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Baskin robbins franchise cost too high for franchise profits (2022)

Written by: Dylan Tymkiw
Last Updated: January 24, 2022
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This article is based on a video originally recorded on our Visa Franchise YouTube channel.

You might not need to be a retail expert to succeed with a Baskin-Robbins franchise.

Ice cream is one of the biggest industries in the US and worldwide and no wonder why – the ice cream industry is one of the few that lets you adapt fast to new trends and consumer preferences. Baskin-Robbins franchise is one of the biggest ice cream shop franchises and you could very well own one.

Baskin-Robbins Franchising has been offering franchises since 2006 and it is located in Canton, Massachusetts.

The ice cream industry is highly competitive! Competitors of Baskin Robbins include very well known franchises in the ice cream industry like Ben & Jerry, Nestle, or Häagen-Dazs as well as other Baskin Robbins ice cream shops nearby.

We will analyze the potential return on investment and whether the initial investment is worth the profit of a Baskin Robbins franchise.

Baskin-Robbins Continues Aggressive Expansion in Ontario with Plans for 18 New Locations - Canadian Franchise

How much is a Baskin Robbins Franchise?

The standard initial fee to open a Baskin Robbins franchise is $25,000. This fee must be paid out of pocket, which means you cannot borrow money to pay for this fee. For every additional unit that you open you have to pay a $25,000 fee.

Baskin Robbins Franchise Cost (Initial Investment)

The initial total investment needed for beginning operations is between $90,985 and $625,185 if you are opening your first Baskin Robbins franchise. 

Type of ExpenditureCategoryAmountMethod of PaymentWhen dueTo Whom Payment is to be Made
Initial Franchise Fee (20-year term)Build Cost12,500 to 25,000 Before openingUs
Real Estate DevelopmentBuild Cost123,000 to 267,000Lump Sum or FinancedBefore openingUs or Third Parties (Your Landlord and/or Contractor)
Equipment, Fixtures and SignsBuild Cost115,000 to 197,760Lump Sum or FinancedAs Incurred, Before OpeningApproved Suppliers
Restaurant Technology SystemBuild Cost1,440 to 15,000Lump Sum or FinancedAs Incurred Before InstallationApproved Suppliers
Licenses, Permits, Fees and DepositsBuild Cost6,000 to 20,000Lump Sum or FinancedBefore OpeningMunicipalities, Lessor or Us
Opening InventortyOther5,000 to 8,000Lump SumBefore OpeningUs and/or Approved Suppliers
Miscellaneous Opening CostsOther9,500 to 28,000Lump SumAs IncurredSuppliers, Utilities, Employees, Etc
UniformsOther400 to 800Lump SumBefore OpeningApproved Supplier
InsuranceOther3,500 to 8,300Lump Sum or payment optionsLump sum or down payment, before openingInsurance Company // Agent
Travel and Living Expenses While TrainingOther1,000 to 9,000Lump SumAs Incurred, before and during trainingAirlines, Rental Car Agencies, Restaurants, Hotels, etc
Marketing Start-Up FeeOther3,000 to 5,000Lump SumBefore OpeningUs or Third Parties
Additional Funds for First 3 Months of OperationOther0 to 52,000Lump Sum and As IncurredDuring First Three Months of OperationUs, Third Parties and Employees

a- Sub-Total Initial Franchise Fee $12,500 to $25,000

b- Sub-Total Build Costs $258,000 to $470,521

c- Sub-Total Other $22,400 to $111,600

TOTALS $90,985 to $625,185

Baskin Robbins Ongoing Costs and Fees:

Continuing Franchise Fee: 5.9% of gross sales

Advertising Fee: 5% of total gross sales

This is significantly higher than other franchises in the industry.

What is required to open a Baskin-Robbins franchise?

Baskin Robbins has a series of requirements if you want to open a franchise. These requirements include having a net worth of at least $200,000 per unit and a $100,000 liquidity and going through the application process.

Some additional application requirements are:

  • Food service or multi-management experience
  • Submitting a business plan
  • Being passionate about Baskin Robbins and its products

Baskin Robbins Port Macquarie smashes Australian sales record | Port Macquarie News | Port Macquarie, NSW

 

How much do Baskin-Robbins Franchise owners make?

