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How Much Should You Spend to Become an Ice Cream Franchisee Today?

An ice cream parlor franchise in the U.S. remains a profitable business if you pick the right brand and find a good location among other factors.

According to the International Dairy Foods Association (IDFA), the best markets to run an ice cream business include Illinois, Indiana, Michigan, Ohio, and Wisconsin. The cost of owning a franchise in these states vary based on the size and popularity of your chosen brand. You can be a franchisee of a local or regional company for as low as $50,000, while buying a franchise from popular brands may cost more than $1.2 million.

Know Your Market

The most recent data for ice cream manufacturing involved statistics for 2017, when the industry produced around 1.4 billion gallons of frozen products. Every year, the average per-capita consumption reaches more than 23 pounds based on IDFA’s estimates. More people will continue to eat ice cream in the next five years as evidenced by the global market hitting a value of almost $75 billion.

Your business model will play a huge role in determining the success of your franchise. First-time business owners should consider a brand that has existed for more than 50 years. IDFA’s data showed that many successful ice cream makers, which are family-run businesses, have been operating for the same length of time. These businesses are a good place to start choosing your preferred brand since families comprise most of the industry’s consumers.

Do Some Field Research

man looking at graphs and tables on his laptopOnce you decide on a market niche, take some time to learn about the actual day-to-day business of present franchisees from your chosen brand. First-hand insights keep you grounded on your business, as your penchant for ice cream alone won’t be enough to make it last beyond its first year. Remember that some new businesses even fail to survive within six months either because of insufficient funding, or they didn’t fully understand the terms of their franchise deals.

Royalties and marketing fees are among these terms that make it difficult to maintain a franchise. When conducting due diligence, you need to estimate the required amount for your business to cover these expenses plus other overhead costs during the first year of operation.

What Are the Requirements?

You’ll need several documents such as a business license, health inspection, and food handler certificates. Those who plan to make deliveries or sell products through an ice cream truck should apply for a Commercial Vehicle Operator’s Registration and truck vending permits. In-store businesses will need a zoning permit.

Other requirements may be required depending on where you plan to open a shop. You’ll also need a comprehensive business insurance plan. Consult a lawyer before signing any documents with the franchisor to make sure that you understand the agreement.

Some ice cream brands screen their potential franchisees based on certain requirements aside from their financial capacity. These may include a person’s net worth, liquid assets, and their experience in a similar business. If you’re a first-timer, you should start with a small company even if you can afford the initial investment.

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