How much does a Crumbl Cookies franchise cost? how much do they make? And are there dark secrets about Crumbl hidden from the general public? Today on Franchise City
Social media darlings Crumbl cookies have millions of followers on social media. They are brilliant at marketing and people love their cookies but what about buying a Crumbl franchise?
Crumbl is also really good at selling franchises. Its funny when people see a lot of people investing in something they assume its good. Same with any investment thats why most people lose at investing - they just follow. We have seen this hype phenomenon with many companies and covered it here on the channel with brands that eventually imploded like BurgerIm and F45 training.
Outlets like the Franchise 500 even gives awards for the fastest growing franchises but is really fast growth a good thing for you the franchise buyer?
Some context. Franchising giants like McDonalds and Chick-fil-A typically add under 100 new locations per year. They have decades of franchising experience and huge support staff to rollout new locations and make sure
Crumbl, a relatively new franchise, in the last two years sold 863 franchises. That's $43,150,000 in franchise fees alone! If any of you have opened a franchise you know how much effort is required finding and negotiating real estate, hiring contractors for the build-outs, obtaining licensing and insurance, hiring staff, marketing. Then all of those hundreds of brand new franchisees will need training and support. The question is will Crumbl be able to sustain the level of growth that even the biggest franchises avoid?
Let's look at the agreement. First, Crumbl won't help you find a site. Many franchises do help franchisees choose the real estate. But what happens if you can't find a suitable store or if Crumbl doesn't like the stores you proposed? According to the agreement Crumbl can legally keep your $50,000 franchise fee and terminate your agreement. Also if you do find a location but have problems with construction, licensing or starting operations for any reason, same rule applies.
Next potential concern. If you buy a Crumbl franchise you get a designated territory. But, Crumbl can change your territory at the end of your franchise term, or if the population increases over 100,000. I'm old enough to remember the booms and busts of various franchise cycles. About a decade ago everybody swarmed to cash in on the Frozen Yogurt craze. Franchises were opening right next to each other. Eventually market saturation happened, public sentiment changed and Froyo shops started selling for pennies on the dollar.
Competitors to Crumbl are already popping up everywhere. Similar franchises Dirty Dough and Crave cookies were actually sued by Crumbl for allegedly copying their idea, which detractors suggested they had ironically stolen from Chip in the first place. Part of the lawsuit stated that Dirty Dough was using sprinkles, rectangular boxes and a rotating menu that surely must have been stolen from Crumbl. Dirty Dough fought back by making hilarious videos mocking how lawsuit happy Crumbl was,
To Buy a Crumbl franchise costs between $367,666 - $1,404,333. Breakdown of expenses on your screen. And the profits look really good, I have had many people call me to ask about Crumbl and at first glance the revenues look great.
The highest earning Crumbl store made just over 1 million shown as *net profit, the lowest store lost $160,000. What is impressive is that a median Crumbl store did $256,029.93 average net profit. Compared to a lot of other franchise companies at the same investment level that is really good net profit.
But not so fast. there is a note below the profit claims stating "The Net Profit may include operating costs that may vary for each location. Such costs could include officer wages, guaranteed payments, corporate benefits and perks, and other indirect costs that owners of each location may choose to incur."
That's not really net profit, or at least how other franchises list net profit so if you are comparing Crumbl to other franchises this number seems quite high. What most companies do if they share net profit numbers, is show net profit and then separate by SDE or "seller discretionary earnings". This makes a huge difference and why buyers should not compare apples to oranges.
If I own a company and make one million a year. I'm working in the business and I pay myself $150,000 salary and other perks. That $150,000 is actually considered an expense for the business, just like the salaries I pay my employees. So if we back out an owner benefit of $150,000 that would leave an actual net profit just over $100k, which is now more in line with other franchises. Always make sure when you compare franchises that you understand what actual numbers you are looking at.
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