FDD Talk: How Much Does a TCBY Franchise Make (Average Revenues and/or Profits)? (2024)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the TCBY franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a TCBY franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a TCBY franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned TCBY outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of TCBY’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• average, median, highest, and lowest gross revenue during the 53-week period from June 28, 2020 to July 3, 2021 (i.e., TCBY’s most recent fiscal year) for the highest quartile, second highest quartile, third highest quartile, lowest quartile, and all 89 franchised traditional TCBY stores, including retail stores in which TCBY is the dominant brand (with over 60% of sales for such stores derived from TCBY), that reported their revenue for the full 53-week period ended July 3, 2021

Section I – Background Information

21 Things You Need to Know About the TCBY Franchise

Celebrates 40th Anniversary with Continued Growth and Expansion Across the U.S.

1. In early June 2021, TCBY celebrated its 40th anniversary with the brand continuing to expand rapidly and thrive as communities reopen amid the rollout of the COVID-19 vaccine. With 12 new U.S. locations opened in the past year and six additional locations set to open in the coming months, TCBY leads the frozen yogurt market in nutrition, taste, and new product innovation.

2. Last summer, TCBY opened a new drive-thru in St. Augustine, Florida, a new self-serve store in Bayonne, New Jersey, focused on catering with a late-night walk-up window, and a counter-service store in Navarre, Florida, that will appeal strongly to tourists.

3. To celebrate its 40th anniversary, TCBY announced a variety of sweet summer deals, including a magical, color-changing bowl for $1 that was available across all locations nationally while supplies lasted.

4. Nelson Tejada, chief executive officer of Famous Brands International, said, “This anniversary is a significant milestone for TCBY, and the success of the brand has only been possible because of our loyal fans, dedicated franchisees and team. We are grateful for continued customer support which has helped us expand to new locations in the past year and we are looking forward to bringing the brand to new locations and connecting with new customers.”

Releases Special Limited-Time Flavors for Continued 40th Anniversary Celebration

5. At the end of July 2021, TCBY announced that it was celebrating its 40th anniversary on Tuesday, August 3 by offering fans a Buy One, Get One for only 40 cents promotion from 3 to 7 p.m. local time at all TCBY locations nationwide. As part of anniversary specials throughout the summer, TCBY also featured Birthday Cake Batter and Strawberry Birthday Shortcake soft-serve flavors, as well as a delicious Birthday Cake hand-scooped flavor.

6. According to Nelson Tejada, chief executive officer of Famous Brands International, “We are thrilled to be celebrating the brand’s 40th anniversary, and this special offer is our way of thanking everyone for their support over the last four decades. We look forward to welcoming our fans and new guests to TCBY this summer to enjoy our frozen treats as they spend time with their loved ones.”

7. As the trailblazer of the froyo industry, TCBY was founded in 1981 in Little Rock, Arkansas, where it brought customers a delicious, healthier-for-you frozen dessert concept that started a dessert revolution. Today, TCBY is the only dual soft-serve and hand-scooped frozen yogurt franchise.

8. With more than 250 locations globally (at the time of the announcement), the brand leads the market in nutrition, taste, product quality, and customer satisfaction among a growing fan base. In addition to an extensive menu of low-fat, non-fat, and no-sugar-added flavors, TCBY’s Super Froyo offerings boast three or more grams of fiber, four or more grams of protein, seven types of live and active cultures, and are a good source of calcium and vitamin D.

Innovating to Stay Relevant

9. In mid-August 2021, as TCBY celebrated its 40th birthday, the brand said that it would be taking new steps to remain relevant, from designing smaller kiosks for traditional locations to working on its first drive-thru window in order to appease on-the-go customers.

10. Betsy Schmandt, president of franchising for TCBY and sister cookie company Mrs. Fields, said it isn’t that company leaders are worried about losing their edge. Company-led studies have found the TCBY brand awareness remains 50% higher than its competitors. But a significant drop in the number of its locations in the past 20 years – from nearly 1,800 in the early 2000s to roughly 250 in and out of the United States today – has cut into the company’s revenue, as it has with other restaurants facing what seems to be their middle age.

