In the year 1999, Edible Arrangements was launched in the state of Connecticut. Since that time, they have become a staple product for gifts, special events, and more. The company offers fresh fruit goods that are presented in artistic bouquets in addition to fruit smoothies, fruit juices, and fruit that has been coated in chocolate. These products have proven to be incredibly popular among American consumers looking for unique ways to celebrate special occasions with family, friends, and loved ones. Indeed, to date, Edible Arrangements has more than 900 stores and is continuously growing via the acquisition of new franchises in countries all over the globe.
On account of their popularity, Edible Arrangements is a popular franchising opportunity with relatively low startup costs compared to many other franchise options. Plus, it is one of the more accessible franchises for prospective franchise owners who don’t have access to a great deal of capital. Entrepreneurs who are interested in starting their own Edible Arrangements franchise or buying one of the company’s “ready to own” sites are required to fulfill a number of particular franchising criteria.
In this post, we’ll cover the ins and outs of owning an Edible Arrangements franchise, the costs associated with owning one, and more! We’ll cover the following topics in detail:
Edible Arrangements Franchise Cost
Edible Arrangements is a particularly low-cost franchise in comparison to other options on the market. The all-in investment – including the upfront franchise fee and initial investment to get started – is typically around $170,000 to $425,000. Here is a breakdown of all the different fees (both upfront and long-term) and requirements you will have to satisfy in order to have and operate an Edible Arrangements franchise:
The amount of money that must be invested by the Edible Arrangements franchisee in order to launch a new location is relatively minimal compared to many other franchise opportunities. The typical franchise investment is between $145,000 and $400,000 to get a new location off the ground and running. Restaurant franchises can reach millions of dollars for just one location, so Edible Arrangements is a comparably cheap franchising opportunity.
Net Worth and Liquidity Requirements
The national franchise requires that new franchisees have a liquid cash reserve of around $80,000 and a net worth of approximately $250,000. Again, this is much lower than many other franchises, which often require a minimum net worth between $500,000 and $1,000,000 and liquid cash reserves between $250,000 and $500,000.
The Edible Arrangement franchise fee is the amount of money that the franchisee is required to pay to the firm in order to be granted permission to use the company’s brand name in their business.
This charge is not refundable and is a one-time fee that grants you the right to use the franchise name (assuming you uphold all the other parts of your franchise agreement) for a certain period of time (your franchise agreement will make clear how long this period lasts). Typically, there are terms for renewal of your franchise rights once a certain amount of time has passed. The first payment for the franchise fee is $30,000 dollars, and it must be paid upfront in full before you can begin building your new franchise.
Royalty and Ad Fees
The national franchise also charges franchisees royalty and ad fees. Royalty fees are how national franchises make a profit off of their brands for their shareholders. Ad fees are how national franchises support advertising, promotional marketing, and more.
The royalty fee for an Edible Arrangements franchise is equal to 5% of the monthly gross income generated by the franchise unit. The ad fee for the franchise is also 5% of the monthly gross income. As such, once you begin operating, you can expect to pay 10% of your monthly gross sales to the national franchise – this is a fairly standard rate compared to other franchises.
Summary of Edible Arrangement Franchise Requirements and Costs:
- Franchise Fee: $30,000
- Initial Investment: $170,000 to $425,000
- Liquidity Requirement: $80,000
- Net Worth Requirement: $250,000
- Royalty Fee: 5% of monthly gross sales
- Ad Fee: 5% of monthly gross sales
Edible Arrangement requires that its franchisees open their stores in locations with a population of at least 75,000 residents. This is required in order to qualify for ownership. This is a relatively easy requirement to satisfy, and odds are you want to open a location in a market with more potential customers anyways. There’s no point in limiting the potential of your store by opening in a market that is not big enough to sustain it.
The holder of a franchise with the firm is allowed to keep their license for the company for a term of ten years. After the conclusion of this time period, the firm will anticipate that the franchisee will extend their license for an additional 10 years via a renewal.
History of Edible Arrangement Franchises
Edible Arrangements was established in the year 1999 by Tariq Farid in East Haven, Connecticut. Farid gained valuable expertise in the floral industry in 1985 when he opened his own flower store, which he called Farid’s Flowers.
