Smoothie King Franchise Disclosure Document Analysis

National Marketing Fee Can Increase Unilaterally to 5% With Minimal Notice

Smoothie King can raise the National Marketing Fee from its current 3% of Gross Sales to as high as 5% of Gross Sales with only 60 days' written notice to franchisees.

Source: p.14

Mandatory Supplier Arrangements Generate Large Rebates Funded by Franchisees

Smoothie King received approximately $8.7 million in vendor rebates in calendar year 2022 — roughly 18% of total revenues — from suppliers that franchisees are contractually required to use, creating a cost structure that franchisees cannot independently negotiate.

Source: p.34

Advertising Fund Governance Lacks Franchisee Oversight or Spending Accountability

Smoothie King controls all spending decisions for the National Marketing Fund and is not required to spend funds proportionally across the system or within any individual franchisee's market.

Source: p.14