Magnolia Bakery Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$422,300 - $1,265,300
Franchise Fee
$39,000
Total US Locations
11
Business Summary
Magnolia Bakery operates retail stores specializing in classic American desserts like banana pudding, cupcakes, cakes, and cookies, along with coffee, tea, and related merchandise. Magnolia Bakeries offer their products for takeaway, delivery, and catering, and some locations also provide limited customer seating and host on-site events. The stores come in two formats: Flagship Stores that produce an expansive menu of items on-site, and smaller No-Bake Stores that offer fewer menu items produced off-site.
Corporate History
Magnolia Bakery International LLC was formed on January 25, 2011, as a Delaware limited liability company. The company began offering franchises for Magnolia Bakeries in July 2011. As of December 29, 2024, Magnolia Bakery International LLC had one franchised location in the United States, and its affiliates operated 10 Magnolia Bakeries. The company does not have any predecessors. Its parent company, Magnolia Group Holdings, Inc., was formed in 2020. An affiliate, Magnolia Operating LLC, formed in 2006, previously offered master license agreements for Magnolia Bakeries internationally but no longer does so.
Financial Overview
Investment Range
$422,300 - $1,265,300
Franchise Fee (Low)
$39,000
Franchise Fee (High)
$49,000
Royalty %
6%
Marketing %
2%
Equipment Costs (Low)
$294,600
Equipment Costs (High)
$832,500
Working Capital
$76,250
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Magnolia Bakery International LLC's financial statements show positive net income for 2022, 2023, and 2024. However, the company's operating results in 2023 and 2024 have been affected by global and economic factors, such as increased commodity and wage inflation. The company notes that if these factors continue to significantly impact its cash flow, it may need to increase borrowings or change its operating strategies, which could adversely affect the business. In 2024, Magnolia Bakery International LLC made large distributions to its members totaling over $4.6 million, which resulted in a negative members' equity position (deficit) of approximately $829,278 at the end of that year. Despite these challenges and the deficit in members' equity, the independent auditors have issued an unqualified opinion on the financial statements, meaning they found them to be presented fairly in all material respects.
Financing Details
Magnolia Bakery International LLC does not offer any direct or indirect financing to its franchisees. The company also does not guarantee any promissory notes, leases, or other obligations for its franchisees.
Performance Metrics
Total US Locations
11
Franchised Units
1
Corporate Units
10
Avg Square Footage
1,300
Franchising Since
2011
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
1
Litigation Summary
Magnolia Bakery International LLC has disclosed one past legal matter. An arbitration action was filed against Magnolia Bakery International LLC on January 20, 2017, by Eaternity s.a.l. (Off-Shore), an area representative for the Middle East and North Africa. Eaternity alleged that Magnolia Bakery International LLC breached its agreement by unilaterally terminating it and also claimed $109,000 for a separate payment obligation, seeking over $3,000,000 in total damages. Magnolia Bakery International LLC denied the claims, asserting its right to terminate due to Eaternity's failure to agree on a development schedule. The dispute was settled on December 20, 2017, with Magnolia Bakery International LLC agreeing to pay Eaternity an aggregate sum of $349,000 over 48 months, without acknowledging any breach or wrongdoing. Other than this concluded action, Magnolia Bakery International LLC reports no other litigation.
Bankruptcy History
Magnolia Bakery International LLC has no bankruptcy history to disclose.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Magnolia Bakery International LLC franchisees must provide written notice between six and nine months before the initial term ends. They must be in good standing, without any defaults on their agreements with the franchisor or any other financial obligations related to the bakery. Franchisees are required to renovate the bakery to meet current brand standards for new locations and demonstrate their right to continue possessing the franchised location. Additionally, they must meet the franchisor's qualifications for new franchisees, sign the then-current renewal franchise agreement (which may have different terms), and sign a general release of claims. A renewal fee, equal to 50% of the then-current initial franchise fee, is also required.
Training & Support Program
Franchisor Assistance
Magnolia Bakery International LLC provides extensive support to its franchisees. Before opening, the company assists with site selection by providing criteria and reviewing proposed locations and leases. Franchisees receive prototypical plans for bakery construction and layout, and the company reviews all preliminary and final design drawings. Initial training is provided through a New Franchisee Orientation program for the Managing Owner, and a four-week program for the Operations Manager and Baking Production Manager of the first Flagship Store. The company also furnishes a grand opening marketing plan and approved marketing materials. After opening, ongoing support includes additional training programs, advice and consultation on bakery operations, supplier review, and regular inspections of the bakery. Magnolia Bakery International LLC also manages and spends contributions to the Marketing Fund for system-wide advertising.
Initial Training Hours
288
Training Location
Online and in New York, NY at corporate offices and training bakeries
Ongoing Support
After opening, Magnolia Bakery International LLC advises and consults with franchisees on bakery operations through visits by representatives, distribution of information, meetings, seminars, and electronic communications. The company conducts periodic inspections to ensure compliance with the system. Franchisee Trainers are required to attend additional training programs as needed. Operations Managers may also be required to attend an annual training seminar. Franchisees are responsible for the costs associated with these additional training programs and seminars.
Franchise Requirements
Ideal Candidate Profile
Magnolia Bakery International LLC seeks franchisees who can designate a Managing Owner with authority over financial, operational, and legal matters. While owners are not required to participate personally in direct daily operations, they must designate a full-time Operations Manager and a full-time Baking Production Manager. These managers must meet the company's educational and experience standards and successfully complete the initial training program. For multi-unit developers, the company may reject proposed Multi-Unit Managers who do not possess significant experience in the multi-unit restaurant business.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Absentee Allowed
Territory Type
Protected
Territory Size Requirements
Magnolia Bakery offers a Protected Territory for traditional locations. This territory is typically a radius around the specific franchised location, though its perimeters can also be defined by geographical features like street boundaries, county lines, state lines, municipal boundaries, or railroad tracks. When determining the size of a Protected Territory, Magnolia Bakery considers various factors, including demographics, population density, the number of households in the area, the population's growth profile, and the competitive environment in that market. Magnolia Bakery does not grant a Protected Territory for non-traditional locations. For Area Development Agreements, Magnolia Bakery grants a Development Area, which allows the developer to open multiple Magnolia Bakeries within that specified geographic area, and the franchisor agrees not to open new Magnolia Bakeries there as long as the developer complies with the agreement.
Staffing Notes
Magnolia Bakery International LLC requires its franchisees to maintain a competent, conscientious, and trained staff sufficient to serve customers and operate in conformance with company standards. Franchisees are solely responsible for all employment decisions, including hiring, firing, and training employees. Key positions include a full-time Operations Manager and a full-time Baking Production Manager, both of whom must meet the company's educational and experience standards and successfully complete initial training. Franchisees must also ensure their employees adhere to dress codes and cleanliness standards prescribed in the Manual. Magnolia Bakery International LLC reserves the right to approve or disapprove of staff members if their performance negatively impacts the brand.