Sub Zero Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$42,955 - $356,000
Total US Locations
40
Business Summary
Sub Zero Franchising, Inc. offers franchises to operate Sub Zero Ice Cream businesses. These businesses specialize in the preparation and sale of food and beverage items, primarily ice cream created using a unique instant freezing method. Sub Zero offers three types of franchise opportunities: traditional storefronts, mobile units (food trailers), and catering services that can also include school presentations. Franchisees operate using Sub Zero's distinctive business formats, systems, and proprietary recipes.
Corporate History
Sub Zero Franchising, Inc. was organized in Utah on October 19, 2010. The company's founder, Jerry Hancock, had been involved in Sub Zero operations since 2004 and the company's predecessor and former affiliate had offered Sub Zero franchises from 2006 to October 2010. All rights to certain intellectual property and franchise agreements were assigned to Sub Zero Franchising, Inc. in November 2010, and Sub Zero Franchising, Inc. has offered franchises since that time.
Financial Overview
Investment Range
$42,955 - $356,000
Franchise Fee (High)
$40,000
Royalty %
6%
Marketing %
2%
Equipment Costs (Low)
$6,155
Equipment Costs (High)
$205,000
Working Capital
$22,500
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Going concern qualification
Financial Health Notes
Sub Zero Franchising, Inc. has suffered recurring losses from operations and has a net capital deficiency. Auditors have noted that these conditions, combined with expectations of further losses during business development, raise substantial doubt about Sub Zero Franchising, Inc.'s ability to continue as a going concern.
Financing Details
Sub Zero Franchising, Inc. may offer financing of up to $10,000 for a franchisee's first Initial Franchise Fee, provided they meet credit standards. For a Storefront Franchise, franchisees pay $25,000 upfront and the remaining $10,000 can be financed. For Mobile Unit or Catering Franchises, franchisees pay $10,000 upfront and the remaining $10,000 can be financed. These loans have a 5% interest rate, compounded monthly, with monthly installments over a 24-month period. There are no finance charges or prepayment penalties. A personal guarantee is required. Default on the promissory note can lead to acceleration of the entire principal plus accrued interest, additional interest up to 18% per annum, collection expenses, and franchise termination. Financing is not offered for any additional franchise territory purchases.
Performance Metrics
Total US Locations
40
Franchised Units
38
Corporate Units
2
Avg Square Footage
825
Franchising Since
2010
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Sub Zero Franchising, Inc. has no litigation history to report as of the issuance date of this FDD, nor are there any pending legal actions required to be disclosed.
Bankruptcy History
Sub Zero Franchising, Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew, Sub Zero Franchising, Inc. franchisees must be in good standing, have the right to maintain possession of their franchise location, provide at least six months' advance notice, pay the then-current renewal fee (currently $2,500), sign the franchisor's then-current franchise agreement, execute a general release of claims against Sub Zero, and renovate or refurbish their franchise to meet current brand standards.
Training & Support Program
Franchisor Assistance
Before opening, Sub Zero Franchising, Inc. assists with site selection and lease negotiation (for storefronts) or designated vendor introduction (for mobile/catering units). They also provide layout and design standards, lists of approved products and suppliers, a confidential operating manual, reporting forms, and initial training for up to three individuals (including an owner/manager) at their Provo, Utah headquarters and on-site at the franchisee's location. Ongoing support includes periodic local advertising and marketing assistance, advice and guidance on new operational methods, access to group purchasing programs, system inspections, and regular updates to the operating system. Sub Zero also maintains a central website and may offer an intranet. Franchisees are required to access monthly newsletters and participate in monthly system-wide conference calls and an annual convention.
Initial Training Hours
91
Training Location
Provo, Utah, or another designated location, and on-site at the franchisee's location/territory
Ongoing Support
After opening, Sub Zero Franchising, Inc. franchisees receive periodic assistance with local advertising and marketing. Sub Zero provides advice and guidance on new or improved operational methods, business procedures, and the use of the Confidential Operating Manual, management materials, promotional materials, advertising formats, and Licensed Marks. This guidance is often delivered through an annual convention, a franchise system newsletter, and monthly system-wide conference calls. Franchisees also have the opportunity to participate in group purchasing programs. Sub Zero inspects and observes franchise operations to ensure compliance with standards. Franchisees are required to accept and access monthly newsletters, participate in monthly system-wide conference calls, and attend an annual convention.
Franchise Requirements
Ideal Candidate Profile
Sub Zero Franchising, Inc. seeks qualified individuals and entities that demonstrate financial and management capability to build, open, and operate their franchises. While full-time engagement is encouraged, it is not strictly required. However, the managing owner or a designated full-time manager must personally supervise the day-to-day operations and successfully complete Sub Zero's training program. The franchise offers a 15% discount on the initial franchise fee for honorably discharged U.S. military veterans and community first responders such as police, fire and rescue personnel, nurses, and doctors, suggesting these backgrounds are valued.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
supervisory
Territory Type
Protected
Territory Size Requirements
For storefront franchises, the protected area extends two driving miles from the franchised store, or 1/4-mile for high population density, high business density, urban, and downtown locations. For Mobile Unit and Catering Franchises, the territory is primarily based on zip codes or other political boundaries, considering the surrounding geographic area and population characteristics. Territories are generally granted for areas with a population of up to 100,000 persons, using U.S. Census Bureau estimates. Densely populated metropolitan areas may have considerably smaller territories, while less densely populated areas may have significantly larger geographic areas.
Staffing Notes
Sub Zero franchisees are not required to be actively engaged in their franchise on a full-time basis, but it is strongly encouraged. If a Sub Zero franchisee operates as an entity, they must designate one of their owners or a full-time employee as the "Manager." This Manager must personally supervise the day-to-day operations and must successfully complete Sub Zero's training program. The Manager needs to have the necessary authority to run the franchise and is not required to have an ownership interest if the franchisee is a business entity. Sub Zero reserves the right to approve or reject proposed managers based on its standards. If a designated Manager or managing owner fails to complete the initial training program satisfactorily, Sub Zero may terminate the franchise agreement. Sub Zero also specifies that a franchisee must hire and maintain sufficient staff to handle customer volume at all times, ensuring employees present a neat and clean appearance and provide friendly, efficient, sober, and courteous service. Employees and independent contractors must meet the standards, specifications, and procedures outlined in the Confidential Operating Manuals, which may include requirements for appearance, customer service, background checks, and drug testing. Employees who handle confidential information must sign non-disclosure agreements. Sub Zero prohibits hiring individuals found guilty of fiduciary misconduct, unlawful sexual conduct, felonies, or similar charges. The franchisee is solely responsible for training, scheduling, controlling, and disciplining their employees and independent contractors, and must comply with all state and federal labor laws, including wage and hour laws, and pay all associated taxes and benefits.