Risk Score
Pending analysis
Investment Range
$40,500 - $1,310,000
Franchise Fee
$20,000
Total US Locations
24
Business Summary
Sprinkles Cupcakes Bakeries are establishments that offer handcrafted cupcakes, cookies, brownies, and other baked goods, prepared according to specific recipes and procedures. Franchisees can operate two types of bakeries: Production Bakeries, which prepare proprietary mixes and products, or Pantry Bakeries, which receive proprietary mixes from Production Bakeries to prepare products on-site. The brand also offers Delivery Service to customers.
Corporate History
Sprinkles Franchise Group LLC was organized in Delaware on August 10, 2020, and operates under the name Sprinkles Cupcakes. While Sprinkles Franchise Group LLC itself had never operated bakeries or offered franchises before 2021, its related companies and their principals have been operating Sprinkles Cupcakes Bakeries since 2005. The company first started offering franchises in February 2021.
Financial Overview
Investment Range
$40,500 - $1,310,000
Franchise Fee (Low)
$20,000
Franchise Fee (High)
$40,000
Royalty %
5%
Marketing %
2%
Equipment Costs (Low)
$530,000
Equipment Costs (High)
$960,000
Working Capital
$45,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Sprinkles Franchise Group LLC's financial condition, as reflected in its financial statements, calls into question the franchisor's financial ability to provide services and support to franchisees. The company is dependent on its parent company, Sprinkles Cupcakes, LLC (SCL), to provide financial resources, administrative, management, support activities, and various other items. The financial statements do not include the cost of these financial resources received from SCL and therefore may not be indicative of conditions that would have existed if Sprinkles Franchise Group LLC had operated as an unaffiliated entity.
Financing Details
Sprinkles Franchise Group LLC does not offer any direct or indirect financing to franchisees. The company also does not guarantee any franchisee's notes, leases, or obligations. Franchisees are responsible for securing their own funding through banks or other lenders.
Performance Metrics
Total US Locations
24
Franchised Units
4
Corporate Units
20
Avg Square Footage
1,300
Franchising Since
2021
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Sprinkles Franchise Group LLC has no litigation to report in Item 3 of its Franchise Disclosure Document. No litigation is required to be disclosed in this Item.
Bankruptcy History
Sprinkles Franchise Group LLC has no bankruptcy history to report in Item 4 of its Franchise Disclosure Document. No bankruptcy is required to be disclosed in this Item.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Sprinkles Cupcakes franchisees must provide written notice at least 12 months (but no more than 15 months) before their current term expires. They must be in substantial compliance with their franchise agreement and all other related agreements. Additionally, franchisees must demonstrate their right to maintain possession of the site for at least 10 years following the expiration of the initial term, and they must renovate or remodel the bakery to meet Sprinkles Cupcakes' then-current requirements for new, similarly situated bakeries. Upon meeting these conditions, franchisees must sign Sprinkles Cupcakes' then-current form of franchise agreement (which may have materially different terms and fees) and pay a successor franchise fee equal to 50% of the then-current initial franchise fee. They will also need to sign a general release of claims.
Training & Support Program
Franchisor Assistance
Sprinkles Franchise Group LLC provides various assistance programs to its franchisees. Before opening, for those signing a Development Rights Agreement, Sprinkles Cupcakes helps determine the development area, the number of bakeries to open, and sets the development schedule. For all franchisees, the company identifies the bakery type (Production or Pantry), accepts the proposed site and lease, and provides mandatory specifications and layouts for the bakery, including an on-site Cupcake ATM. Sprinkles Cupcakes also conducts an Initial Training Program for the managing owner, general manager, and two assistant managers, and provides access to an Operations Manual. The company assists with the development of the grand opening marketing program and may provide guest services, including online ordering and a customer service center. After opening, Sprinkles Cupcakes advises franchisees periodically on operations based on reports and inspections, providing guidance on standards, pricing, purchasing, and administrative procedures through the Operations Manual, bulletins, electronic media, and phone consultations. The company provides updates to the Operations Manual and System Standards as they are implemented and maintains and administers the Brand Fund and System Website. Franchisees and their personnel may also be required to attend various ongoing training courses and conventions.
Initial Training Hours
360
Training Location
Certified Training Bakeries in various locations, currently expected to be in Dallas, Texas.
Ongoing Support
After opening, Sprinkles Franchise Group LLC provides ongoing support to its franchisees. This includes periodically advising franchisees on the bakery's operation based on submitted reports or inspections. The company guides franchisees on established standards, specifications, operating procedures, and methods, including setting menu item prices, purchasing required assets, and administrative procedures. This guidance is provided through the Operations Manual, bulletins, electronic media, telephone consultation, or at the company's office or the bakery. Sprinkles Cupcakes also provides updates to the Operations Manual and System Standards as they are implemented. Additionally, the company maintains and administers the Brand Fund and the System Website. Franchisees and their personnel, including the Managing Owner and General Manager, may be required to attend and satisfactorily complete various ongoing training courses, programs, and evaluation programs, including online training, at designated times and locations. Personnel may also need to attend specified conventions or other programs.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
non-exclusive
Territory Size Requirements
Sprinkles Cupcakes defines its franchise territories using geographic boundaries such as counties, cities, zip codes, or city blocks. The size of a territory can range from a few blocks to an entire state, depending on various market characteristics like demographics, traffic flow, natural and man-made boundaries, location of competing businesses, neighborhoods covered, and population density. For Development Rights Agreements, territories are typically determined using Designated Market Areas (DMAs), city, county, state, or other political boundaries, with a minimum size expected to be a city.
Staffing Notes
Sprinkles Cupcakes requires that each franchisee's Managing Owner, General Manager, and two assistant managers attend and complete the Initial Training Program to the company's satisfaction before the bakery opens. The General Manager, who must be approved by Sprinkles Cupcakes, is required to devote all of their business time and attention to the on-premises management and operation of the bakery. The Managing Owner is not required to participate personally in the direct, on-premises operation, but is recommended to do so, and must devote sufficient time to the business's promotion and enhancement. The General Manager and Certified Training Manager are responsible for properly training all other personnel at the franchisee's Sprinkles Cupcakes Bakeries. Labor costs for company-owned bakeries typically include hourly labor and salaries and benefits for a general manager and two assistant managers at each location.