“When Boris Lee travelled to California in 2011 with his family and discovered Menchie’s frozen yogurt, he was inspired by the friendly atmosphere, self-serve format, and delicious frozen treats.
Returning to Toronto, he started researching franchise opportunities with two partners — his brother and a close friend. There are many frozen yogurt companies ranging from small independents to big chains, and Mr. Lee studied each of them to determine which was best. After careful deliberation the partners settled on Menchie’s. Recently, they opened a new store in Toronto at St. Clair and Bathurst in the ground floor of a new condo tower.
“Menchie’s is very well recognized and growing in Canada,” Mr. Lee said. “Now they’ve gone global with the franchise so there is incredible support. A lot of marketing initiatives are driven through Canada and the U.S. brand recognition is something we really look at in understanding what they offer.”
The total cost of opening a Menchie’s is around $350,000 on average. The franchise fee is $40,000 for one store, or $105,000 for three, which brings down the cost to $35,000 each. Franchisees must provide one third of the capital to cover start-up fees while the rest is covered by a bank loan. On top of the franchise fee, they pay at least $150,000 for lease hold improvements, $100,000 or more for equipment, and there are also inventory and training expenses.
Founded in California in May 2007, Menchie’s has quickly expanded around the world, now numbering 285 stores in 12 countries. Canada has 33 locations and another 30 are scheduled to open in the next 90 days. Ultimately, Menchie’s plans to operate 200 stores across Canada and 150 of those are already spoken for, said Micheal Shneer, master franchisor of Menchie’s Canada and president of Yogurtworld Franchising Corp.
Menchie’s is a high-growth franchise, and the speed with which it’s spreading across Canada is hard to ignore. It was one of the eight frozen yogurt franchises operating in Canada registered with the Canadian Franchise Association. Its success is due to a number of things, including its tremendous celebrity cache.
At Mr. Lee’s St. Clair West location there is a wall covered with photos of teen favourites Paris Hilton, Selena Gomez, Justin Beiber and many others chowing down on its frozen yogurt. A large part of Menchie’s customer base is in the younger crowd, so when they see their pop idols eating at Menchie’s, they may want to do the same.
Darren Calabrese/National PostThe total cost of opening a Menchie’s is around $350,000 on average. The franchise fee is $40,000 for one store, or $105,000 for three, which brings down the cost to $35,000 each.
But this may not be the biggest contributor to its rapid expansion. “Part of the Menchie’s experience is engaging with the local community,” Mr. Shneer said. “We do it through fundraising, Facebook, Twitter, and some of the more fun things we do.”
“We allow each individual store to make its own decision about who it wants to support. We try and make it a neighbourhood-based decision,” he said. He also points to the many national and provincial campaigns. “For instance, this year we’ll be doing a big one with muscular dystrophy in which all the stores will participate. We’re also doing one in May against bullying and that’s going to be an Ontario-based one. We’ve done countless ones with cancer [fundraisers], The United Way… there’s probably not a week that goes by where we’re not doing a fundraiser.”
These community efforts give Menchie’s some social capital and makes one of its franchises a welcome addition to a neighbourhood.
Mr. Lee has already made community donations and is thrilled with the positive response his Menchie’s store has received so far.
“We want to understand what’s out there first of all,” Mr. Lee said. “There are nurseries. There are non-profit organizations. There are schools. There are after school programs. It’s important for us to get that information and get involved with the community. It’s going to be hard to get involved with everyone, but we certainly want to make sure we have a lot of the organizations in the area.”
But owning a franchise business isn’t for everyone, even if it is the crowded frozen yogurt sector you are getting into. Fred Asta is co-owner of Nom Nom Yogurt, a new independent chain in Vaughan that will soon open its second store and has a third planned for fall 2013.
“We actually went to Menchie’s first and all the locations were sold out,” says Mr. Asta. “With the lack of assistance once we looked through their franchise and their format we said, ‘ya know what, we can do this on our own and we can do it better.’ ” The store is similar to Menchie’s but has different product offerings such as pizza cones, and cakes.
“Us little guys are going to catch up to them. We’re not going to let those American guys beat us!”
http://business.financialpost.com/2013/04/29/menchies-takes-a-big-bite-out-of-canadas-frozen-yogurt-market/
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