He founded Edible Arrangements, a company that sells fresh fruit bouquets, by fusing the idea of his flower business with his longtime interest in fruit gift baskets.
After making many trips to Farid’s store, Chris Dellamarggio suggested that Farid open a franchise in the year 2000. Farid listened to Chris’s advice. After that, the first franchised site of Edible Arrangements debuted in Waltham, Massachusetts, a year later.
In addition to fresh fruit bouquets, businesses provide chocolate-covered fresh fruits, cheesecakes, pastries, cupcakes, gourmet popcorn, and other foods and treats that may be purchased as boxed gifts to present for events, special occasions, or just for the spirit of gift giving. This gives franchise owners a wide range of products to offer that appeal to a large spectrum of potential customers.
Edible Arrangements offers a selection of sweets suitable for immediate consumption, including fruit smoothies, fruit parfaits, fruit salads, and blended fruit yogurt drinks, in addition to their traditional flower arrangements.
The company prides itself on the quality of its customer relations program. They run a rewards and loyalty program with more than 2 million people signed up for it. Once a consumer enrolls in the loyalty program, they become eligible for perks such as a free birthday present, surprise deals, and a streamlined checkout procedure.
The company has struggled as of late, shedding a lot of stores to closure. According to Entrepreneur, the number of Edible locations has fallen 17% over the last few years from a peak of over 1,100 to around 930. However, they have started to turn things around post-pandemic. In September of 2021, they posted a 32% sales gain turnaround and have begun the process of climbing back after a few tough years. So, while there are no guarantees that your franchise will be a success, if you are confident about the brand and demand in your area, you could be part of the turnaround.
Procedure for Applying for a Franchise
Contacting the organization’s development team is one of the first actions that must be taken in order to become the owner of an Edible Arrangements franchise. This is the first step in getting the ball rolling so that you can begin asking questions about the franchise, requirements, logistics, and more.
In addition to this, you will need to fill out an application for a franchise, in which you will be required to divulge the following information: your education, your job experience, the financial resources you have available, and your general motive for wanting to start the franchise. This will allow them to assess your fit and whether they think you can be a strong and competent franchise owner.
Additionally, you are required to go through the franchise disclosure paperwork. This is a pre-sale document that provides an overview of the franchising firm as well as the business prospect.
Make a plan for your company’s future and do your research
After you have finished filling out the franchise application, you will be required to go through the due diligence process.
During the length of time allotted for due diligence, you will be required to compose a business plan and appear in person at a “discovery day” held in the Connecticut headquarters of the firm.
Further information about the Edible Arrangements brand will be provided to you, and you will also have the chance to speak with top executives. During the length of time allotted for due diligence, you will also have the opportunity to arrange to finance the franchise investment.
Franchise approval process
Following the conclusion of the business planning and research phases, the firm will grant you final approval of your franchise application and proceed with the execution of a franchise agreement.
Edible Arrangements has a real estate team that will work with you to find the ideal site for the new shop within the context of your market. The group will also assist in finalizing the lease agreement for your facility and negotiating the conditions of any real estate deals.
You are required to create a grand opening plan in addition to receiving training before you are allowed to launch your company.
Get yourself ready for the associated costs
You will, of course, have the costs we already discussed in terms of your franchise fee and initial investment to build out your store, buy equipment, etc. However, a new Edible Arrangements franchise location will incur additional expenses. This will include costs for signs, printing, and graphics, starting inventory, insurance, and up to three months’ reserve cash.
You will want to make sure you have begun budgeting out all these costs and creating a clear financial plan for at least your first year of operation. If you need help, you can talk to the national team for information about resources you may be able to take advantage of to help you out. After all, they are there to help you create a realistic and sustainable operational plan for your location. They want you to succeed because if your location succeeds, they succeed.
Other Key Details
You should be aware that the information included in this article is not all of the information that you will need in order to launch your franchise unit.
You will be able to find further information on the process of opening an Edible Arrangement franchise on their website, and you will also be asked to submit your application to the company via the website of the company.
When the franchise team has finished reviewing your application, they will provide you with feedback. You will be provided with a franchise manager after the firm has decided whether to offer you a franchise opportunity. The franchise manager is going to be the one who is in charge of doing further examinations to determine whether or not you are qualified to start a franchise unit with the firm.
