Abbott's Frozen Custard

Food & Beverage

FDD Year: 2024

Item 19 Available

Abbott's Frozen Custard^®

Food & Beverage • Year: 2024

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Business Model Overview

Abbott’s Frozen Custard is a retail frozen-custard franchise offering frozen custard, soft drinks, and other desserts and food-related products under its proprietary marks. Franchisees operate stand-alone Abbott’s retail custard stands (with configurations that may include indoor seating and encouraged drive-throughs) and the franchisor also permits short-term satellite kiosks; satellite kiosks are intended for carry-out service or delivery and the stands are described as serving the motoring public.

Pros & Cons Analysis

Pros

Strong outlet stability — negligible non‑renewals and reacquisitions versus industry averages, indicating low turnover risk and better unit retention.

Cons

High upfront fee — initial franchise fee is substantially above peers (30,000 vs ~15,000), raising initial capital required.

High mandatory ongoing training cost — ongoing training fees are materially above industry (3,500 vs ~387), which can reduce margins.

Elevated on‑site support charges — on‑site support cost is substantially above average (1,200 vs ~555), adding to recurring expenses.

Legal Risk Score

100

Excellent

The franchise reported no legal proceedings.

Territory Protection Score

23/100

POOR

The franchisee receives a 'protected' but not exclusive territory; however, the franchisor can reduce the territory for non-performance and may sell online into the area while the franchisee lacks a right of first refusal. These significant risks produce a low level of protection, resulting in a weak territory score (23/100).

Training & Support Score

46/100

NORMAL

With a score of 46.5, Abbott's Frozen Custard offers a standard, adequate training program that includes on-site training and training for three people under the initial fee. Total training is a limited number (63 hours), and on-site support—while available—carries additional costs, reducing overall support value.

Executive Summary

Abbott’s Frozen Custard is a small-system retail franchise (25 outlets, 19 franchised) with a non‑refundable $37,000 initial fee but potentially substantial and highly variable startup capital — equipment ~$207k–$262k, real estate/improvements $114k–$1.3M, plus design fees, inventory and 3–6 months working capital. Reported 2023 performance for nine designated franchised stands shows average gross sales of $320k (median $295k) but high dispersion (only 44% at/above the mean) and low stability (26%), while drive‑through locations materially outperform non‑drive stands (~2.4x average); figures are unaudited and based on small samples, limiting reliability. Key risks include weak territory protection (score 23/100) — franchisor may sell online into territories and can shrink protected areas for non‑performance — and significant operator exposure from required personal guarantees (spouse and all equity partners) and mandatory ongoing training costs ($3,500) plus additional on‑site support fees. There are no disclosed legal proceedings, but the combination of small sample performance data, startup cost variability, and limited territorial safeguards is a noteworthy high‑risk indicator for prospective investors.

Performance Analysis

The charts show pronounced volatility in unit count over the period, indicating an inconsistent growth trajectory with frequent openings and closures rather than steady expansion. Prospective franchisees should view this as a potential risk signal—it may reflect market sensitivity, franchisee-level performance variability, or strategic shifts—so they should thoroughly investigate the drivers of churn, regional performance patterns, and the level of franchisor support before investing.

Periods of high unit count volatility indicating potential instability

Financial Performance Analysis (Item 19)

Average Gross Sales:

$320,050

Median Gross Sales:

$295,321

High Gross Sales:

$567,719

Low Gross Sales:

$148,853

Sample Size:

Percent Attaining Average:

44.0%

Audited:

Franchise vs Corporate Performance: Designated franchised (non-drive) stands (Table 1) show a 2023 average Gross Sales of $320,050 and a median of $295,321. Drive-through stands (Table 2) materially outperformed non-drive franchised stands in 2023, with a 2023 average Gross Sales of $775,132 and median of $691,510 — roughly 2.4x the average of the designated franchised stands. Corporate operating metrics (Tables 3a/3b) show FY2023 average Cost of Goods Sold ≈ 27% and Payroll ≈ 31% for non-drive corporate stands; corporate drive-through stands show COGS ≈ 30% and Payroll ≈ 28%. The presence of higher-volume drive-through locations drives materially higher top-line potential compared with the designated franchised sample.

Performance Variability Analysis: 2023 gross sales among the 9 designated franchised stands are widely dispersed: high = $567,719, low = $148,853, mean = $320,050, median = $295,321. Only 4 of the 9 designated franchised stands (44%) met or exceeded the 2023 average, indicating skew in the distribution (a few higher performers push up the mean). The drive-through sample (n=4) also shows variance (range $471,630–$1,245,877) and one franchised drive-through operated only 8 months in each fiscal year (note K), which affects comparability. Small sample sizes (9 stands non-drive, 4 drive-through) produce high variability and limit statistical reliability of averages.

Data Scope and Limitations: Gross Sales figures were provided by franchisees and the franchisor states it has not audited or verified those gross sales figures; Tables 3a and 3b (expense percentages) are audited. Expense tables present key operating percentages but exclude real estate costs (rent, property tax, depreciation) and therefore do not equal full net income/profitability. The franchisor imputes a 5.5% royalty and 2% advertising fund contribution (plus 1% local advertising imputed) when presenting corporate expense percentages — these are management-imputed items, not cash outflows at the corporate sites. Given unaudited sales, small samples, differing operating months for one location, and excluded fixed/real-estate costs, users should treat these metrics as directional and request actual historical P&L records for any specific existing outlet before making investment decisions.

Investment Requirements

Total Outlets:

Company Owned Units:

Franchised Units:

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