Types of Business Models:

Franchise v.s License v.s Independent Operator

 

Within the Frozen Yogurt Industry, there are three types of business models that you can choose from when opening your store. See below to find out more details and which type of business model is the right choice for you!

 

Franchising:

A franchised store is one in which a store owner (franchisee) is granted the right from the corporate company (franchisor) to use their name, brand, products, and business model. For example, a majority of Subway stores that you probably see on a regular basis are franchised stores. They are owned and operated by an individual that has been given the right (by paying an upfront franchise fee) to open a Subway store for business. Now, with any franchised business, it is typical that the franchisee will pay a large upfront fee. This fee is what actually grants his or her right to operate under the franchised name. Once this initial fee has been paid, and the new franchise location is open for business, an ongoing (usually monthly) royalty fee is paid to the franchisor. These ongoing fees are typically a percentage of the monthly gross sales, and they are paid to the franchisor to not only serve as the royalty fee to the corporate company, but also for marketing purposes for the corporate company. Also, with a franchise, franchisees’ creativity may be limited because of the franchisor wanting to sell only a certain product line and have their store designed in a certain way (i.e. If you open a frozen yogurt franchised store and decide that you want to sell coffee or sandwiches as additional menu items, you may not be allowed to o er these because of the franchisor’s rules). Also, keep in mind that franchises usually carefully select who they can trust with their brand, so you may have to prove that you are capable of keeping their brand integrity. If you choose to go with a franchise system, be prepared to sign a contract to pay an already well-established company to operate under their brand and to use their business model. The franchisor will assist you from beginning to end with the initial setup and ongoing operating systems of the business in exchange for the franchise fee (initial fee) and royalty fee (ongoing fee). Owning a franchise will also allow you to seek insight and support from the franchisor when needed. This guidance helps people to feel more comfortable in the business process, especially if it is their first time owning and operating their own business. Another reason to open a franchise is to gain the customer base that will come with the brand recognition. While the Frozen Yogurt Industry is still on the rise, there are a few frozen yogurt brands that are recognized regionally, if not nationally. Many franchises in the United States are establishing themselves regionally to begin with and will start branching out as they gain popularity. Opening up a franchise allows you to attract customers who already know your brand and will come to your store because of this familiarity. While a franchise model may provide all of the initial setup and operational systems, keep in mind that this expertise is not free; again, it is in exchange for the initial franchise fees as well as the ongoing royalty fees.

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Licensing

Licensing is similar to franchising in that you (Licensee) must also enter into a contract and pay the corporate company (Licensor) a licensing fee (initial fee) in order to operate under their name and brand and to use their Intellectual Property. The main difference between franchising and licensing is the ongoing royalty fee. Under most licensing programs, the corporate company may not require an ongoing royalty fee. However, certain restrictions may still apply (i.e. the licensee may be required to purchase products such as yogurt mix, toppings and cups from the corporate company). In general, licensing programs o er the store owner more freedom and edibility in operating their frozen yogurt business. This is because the licensing fee grants the Licensee the right to use the Licensor’s brand name while operating mostly under the Licensee’s own terms and conditions. For example, if you wanted to o er additional menu items in your store, most Licensing programs would allow you that freedom.

we encourage you to do further research on these three options

Independent Operator:

If you choose to open a frozen yogurt store independently, you will have the ultimate freedom to control all aspects of your business. The name, location, logo, startup costs, store appearance, and product offerings are all tailored to your liking. This is a great option for those people that know exactly what they want to do with their frozen yogurt store. It is also a good option for those people that like to think outside of the box and do things their way. Not to mention, the startup costs of opening an independent frozen yogurt store can be dramatically less than that of a franchise or licensing program. With no initial franchise or licensing fees, and no ongoing royalty fees, independent store owners are able to retain more profits for themselves and for their business. While the lack of experience within the industry may be somewhat frightening to you or to someone wanting to open their own independent frozen yogurt store, we here at FYU do not want you to worry. With dedicated research and attention to detail, anyone can get their frozen yogurt store opened and operating successfully.