5 Reasons Why Not to Buy Smoothie King Franchise

Table Of Contents

1 Top Drawbacks To Consider Before Buying A Smoothie King Franchise
2 Other important reasons for not buying the Smoothie King franchise are:
3 A Few Benefits Of Buying A Smoothie King Franchise
4 Conclusion

Smoothie King Franchises, Inc., the first smoothie franchise in the United States, is a privately held franchise company based in Dallas. Smoothie King, founded in 1973, has developed into a lifestyle company just like today’s innovative and everyone’s favorite Brooklyn Dumpling or Slapfish Shack Franchise that encourages people to maintain active and healthy lifestyles through great-tasting and nutritious food items.

A trend of healthy lifestyles has many people excited for the future. It’s promising news for Smoothie King, which will open 32 stores in the next few years. At the same time, Smoothie King franchise owners are facing an alarming 28% SBA default rate, which is a difficult situation.

Hi, this is Dan Rowe from Fransmart. We help our clients make an informed decision on buying multi-bagger franchise opportunities in the fast-casual restaurant industry.

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For a more secure return on investment, you can also find out more about franchises that have won awards and can grow in multi-folds.

On the prestigious Franchise 500 list of Entrepreneurs in 2020, Smoothie King was ranked No. 1 in the juice/smoothie category and No. 14 on the QSR Industry List.

Josh Nicosia is the newly appointed chief legal officer at Smoothie King, in charge of complying with all legal matters of franchise operations, mergers, acquisitions, and data privacy.

Smoothie King is a healthy franchise, but there are some terrible things you should know about them before buying. The conclusion is only after researching the company’s disclosure document, complaints from franchisees, lawsuits, financials, and more. The outcome? By using Fransmart Review, you can make an informed decision on buying.

Top Drawbacks To Consider Before Buying A Smoothie King Franchise

Buying a franchise is a sturdy financial commitment, and the brand which was profitable earlier or is paying does not mean it will give you profits in the future. Here are the main disadvantages of buying the Smoothie King Franchise

The disadvantages of buying a franchise:

Buying a franchise is a hefty financial investment.
The success of a franchise depends mainly on the industry and location.
Local laws and regulations may be out-of-date and challenging to navigate.

Other important reasons for not buying the Smoothie King franchise are:

#1 Higher Cost Of Investment As Compared To Other Brands

The total investment, franchise fee, and other investment costs to buy a Smoothie King’s franchise are much higher than other brands, making it challenging to buy. A few major investments to purchase its franchise are as follows:

Liquid Capital- $100,000
Net Worth- $300,000
Total Investment- $269,550 to $845,985
Furniture Fixtures and Equipment etc.- $115,500
Leasehold Improvements- $428,535
Grand Opening Advertising- $15,000

The Operating Fee is 6% of total sales with a $30000 minimum monthly fee. The National Marketing Fee is about 3% of sales revenue. Smoothie King is entitled to raise the marketing fee to 5% of total sales upon notice of 60 days. Besides, several other charges are there that you must consider and look through before buying a Smoothie King franchise.

To evaluate the accurate profit of Smoothie King Franchise owners, watch the video below, which gives you the potential financial model of how much profit is earned by any franchise owners after making investment and operation costs.

#2 Lawsuit for Discrimination and Violations of Disabilities Act

On February 6, 2021, a lawsuit against Smoothie King Franchises Inc. was filed by an employee being fired unfairly due to her Parkinson’s disease. The case was filed in the Eastern District of Louisiana, United States District Court, accusing Smoothie King, supposedly did fail to offer alternative accommodation, discriminated, and firing her because of her sex and disability. Such an allegation is unhealthy for franchises offering only healthy menus.

#3 Allegation For Unpaid Rent On Many Franchisees

A lawsuit was filed against Smoothie King franchisee, by Ivy League Enterprises Inc., a subsidiary of Cordish Cos., the Louisville Galleria LLC, for owing around $25,000 in unpaid rent. Such failure resulted in a lawsuit that is deteriorating brand image and left us perplexed about the financial mismanagement of franchisees.

#4 Store Closure Due To Racist Remarks On The Receipts

Two store locations of Smoothie King in Charlotte, N.C., were closed in 2019 after racist remarks were allegedly added to the receipt of customers. It was a disrespectful experience for the customers who received it, and they found it entirely inappropriate to use such language. Again, such incidents are wrong for a brand’s ethical image in society.

#5 Restrictions and Obligations

A few stringent restrictions and obligations mandated by Smoothie King make it challenging for a few individuals to buy its franchise.

Franchisees or competent and trained staff working on a full-time managerial position who has completed the initial management training program of Smoothie King’s should have on-location, full-time, and direct supervision of the unit they operate and develop at all times. Besides, only the services and goods that Smoothie King approves must be offered and sold by franchisees.

A Few Benefits Of Buying A Smoothie King Franchise

The No. 1 Smoothie brand is primarily focused on Health and Fitness. It has brand recognition, resources, and expertise to help franchisees succeed in the quickly expanding smoothie industry.

The brand’s team helps franchisees start a business and assist them in growing and succeeding year after year. It has a tried-and-true operating system that comes with lower entry costs. It is committed to helping franchisees get off to a beautiful beginning by providing a low entry cost and simplifying various business management procedures.

Conclusion

If you plan to buy the Smoothie King franchise, you must have a minimum of $100,000 liquid capital and $300,000 net worth. The franchisees need to invest between $269,550 and $845,985 in total. However, Smoothie King provides third-party financing and a 20% discount for veterans on the franchise fee. Besides, there are a few allegations, lawsuits, and drawbacks of Smoothie King that an individual must consider before stepping ahead to buy its franchise.

Starting your business is an exciting prospect. But it can also be tricky. It is best to research the franchise you’re thinking about buying and understand the terms and conditions, as well as pre-requisites to opening up a franchise. It’s also important to consider the reputation and brand name of the franchise in the market.

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