Pelican's Snoballs Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$81,750 - $230,800
Total US Locations
202
Business Summary
Pelican's SnoBalls stores specialize in selling flavored ice products and other related items, operating under the Pelican's SnoBalls brand and distinctive trade dress.
Corporate History
The Pelican's SnoBalls brand originated in 2001 when Adrian Johnson started operating the first Pelican's SnoBalls business in Raleigh, North Carolina as a sole proprietorship. Mr. Johnson later formed Pelican's SnoBalls, LLC in 2011. Pelican's SnoBalls USA, LLC was formed in North Carolina on August 1, 2016, and acquired the Pelican's SnoBalls system on January 16, 2017. Pelican's SnoBalls USA, LLC began offering franchises for its stores in the first quarter of 2017.
Financial Overview
Investment Range
$81,750 - $230,800
Franchise Fee (High)
$25,000
Royalty %
8%
Marketing %
1%
Equipment Costs (Low)
$37,600
Equipment Costs (High)
$146,000
Working Capital
$1,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Pelican's SnoBalls' financial condition raises concerns about its ability to provide services and support to franchisees. The company has a significant accumulated members' deficit, totaling $(280,835) in 2023 and $(131,023) in 2022. State regulators in California, Maryland, and New York have noted these financial conditions, stating that Pelican's SnoBalls has not demonstrated adequate capitalization and may rely on franchise fees to fund operations. As a result, in these states, the collection of initial fees from franchisees is deferred until pre-opening obligations are met and the business is open. The estimated initial investment range for a franchisee in New York also exceeds the franchisor's stockholders' equity as of December 31, 2021.
Financing Details
Pelican's SnoBalls does not offer any direct or indirect financing to its franchisees. The franchisor also does not guarantee any notes, leases, or other obligations for franchisees.
Performance Metrics
Total US Locations
202
Franchised Units
202
Corporate Units
0
Avg Square Footage
750
Franchising Since
2017
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
1
Litigation Summary
Pelican's SnoBalls has disclosed one litigation case involving its Virginia Predecessor. In 2016, the Virginia Corporation Commission alleged that Pelican's SnoBalls VA LLC and its owner violated the Virginia Retail Franchising Act by offering and selling franchises without proper registration. Without admitting fault, the Virginia Predecessor and its owner entered into a Consent Order in December 2016. They agreed not to violate the Act in the future, offered rescission to certain Virginia-based franchisees, and paid $15,000 in monetary penalties. No other litigation is reported for Pelican's SnoBalls.
Bankruptcy History
Pelican's SnoBalls has no bankruptcy history to report for the franchisor, its predecessors, or key management personnel.
Agreement Terms
Initial Term
15 years
Renewal Term
15 years
Renewal Conditions
To renew a Pelican's SnoBalls franchise, franchisees must provide advance notice, make improvements to the franchised business, ensure all monetary obligations throughout the term of the agreement have been satisfied, and comply with all provisions of the Franchise Agreement. Franchisees are also required to sign a general release of claims, execute a new franchise agreement (which may have materially different terms and fee requirements), pay a renewal fee, and complete any required training.
Training & Support Program
Franchisor Assistance
Pelican's SnoBalls provides several forms of assistance to its franchisees. Before opening, franchisees receive an initial training program at a designated location for themselves and their management employees, a copy of the confidential Brand Standards Manual, and an inspection of the store before it opens for business. Pelican's SnoBalls may also provide prototype and specifications for store construction and design, and a representative may be present at the store's opening. Ongoing assistance includes making additional training programs available as deemed appropriate, governing the regional marketing fund, and offering periodic assistance in marketing, management, and operation, which may include visits from accounting managers and other representatives to offer advice.
Initial Training Hours
47
Training Location
A Pelican's SnoBalls store or at corporate headquarters in North Carolina
Ongoing Support
Pelican's SnoBalls offers ongoing support to its franchisees through additional training programs as deemed appropriate. The franchisor also governs the Regional Marketing Fund. Furthermore, Pelican's SnoBalls may provide periodic assistance in the marketing, management, and operation of the franchised business, including visits from representatives like an accounting manager who will offer advice regarding operations.
Franchise Requirements
Ideal Candidate Profile
Pelican's SnoBalls encourages active participation from its franchisees, or requires an Operating Principal to devote full-time energy and best efforts to managing the store. If the franchisee is an entity, all owners must sign a personal guarantee. The Operating Principal must be approved by Pelican's SnoBalls, possess a good business reputation in the industry, successfully complete the training program, and be able to speak English. While the Operating Principal does not need an equity interest, they must supervise the store's operations.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Full-Time
Territory Type
Protected
Territory Size Requirements
The size of each Pelican's SnoBalls protected territory varies depending on the specific location of the franchised business and other factors. There is no minimum size specified for a protected territory, and the exact boundaries are outlined in Exhibit A of the Franchise Agreement.
Staffing Notes
Pelican's SnoBalls requires that the franchised location be actively managed full-time by either the franchisee or an approved Operating Principal who has successfully completed the initial training program. Franchisees must maintain the required number of specially trained management employees in the store's employ throughout the agreement term. If a specially trained management employee leaves, a qualified replacement must be enrolled in the training program within 30 days. All staff must cooperate with Pelican's SnoBalls representatives and maintain any professional certifications or licenses. Employees must also comply with dress code and personal appearance standards prescribed by the franchisor, including branded apparel. Franchisees must maintain a competent, trained staff in sufficient numbers to service customers and ensure good customer relations.