RegionsTotal Number of Restaurants in SampleAverage Sales% Restaurants at or Above Average
Total Continental U.S882$419,00343.65%
West -north245$449,40842.04%
West – South240$478,02542.50%
Mountain West242$363,30540.50%
East155$366,51643.87%

2019-2020 Franchise Average Net Sales: $419,003

The average net sales in the US are $419,003. However, sales seem to vary significantly depending on the location of the shop. This is important to note as you decide where to open your franchise.

1- Based on a midpoint investment of $358,085 with estimated profits of $41,900 at a 10% profit margin it would take about 10 years to recoup your investment.

2- Based on a midpoint investment of $358,085 with estimated profits of $62,850 at a 15% profit margin it would take about 8 years to recoup your investment.

3- Based on a midpoint investment of $358,085 with estimated profits of $83,800 at a 20% profit margin it would take about 6 years to recoup your investment.

Is Baskin-Robbins Franchise Profit Worth the Franchise Cost?

After a few years in the business, when you go to sell your franchise based on the median multiple of .44 and net sales average from 2019-2020 of $419,003 a Baskin Robbins franchise would sell for about $184,361. This is 51% less than the midpoint initial investment of $$358,085 which means you would most likely be selling at a loss.

Baskin-Robbins Franchise Income Statement:

Baskin-Robbins Income Statement

 12 days ended December 26,2020352 days ended December 14,2020December 28, 2019December 29, 2018
Revenues    
Franchise fess and royalty income17,279550,154596,169563,499
Advertising fees and related income14,199440,871474,387455,368
Licensing fees57415,69417,57016,798
Other revenues1223,4954,1764,132
Total revenues32,1741,010,2141,092,3021,039,797
Operating costs and expenses    
Advertising expenses14,199439,168474,387455,368
Amortization of intangible assets2,283   
Other operating costs and expenses1892,7593,8614,113
Total operating costs and expenses16,671441,927478,248459,481
Operating income15,503568,287614,054580,316
Other income (expense), net:    
Interest income1133409550
Foreign currency gain (loss), net3(32)(93)(178)
Total other income, net4101316372
Income before income taxes15,507568,388614,370580,688
Provission for income taxes1623,0673,7793,452
Net income15,345563,321610,591577,236

Baskin-Robbins is a profitable business for the franchisor with income that surpasses the half million dollars in every fiscal year. On top of that, Baskin-Robbins is seeing stable growth. Its revenue increased 5% from 2018 to 2019, and despite the pandemic which had a huge impact on competitors like Haagen-Dazs, Baskin-Robbins only saw a decline in revenue of 4% probably thanks to their delivery and take-out options. 

The Untold Truth Of Baskin-Robbins

How Many Baskin-Robbins Units Have Opened and closed?

System-wide Outlet Summary

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised20181,0728-79
201999324-44
202094957-55
Company-Owned2018050
2019070
2020090
Total Outlets20181,02913-36
201999331-44
202094966-55

The number of franchises have been in decay over the last three years, shrinking at a rate of over 50 outlets a year. This could be an indicator that the franchises are not performing well and that maybe they are not seeing significant profit. 

Conclusion

Baskin-Robbins is one of the most popular ice cream franchises in America. Ice cream is also the most popular frozen dairy product in the US, and no matter what, people will always consume it. It is also an industry that lets you adapt to new trends without a significant investment.

If you open a Baskin-Robbins franchise you can recoup your investment in 4 to 8 years depending on your profits, which is still faster than other franchises in the ice cream industry. When you go and sell your franchise, it will be at a loss.  

A positive aspect of Baskin-Robbins its robust delivery and take-out system which they continue to advertise which helped franchisees during the Covid-19 pandemic and it can also counter the location effect which makes Baskin-Robbins more accessible to people who do not understand a lot about real estate than other franchises in the ice cream industry.

It is important to note that the number of outlets has been in decline for the last three years. Which could be an indicator that franchise owners might be doing so well.

Our suggestion is to speak to at least one franchise owner before opening a franchise yourself. And to research which would be the best location for your franchise since location has a large impact on net sales.

If you think Baskin-Robbins is the right franchise for you, or you want to explore other franchise opportunities. Check out our listing page on the Vetted Biz website for thousands of franchises available for your investment. 

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