It is necessary for him to verify both your financial situation and your capacity to perform your duties as an Edible Arrangement franchisee in an efficient manner.
As soon as the franchise manager has determined that you meet all of the requirements necessary to launch a franchise unit, he will coordinate the efforts of the other members of his team to provide assistance to you in launching your Edible Arrangement business unit.
Financing Options for Edible Arrangement Franchise
If you are going to start a franchise business, it is likely that you will need to obtain some form of financing to give you access to the capital that you need to get the business off the ground and running. Here are some popular forms of financing that many franchise owners take advantage of when financing their storefronts:
The Small Business Administration (SBA) is a U.S. federal government agency that provides small companies with access to loans guaranteed by the federal government. This backing allows lenders to make funding available to borrowers who would not fit the conventional qualifications, and it provides borrowers with attractive interest rates and conditions of repayment. As such, SBA loans are a go-to resource for a wide array of small businesses.
However, the process of applying for SBA loans may be time-consuming. They require considerable documentation, and the application process is long and thorough, assessing the company, its business plan, credit history, and more.
The SBA’s most popular loan program is the SBA 7(a) loan that they offer. The SBA 7(a) loan is a term loan that allows borrowers to receive up to $5 million dollars in funding for a term of up to 25 years.
It is important to remember, however, that SBA loans can only be used for certain franchises that have already been pre-approved by the SBA in advance. The list of franchises the SBA has pre-approved can be found on their website in their online franchise directory.
Term loans are another popular option for small business owners and franchise owners. Term loans are a broad category of loans (for instance, the SBA provides term loans). With a term loan, the borrower receives a lump sum of cash which must be returned over a certain amount of time at a predetermined interest rate. They can come with both fixed and variable interest rates.
Both conventional banks and alternative lenders (like Biz2Credit!) are able to provide you with term loans. There are pros and cons that come with both of these types of lenders.
Traditional bank loans are notoriously difficult to qualify for, and they have very long application processes that will dive deep into your credit history, your business and its plans, and more. This is how traditional banks assess the risk associated with lending to you, and they are very thorough in their approach. However, because of this process, traditional banks are able to offer more favorable interest rates.
Alternative lender loans, on the other hand, are much simpler to obtain. They tend to have very quick online application processes, and you can often get approval and funding in as little as 24 hours. They also have much less stringent standards for borrowers, making their loans to a wider array of businesses. However, because the due diligence process is less intense, loans from alternative lenders have higher interest rates to compensate for the additional risk the lender is taking on.
Lines of Credit
Lines of credit are different from other loans in that they last for an indefinite period of time (often 10 years with the option to reapply or extend your line of credit) and provide year-round access to funds. With a line of credit, you may borrow money as required up to a maximum amount that has been agreed upon in advance. You are only required to pay interest on the amount of money you actually borrow, and you are free to borrow more funds whenever you need them. Once you repay what you have borrowed, you can then borrow that amount of money again.
Lines of credit are helpful for shoring up cash flow and making short-term purchases; however, since the interest rates on lines of credit are often variable, they are better suited for interim financing rather than long-term funding. So, for instance, you can use a line of credit to make a purchase that you need to make today and don’t have time to secure long-term financing for, and then you can search for long-term financing to pay off the line of credit.
Once your business is up and running, it is highly recommended that you look into qualifying for a line of credit. They can be a life-saving source of funds in a tight cash flow pinch. It is not uncommon for otherwise healthy businesses to go out of business on account of cash flow issues – having quick and easy access to cash can allow you to fill those periods when cash flow is low.
Equipment financing is a great resource for franchise owners because it is generally easier to obtain than many other sources of financing, and franchises often have a lot of equipment they need to purchase to get started. With equipment financing, borrowers are not required to provide any collateral upfront since the equipment purchased with the loan serves as collateral. This reduces the risk for the lender as well since they have something of salvage value if the borrower defaults, making it easier for lenders to offer equipment financing to a wide range of borrowers.
Because the equipment is used as security for the loan, the interest rates on equipment financing are often lower than those on other types of loans, making it an attractive choice for companies that want new machinery.
