Sweetfrog Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$111,350 - $658,500
Franchise Fee
$8,000
Min Cash Required
$3,000
Total US Locations
206
Business Summary
sweetFrog operates restaurants that offer self-serve frozen yogurt and other frozen dessert products made with its proprietary recipes. Customers can enjoy these products on a take-out or eat-in basis. sweetFrog offers various restaurant formats, including traditional, which are typically large storefronts, and non-traditional options like kiosks, standard counters, or mobile vehicles, which offer a more limited menu. These businesses serve the general public, including people of all ages, and experience seasonal demand, with higher consumption of frozen desserts in the summer months.
Corporate History
MTY Franchising USA, Inc., the franchisor for sweetFrog, was originally incorporated in Delaware on March 14, 2001, under a different name, and later converted to a Tennessee corporation on October 9, 2019. The sweetFrog brand itself was acquired by MTY Franchising USA, Inc. effective September 1, 2018, from a previous owner, SFF, LLC. SFF, LLC's predecessor, SweetFrog Enterprises, LLC, was formed in February 2009. sweetFrog's ultimate corporate parent, MTY Food Group, Inc., is a Canadian corporation incorporated in 1979.
Financial Overview
Investment Range
$111,350 - $658,500
Franchise Fee (Low)
$8,000
Franchise Fee (High)
$30,000
Minimum Cash Required
$3,000
Royalty %
5%
Marketing %
2.5%
Equipment Costs (Low)
$56,500
Equipment Costs (High)
$524,500
Working Capital
$20,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Going concern qualification
Financial Health Notes
The FDD for sweetFrog indicates that its financial statements for the fiscal years ending November 30, 2024, 2023, and 2022 include a going concern qualification from its auditors. This means the auditors have raised concerns about MTY Franchising USA, Inc.'s ability to continue operations, typically due to financial difficulties such as ongoing losses or insufficient working capital.
Financing Details
sweetFrog generally does not offer direct or indirect financing to its franchisees, nor does it guarantee their obligations under notes or other agreements. However, there are potential exceptions: sweetFrog or its affiliates may, in their sole discretion and for a fee, agree to guarantee a franchisee's lease for the restaurant site. Additionally, if a franchisee purchases a corporate-owned sweetFrog restaurant 'as-is' from one of sweetFrog's affiliates, sweetFrog may finance up to 100% of the purchase price. For such financing, the annual interest rate would range from 0% to 12%, depending on the franchisee's creditworthiness and the amount financed, with repayment terms between 12 and 60 months. This financing requires a first lien on all equipment and personal guarantees from the franchisee and their spouse, if applicable.
Performance Metrics
Total US Locations
206
Franchised Units
206
Corporate Units
0
Avg Square Footage
1,400
Franchising Since
2018
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
18
Litigation Summary
sweetFrog, its affiliates, and predecessors have been involved in 18 litigation cases, including both civil lawsuits and state administrative actions. The civil cases include disputes related to breach of contract, unjust enrichment, fraud, and violations of franchise investment protection acts. For example, Kahala Franchising was a defendant in a 2015 breach of contract and fraud case, which was settled. SFF, L.L.C., a predecessor for sweetFrog, was involved in a 2014 arbitration for fraud and unfair practices, settling for $300,000. Additionally, Famous Dave's, another brand under the parent company, had litigation with franchisees over franchise agreements, which was settled in 2018. State administrative actions against predecessors involved issues like selling unregistered franchises and failing to provide required disclosures, resulting in consent orders and fines, such as a $50,000 civil penalty for Triune, LLC in Maryland in 2012. Two recent lawsuits filed by Kahala Franchising, L.L.C. against franchisees for breach of contract and forcible entry and detainer occurred in the fiscal year ending November 30, 2024. No litigation is currently pending against sweetFrog itself regarding the sweetFrog brand, but its parent company's affiliates have had various disputes.
Bankruptcy History
sweetFrog does not have any bankruptcy information to disclose in its Item 4.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their sweetFrog franchise, franchisees must notify sweetFrog at least 120 days before their current agreement expires. They must be in good standing, meaning they have no outstanding defaults and have not received more than three default notices during the term (or more than two in the last five years). Franchisees must also have a suitable premises, sign sweetFrog's then-current franchise agreement (which may include materially different terms and higher fees), pay a renewal franchise fee, remodel or refurbish their location to meet current brand standards if required, and be current on all financial obligations. Additionally, they must sign a general release provided by sweetFrog.
Training & Support Program
Franchisor Assistance
sweetFrog offers various forms of assistance to its franchisees. Before opening, sweetFrog helps with approving the restaurant location (though the franchisee is responsible for selection), provides design drawings, identifies necessary equipment and furnishings, and sets operational standards. sweetFrog also provides an initial training program for two individuals, with an optional on-site representative for up to five days during the grand opening (one day for mobile units). After opening, sweetFrog maintains an ongoing advisory relationship, offering consultation on marketing, merchandising, and general business operations. It provides updated operating standards, conducts periodic inspections, and may inform franchisees about available software for administrative tasks. sweetFrog also manages an Advertising Fund, directing all marketing and promotional programs. Franchisees are required to attend mandatory refresher training programs, conferences, and seminars in the future.
Initial Training Hours
64
Training Location
Scottsdale, AZ
Ongoing Support
After their sweetFrog restaurant opens, franchisees receive continuous advisory support, including consultations on marketing, merchandising, and general business operations. sweetFrog provides updated operating standards and conducts periodic inspections and quality checks to ensure compliance. Franchisees are informed about approved software for administrative, bookkeeping, accounting, and inventory control procedures. sweetFrog also reviews and approves any proposed relocations of the business. Additionally, franchisees are required to attend future refresher or additional training programs, conferences, and seminars, for which a nominal registration fee may apply.
Franchise Requirements
Ideal Candidate Profile
sweetFrog seeks franchisees who are active, hands-on operators, not passive investors, who intend to be involved in the direct operation and daily affairs of their sweetFrog business. Ideal candidates should demonstrate good work experience and aptitude, the ability to dedicate their time and best efforts to the franchise, and possess an equity interest in the business. They must also be able to read and write English sufficiently to communicate effectively with employees, customers, and suppliers, and have no conflicting business interests.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Hands-On
Territory Type
Non-Exclusive
Territory Size Requirements
For all sweetFrog franchised businesses other than Vehicles, sweetFrog franchisees do not receive an exclusive territory. sweetFrog may establish other franchised or company-owned sweetFrog restaurants that may compete with the franchisee's location, including across the street or in the same venue. sweetFrog also reserves the right to market and/or test products or services through other channels of distribution that may compete with the franchisee's business. Vehicle type non-traditional sweetFrog restaurants will receive partial exclusivity to an Authorized Territory, meaning sweetFrog will not operate or grant any third party the right to operate another Vehicle in that specific Authorized Territory. However, sweetFrog may undertake any other activities in the Authorized Territory, including operating and granting third parties the right to operate any other type of sweetFrog franchised business other than a Vehicle.
Staffing Notes
sweetFrog franchisees are solely responsible for hiring, firing, training, supervising, and compensating their employees, and for maintaining employment records and ensuring employee safety and compliance with System Standards. Franchisees must employ at least one full-time, on-premises supervisor (Manager) who meets sweetFrog's criteria as a qualified restaurant operator and has successfully completed the training program. Managers must be able to read and understand sweetFrog's materials and communicate in English with employees and customers. All personnel must adhere to sweetFrog's standards for sanitation, cleanliness, and demeanor, and wear approved uniforms or clothing. Employees interacting with customers must be sufficiently literate and fluent in English (or the primary market language) to serve the public adequately.