Planet Smoothie Franchise Owners Expect ROI of 10+ Years (2023)
Written by: Vetted Biz Franchise Research Team
Last Updated by
María Fernández Amato: February 3, 2023
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Planet Smoothie is a leading franchise opportunity in the Food and Beverage industry, offering a range of delicious and refreshing menu items to customers seeking a healthier lifestyle. As a Planet Smoothie franchisee, you will have the opportunity to operate your own business that provides customers with a wide range of smoothies and juices made with fresh ingredients. With a focus on customer satisfaction and a commitment to delivering the best products and service, Planet Smoothie franchise is a trusted choice for those seeking a healthy, convenient meal option.
Contents
How Is Planet Smoothie Franchise Positioned in the Food and Beverage Industry?
The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people get employed in this industry. Food franchises make up 36% of the total franchise establishments in the U.S and it is expected to create 1.6 million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x.
How Much Is a Planet Smoothie Franchise?
The initial Planet Smoothie Franchise Fee ranges from $12,000 to $25,000. You have to pay this upfront fee when opening a Planet Smoothie franchise. This is quite low for a smoothie franchise. Generally, franchise fees are $30,000+ for smoothie franchises.
Planet Smoothie Franchise Cost
The estimated total investment necessary to begin the operation of a Planet Smoothie Franchise ranges from $193,150 to $421,500. The following costs are part of the upfront costs included in the initial investment for a Planet Smoothie. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Planet Smoothie franchise in 2022.
Estimated Initial Investment
| Type of expediture | Amount | To Whom Payment Is to Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee | $12,000 | $25,000 | Us |
| Lease Review Fee | $0 | $2,500 | Us |
| Rent/Security Deposit (for 3 months) | $6,000 | $20,000 | Landlord(s) |
| Travel and Living Expenses (3 persons) while training, not including salaries, if any, for you and your employees | $3,750 | $7,500 | Airlines, Hotels, Restaurants, etc. |
| Real Estate | $ | See with Us | |
| Real Estate | To Be Arranged | To Be Arranged | To Be Arranged |
| Architectural Fees | $7,000 | $20,000 | Licensed and Approved Architect |
| Leasehold Improvements | $75,000 | $190,000 | Approved Contractors and Vendors |
| Restaurant, Equipment, Furniture, Small Wares, Interior Signage and Menu Panels | $53,000 | $80,000 | Approved Vendors and Suppliers |
| Exterior Signage | $7,000 | $15,000 | Approved Sign Company |
| Computer Hardware, Software (POS System) | $3,000 | $5,000 | Approved Suppliers |
| PCI Compliance | $150 | $1,300 | Approved Vendor |
| Opening Inventory (food and paper) | $2,500 | $5,000 | Approved Suppliers |
| Business Insurance | $1,000 | $5,000 | Insurance Company/Agent |
| Miscellaneous Opening Costs | $4,750 | $17,200 | Approved Suppliers, Utilities, etc. |
| Grand Opening Marketing | $10,000 | $10,000 | Us |
| Depository Account | $3,000 | $3,000 | Your bank (we have the right to withdraw from this account) |
| Additional Funds (3 month initial period) | $5,000 | $15,000 | Us, Employees, Various Third Parties |
| TOTAL | $193,150 | $421,500 | (Does not include real estate costs and/or rent for the business location except for the initial security deposit) |
Ongoing Fees
Royalty: 5% of total biweekly Gross Sales plus a maximum Surcharge of $10 per week
Advertising Fee: Up to 5% of biweekly Gross Sales
How Much Do Planet Smoothie Franchise Owners Make?
| Average Gross Sales | Median Gross Sales | Number of Stores Measured | Number of stores that met or exceeded the Average Gross Sales | Percentage of stores that met or exceeded the Average Gross Sales | Number of stores that met or exceeded the Median Gross Sales | Percentage of stores that met or exceeded the Median Gross Sales | |
|---|---|---|---|---|---|---|---|
| All franchised outlets including co-branded outlets and Non-Traditional outlets | $262,704 | $231,503 | 131 | 57 | 44% | 66 | 50% |
2021 Planet Smoothie Median Franchise Sales: $231,503
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $307,325 | 10% | $23,150 | 14.75 years |
| 15% | $34,725 | 10.5 years | |
| 20% | $46,300 | 8.25 years |
Based on the median sales provided by Planet Smoothie’s franchise locations, at an average of a 15% profit margin it will take 10+ years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store, such as the Franchised store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other Food and Beverage stores; and the extent of market penetration and brand awareness that Planet Smoothie stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Planet Smoothie Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Planet Smoothie franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.55
When you go to sell a Planet Smoothie franchise based on the median multiple of .55 and net sales in 2021 of $231,503, it would sell for $127,327. This is significantly lower than the midpoint investment of $307,325.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
A few are currently listed on BizBuySell for less than $100,000.
MTY Franchising (Franchisor) Income Statement Key Insights
Statement of Income
| (in thousands) | Years ended November 30, | |
|---|---|---|
| 2021 | 2020 | |
| Revenue | $216,655 | $192,657 |
| Costs and expenses | ||
| Operating expenses | 142,077 | 141,443 |
| Depreciation – property, plant and equipment | $1,057 | $1,415 |
| Amortization – intangible assets | 13,888 | 14,174 |
| Impairment charge – property, plant and equipment | 27 | 579 |
| Impairment charge – intangible assets and goodwill | 2,862 | 62,143 |
| Interest expense | 16,264 | 16,764 |
| Management fees charged by parent company | 1,733 | 1,830 |
| $177,908 | $238,348 | |
| Other income (expenses) | ||
| Interest income | 1,536 | 683 |
| Gain (loss) on disposal of property, plant and equipment and assets held for sale | 1,986 | (276) |
| Gain on extinguisment of holdback | 3,549 | 407 |
| Income (loss) before income taxes | $42,296 | $ (45,284) |
The parent company of Planet Smoothie, MTY Franchising USA, is a very profitable business. MTY’s U.S. affiliate had retained earnings of $42.3 million in 2021. Compared to a loss of $45.28 million in 2020, they saw a good rebound from the pandemic.
How Many Planet Smoothie Units Have Opened and Closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 131 | 139 | +8 |
| 2020 | 139 | 140 | +1 | |
| 2021 | 140 | 149 | +9 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets (United States) | 2019 | 131 | 139 | +8 |
| 2020 | 139 | 140 | +1 | |
| 2021 | 140 | 149 | +9 |
Over the last three years, the company has expanded. Over the last three years, franchises have opened at a rate of 6 units a year.
Conclusion
With a focus on customer satisfaction and a commitment to delivering high-quality products and service, Planet Smoothie is a trusted choice for those seeking a convenient and “healthy” meal option.
The initial investment for a Planet Smoothie franchise ranges from $193,150 to $421,500, including an upfront franchise fee ranging from $12,000 to $25,000. Ongoing fees for a Planet Smoothie franchise include a royalty of 5% of biweekly gross sales, plus a maximum surcharge of $10 per week, and an advertising fee of up to 5% of biweekly gross sales.
According to the 2021 median franchise sales for Planet Smoothie, at an average profit margin of 15%, it will take ~10 years to recoup your initial investment. While the time to recoup your investment may be longer than other franchise opportunities, the earning potential of a Planet Smoothie franchise may be worth the initial investment.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Food and Beverage industry.