Because each possible method of obtaining financial support comes with its own set of benefits and drawbacks, it is essential to give serious thought to which method is most suitable to your individual requirements and the specifics of your situation.
How Much Do Edible Arrangements Franchises Make in Profit?
According to Franchise Times, the average Edible Arrangements store that has been open for three years did $153,000 more in total sales in 2019 than in previous years. Near the conclusion of 2020, the average unit volume, also known as the AUV, was about $570,000.
When you include in the price of ingredients, labor, leasing a retail location, and taxes, running an Edible Arrangements company comes with a substantial amount of additional expenses that must be covered.
If we assume that profit margins are between 20% and 25%, then end-of-year profit for an established franchise would be somewhere between $114,000 and $142,500. However, as noted, Edible Arrangements franchises have been struggling over the last few years, with many bankruptcies and closures, so it can depend on your location, clientele, local awareness, and more.
When running any kind of food-related company, maintaining tight control over expenses is necessary in order to make a profit. Knowing how much demand you will have so that you order the right amount of food – which is perishable – is critical for driving margins and profit.
In order to make the most profit possible as a franchise owner, you will need to take every measure possible to cut down on food waste, successfully negotiate leasing agreements, and maintain tight control over labor expenditures. This is generally a skill that is learned over time.
Advantages of Starting an Edible Arrangement Franchise
As part of becoming a franchise owner, you will go through a 2-week training program at what the national franchise calls Edible University. Here, franchisees learn how to run their store, use the company software, make the arrangements and other products they offer, and other operations skills, tips, and tricks. Each franchise owner must successfully complete the program before they can hit the ground running and begin running their store.
Edible Arrangements has several ambitious plans for the expansion of its brand in the next years. The company is working on turning around what has been a rough past few years, and they are committed to starting a new era for the company.
If you own an Edible Arrangements franchise, you stand to benefit from the company’s ongoing commitment to growth and innovation, as evidenced by the introduction of new products. This ensures that your customers will always have something to look forward to when they place an order with your business.
Additionally, because of the low cost of opening Edible Arrangements storefronts, it is easy for current franchise owners to expand and new franchise owners to expand once they get a solid footing with one store. The average number of stores owned by multi-unit owners is currently 3, according to the national brand.
Opening additional storefronts is a great way to increase profits and income for yourself, as well as build out a larger business operation. Plus, opening new storefronts and operating them with success is easier once you have already done it once since you’ll be applying the same lessons and operational procedures to each location.
Increased Number of Customers
The marketing method used by Edible Arrangements has the distinct advantage of bringing in more consumers with each sale of a product. For example, not only do you end up with the client who is providing the gift, but the person who is receiving it also learns about your company.
Every time you make a sale, you open the door to more potential clients in the future who have interacted with your brand and had a good experience with it.
The vast majority of edible arrangements are sent directly to the recipient’s house or place of business. With this technique, the firm was able to maintain a 45% increase in total revenue all the way through the pandemic, even though more customers chose to eat and work from home during that time. During this time period, the corporation began to make technological advancements as well as expand the product range they offered.
Being a delivery-based business means you can keep your storefront small while still serving a large volume of customers, lowering your overhead and increasing your profit margins.
It is no secret that Edible Arrangements had a few tough years, especially prior to the pandemic, in which a lot of storefronts had to close. However, there are signs that the national brand is turning this around. With over 900 storefronts still in operation, Edible Arrangements is likely here to stay for a while longer, and many of these storefronts are very profitable.
If you feel there is a demand in your community for an Edible Arrangements location and think you have what it takes to start one, this could be a great franchise for you. With low upfront costs and minimal owner requirements, Edible Arrangements can be a great starter franchise under the right circumstances.
As always, be sure to do your research and compare the franchise with other franchise options you are interested in. Starting a franchise takes a lot of hard work, time, dedication, and financial commitment, so it’s not something you should take on lightly. Make sure the franchise you choose is one you feel you can really get behind and make successful – not just the one that you think is the cheapest to start or will yield the highest returns. You have to be excited and passionate about what you are doing – otherwise, it will just become a burden in the long run.
So, stay diligent and do your research. With the right approach, you could be well on your way to owning a successful franchise business in the near future.
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