and rewards of ownership, retaining any profits.
Franchisee Territories and Locations
Smoothie Factory franchisees have exclusive rights to open Smoothie Factory stores within a defined geographic territory. Their territory is mapped out in their franchise agreement.
Within their territory, franchisees are responsible for selecting and securing specific store locations. They negotiate leases, build out store space, obtain licenses and permits, and complete other tasks involved in setting up a new Smoothie Factory store.
Some Smoothie Factory franchisees choose to own and operate multiple store locations within their territory. Multi-unit franchisees take on greater investment and responsibility in growing the Smoothie Factory brand locally.
The Franchise Relationship
At Smoothie Factory, franchisees and the franchisor (Kahala Brands) enter into a contractual franchise relationship:
- Franchisees invest capital to open stores using the franchisor’s brand, systems, and support.
- In exchange, the franchisor receives ongoing franchise fees and royalty payments.
- The franchisor provides tools, training, and guidance to uphold brand standards.
- Franchisees have access to a proven business model and national brand.
This relationship allows both parties to benefit. The franchisor expands, while franchisees can become successful business owners with less risk.
Franchise Agreements
The expectations, rights, and obligations of both parties are detailed in a binding legal agreement. Smoothie Factory franchise agreements typically span 10-20 years. Agreements cover topics like:
- Term length
- Territorial rights
- Number of locations
- Brand use guidelines
- Fees and royalties
- Marketing contributions
- Operational standards
- Training requirements
- Renewal options
The franchise agreement provides structure and rules to protect the franchisor’s brand while granting franchisees access to operate under the brand. Agreements are legally binding contracts.
Ongoing Royalties and Payments
As part of their franchise obligations, Smoothie Factory franchisees make ongoing royalty payments to the franchisor. These royalties allow Kahala Brands to continue supporting the brand while earning revenue from the overall system.
Required payments include:
- Continuing royalty fee – Ongoing percentage of gross sales, around 5%, paid weekly or monthly
- Marketing fee – Contributes to national and regional marketing campaigns, around 2% of sales
- Renewal fee – Set fee when renewing franchise term, around $10,000
By paying these fees, individual franchisees gain the benefits of being part of an established national brand.
Opening a New Smoothie Factory Location
For entrepreneurs interested in owning their own Smoothie Factory franchise, the process includes several key steps:
- Submit a franchise application to be reviewed by Kahala Brands
- Meet financial requirements, including liquid capital of $125,000 – $350,000
- Complete Smoothie Factory training program
- Identify and secure a suitable store location
- Obtain financing for lease, equipment, construction, etc.
- Build out and furnish Smoothie Factory store
- Hire and train team members
- Order initial inventory
- Open for business and execute local marketing
- Operate store and remain compliant with franchise agreement
It can take anywhere from 7 to 18 months to open a new location. Kahala Brands provides extensive guidance and support throughout the process to set franchisees up for success. They also conduct ongoing training and share best practices.
Financing a Smoothie Factory
For most franchisees, obtaining financing is crucial to cover the $125,000 to $350,000 typically required to start a Smoothie Factory location. Financing options include:
- Personal savings and investments – Individual funds or pooled capital from partners/investors
- Small business loans – Provided by banks/credit unions based on credit/collateral
- SBA-backed financing – Programs helping entrepreneurs/small business owners, including SBA 7(a), 504 loans, etc.
- Rollovers for Business Startups (ROBS) – Uses 401(k) or IRA funds without early withdrawal penalties
- Invoice financing – Obtain funding based on unpaid customer invoices
- Equipment financing – Finance expensive equipment over time
- Crowdfunding – Leverage online platforms for investors to fund your business
Kahala Brands partners with lenders experienced with funding franchise businesses. They can help point prospective franchisees in the right direction to obtain capital. Having a detailed business plan and strong personal credit help improve financing options.
The Benefits of Smoothie Factory Franchise Ownership
Why do entrepreneurs choose to invest in owning Smoothie Factory franchises? There are several advantages:
- Established brand – Instant name recognition and existing customer base
- Proven business model – Franchisor provides training in operations, marketing, etc.
- Ongoing support – Access to franchisor’s knowledge and shared best practices
- Purchasing power – Discounts on equipment, supplies, etc. through franchisor relationships
- National advertising – Benefit from marketing done on national scale
- Scalability – Option to own multi-units and expand locally
Franchisees can leverage the brand, avoid start-up struggles, and gain ongoing support. The Smoothie Factory franchise offers the chance to own your own business with less inherent risk.
Keys to Smoothie Factory Franchise Success
To maximize the advantages of owning a Smoothie Factory franchise, successful franchisees do several things well:
- Follow the system and work closely with the franchisor
- Select a prime location with heavy foot traffic
- Maintain excellent unit-level economics
- Hire and train great team members
- Provide fast, friendly customer service
- Keep the store clean, inviting, and well-managed
- Consistently market your location
- Engage with the local community
Strong unit-level execution and sales, positive customer experiences, and local store marketing are key to driving performance. The top Smoothie Factory franchisees excel in these areas.
Smoothie Factory Franchise Ownership by the Numbers
Here is a snapshot of key Smoothie Factory franchise facts and statistics:
| Year Founded | 1973 |
| Franchising Since | 1989 |
| Franchisor | Kahala Brands |
| US Locations | 90+ |
| Global Locations | 100+ |
| Startup Costs | $125k – $350k |
| Net Worth Requirement | $500k |
| Liquid Capital Required | $125k |
| Initial Franchise Fee | $25k |
| Ongoing Royalty | 5% of gross sales |
| Term Length | 10 – 20 years |
| Renewal Fee | $10k every 10 years |
These figures provide an overview of typical requirements and investments to become a Smoothie Factory franchisee. Specific details vary based on each agreement signed.
Is a Smoothie Factory Franchise Profitable?
Smoothie Factory lists average annual gross sales per unit of $650,000 to $850,000. However, financial outcomes depend on many factors, including location, local management, competition, and economic conditions. Franchise Disclosure Document (FDD) from Kahala Brands can provide profitability details on existing locations.
Smoothie Factory franchisees must excel operationally to achieve strong unit economics. The franchisor offers guidance to franchisees, but local owners ultimately decide staffing, inventory management, purchasing, marketing, and execution.
With smart business practices and following the Smoothie Factory system, franchisees have the opportunity to operate profitable locations by leveraging the strength of an established brand.
Conclusion
In summary, while the franchisor Kahala Brands owns the Smoothie Factory franchise system, individual franchisees own and operate each local store. This franchise model has fueled Smoothie Factory’s national growth for over 40 years.
Becoming a Smoothie Factory franchisee allows entrepreneurs to own branded smoothie shops with training and support from an experienced franchisor. It offers a proven business model to capitalize on consumer demand for nutritious, convenient options. With hard work executing the fundamentals, Smoothie Factory franchisees have the potential for fruitful outcomes.