11. And like practically every concept not built around drive-ins, its revenue fell in 2020 – a percentage that Schmandt declined to specify but that Nation’s Restaurant News pegged at 25%. But the same company that’s moved 50% of its locations over the past decade to a self-serve model that’s dominated the frozen-yogurt sector, responded once again to consumer demand even as it was dealing with the industry-wide loss of customers. It added contracts with third-party delivery platforms and boosted sales through the format.

12. TCBY also developed a new 100-square-foot kiosk that can hold 12 three-gallon bins of frozen yogurt along with toppings, beverages, and specialty desserts and began deploying them through franchisees to malls and soon to airports. The smaller-format stations allow franchisees with more limited capital to buy into the concept, and it is designed to help landlords in spaces that lost multiple tenants during the pandemic to fill back again as customers return, Schmandt said.

13. And while it’s deploying that innovation, the chain also is preparing to open its first drive-thru window on a store in St. Augustine, Florida, in the next year. This is once again doubling down on the call for convenience, and company officials believe it could set the tone for a new store prototype.

14. Meanwhile, TCBY is back in growth mode. After opening just eight new locations in the halcyon pre-pandemic days of 2019, it opened 12 in 2020 and had 28 stores that either debuted in 2021, were under construction, or were under contract for development. “I think that Covid was really the kick to make us move a little faster on some of those aspects,” Schmandt said of the new designs and service models. “What most brands saw was an acceleration of customer trends around convenience.”

15. Some of those trends were underway even before the pandemic. A franchisee in Bayonne, New Jersey – located southwest of New York City – requested to open a walk-up window, transforming a self-service location into one manned by a single worker to serve late-night crowds. Schmandt said that while such efforts likely would be limited to areas with high pedestrian traffic, the chain will consider expanding that model in the future.

16. Additionally, TCBY continues in its effort to co-locate TCBY with sister cookie store Mrs. Fields, a co-branding that now is in 36 locations. Mall-located Mrs. Fields stores have recorded double-digit percentage year-to-date revenue growth versus 2019, and Schmandt said that company officials are confident that customers will return to malls in the coming years.

17. In the past six months, TCBY has signed several new franchise agreements that will push growth even further, Schmandt added. So, while the chain may be showing some gray hairs, it’s still got a spry attitude and plans to try new ways to reach a younger, yogurt-seeking crowd. Schmandt added, “ I think, in general, being a 40-year-old brand is a blessing. Our customers love TCBY. Our business is back to 2019 levels…I feel very confident in where we’re going.”

Company History

18. TCBY (The Country’s Best Yogurt) was founded in 1981 by Frank D. Hickingbotham in Little Rock, Arkansas. Hickingbotham was a serial entrepreneur and was looking for his next business venture when he first discovered frozen yogurt at a Dallas Neiman Marcus department store. His wife said that it was the best frozen yogurt she had ever had. Hickingbotham agreed that it was delicious and reportedly said, “This can’t be yogurt!” The Neiman Marcus frozen yogurt was so good that Hickingbotham decided to use the same product for his own frozen yogurt shop.

19. The first TCBY was a success and Hickingbotham brought in family members to open additional locations. Franchising started in 1982 and by the end of the 1980s, TCBY had grown to over 1,582 stores. Over the next few decades, TCBY continued to grow around the United States and expanded internationally.

20. In 2000, TCBY was acquired by Mrs. Fields and the new parent company was dubbed Mrs. Fields Famous Brands. Despite the early success, by the early 2010s, TCBY’s sales had declined and several stores were closed. However, TCBY is still one of the largest frozen yogurt brands in the U.S.

Entrepreneur’s Franchise 500

21. TCBY did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of TCBY franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Detailed information on TCBY’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year: 263
• Outlets at the End of the Year: 230
• Net Change: -33

2019

• Outlets at the Start of the Year: 230
• Outlets at the End of the Year: 202
• Net Change: -28

2020

• Outlets at the Start of the Year: 202
• Outlets at the End of the Year: 172
• Net Change: -30

Company-Owned

2018

• Outlets at the Start of the Year: 0
• Outlets at the End of the Year: 0
• Net Change: 0

2019

• Outlets at the Start of the Year: 0
• Outlets at the End of the Year: 0
• Net Change: 0

2020

• Outlets at the Start of the Year: 0
• Outlets at the End of the Year: 0
• Net Change: 0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• The information used to formulate this data set was derived from 89 traditional Stores including retail Stores in which TCBY is the dominant brand (with over 60% of sales for such Stores derived from TCBY) for the fiscal year June 28, 2020 to July 3, 2021.

• As of the end of TCBY’s most recent fiscal year, there were 172 Stores in operation, all of which were owned by third-party franchisees.

• TCBY excluded from that group 5 Stores which had less than 52 weeks of sales and 2 Stores which were temporarily closed for the entire fiscal year. These Stores were excluded because TCBY did not have results for the full fiscal year (either because their results for the full fiscal year were not available to TCBY, or because they opened during TCBY’s last fiscal year).

• Additionally, TCBY excluded from the data set 76 non-traditional Stores (those that, for example, are only open part time, that operate seasonally, that are located in non-traditional locations such as gas stations or are operated as an add-on to another primary brand).

• Those Stores were excluded for two reasons: (1) because of the wide variation in factors that made them non-traditional and (2) because the focus of TCBY’s sales efforts is on selling franchises for traditional locations. As a result, TCBY does not make financial performance representations with respect to non-traditional Stores.

• To determine the average Gross Revenue for each group shown in the table below, TCBY took the group’s total Gross Revenue (as that term is defined in the Franchise Agreement that you will sign), then divided that number by the number of Stores in the group.

• “Gross Revenue” means the aggregate of all revenue, in whatever form (including the value of all barter, exchange, trade, or other credit), attributed to the operation of your Store (whether or not in compliance with the Franchise Agreement) based on the gross (undiscounted) price of all products and services sold at or through your Store and all other revenue sources, but excluding all federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority.

• Gift certificate, gift card, and similar program payments will be included in Gross Revenue as and in accordance with the policies set forth from time to time in the Operations Manual.

• Gross Revenue also includes all insurance proceeds you receive for loss of business due to a casualty or a similar event.

• This is the same definition of Gross Revenue on which you will be required to pay royalties and marketing fees.

• In the table below, TCBY also reports the results by quartile. Each quartile represents 25% of the 89 Stores that form the data set.

• For each group, the reported average Gross Revenue is for the full fiscal year.

• Because the data set is comprised entirely of franchised Stores, the data is what those franchisees reported to TCBY or what the franchisees entered into the Store’s point-of-sale system and, consequently, reported to TCBY.

• For purposes of this Item 19, TCBY assumed the data they reported is accurate. It did not audit or otherwise verify the data reported to it.

• In the results below, TCBY also reports, for each group, the range and the median. The range reflects the low and high data point for each group. The median is the data point that is the center of all data points used for the group, except that, in a given group of Stores where there is an even number of Stores, the median is derived by adding the two numbers in the middle of the data set for the given group of Stores, then dividing that number by two.

Gross Revenue for the Entire Fiscal Year

• The following table provides the Stores’ results for TCBY’s last fiscal year, which ran for a 53-week period from June 28, 2020 to July 3, 2021.

Highest Quartile

• Number of Stores in Group: 22
• Average Gross Revenue: $515,646
• Median Gross Revenue: $447,570
• Range: $398,528 to $1,174,578

Second Highest Quartile

• Number of Stores in Group: 22
• Average Gross Revenue: $304,839
• Median Gross Revenue: $310,295
• Range: $225,627 to $398,501

Third Highest Quartile

• Number of Stores in Group: 22
• Average Gross Revenue: $196,295
• Median Gross Revenue: $191,563
• Range: $170,615 to $224,043

Lowest Quartile

• Number of Stores in Group: 23
• Average Gross Revenue: $125,803
• Median Gross Revenue: $123,414
• Range: $78,615 to $165,481

Total Group

• Number of Stores in Group: 89
• Average Gross Revenue: $283,850
• Median Gross Revenue: $224,043
• Range: $78,615 to $1,174,578

• Of the 22 Stores shown in the highest quartile, 7 Stores (32%) met or exceeded the average shown.

• Of the 22 Stores shown in the second highest quartile, 12 (55%) met or exceeded the average shown.

• Of the 22 Stores shown in the third highest quartile, 10 (45%) met or exceeded the average shown.

• Of the 23 Stores shown in the lowest quartile, 11 (50%) met or exceeded the average shown.

• Of the 89 Stores shown in the total group, 35 (39%) met or exceeded the average shown.

• The numbers provided in this Item 19 do not reflect the expenses associated with operating a Store (and, thus, do not reflect gross or net profit).

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

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