FDD Talk 2021: Jamba Franchise Review (Financial Performance Analysis, Costs, Fees, and More) (2024)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Jamba franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Jamba franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Jamba franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Jamba outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Jamba’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2019 and 2020 average, median, highest, and lowest net sales and weeks open for the 531 franchised traditional Jamba stores that were active franchises throughout the entire fiscal year 2019, and the 570 franchised traditional Jamba stores that were active franchises throughout the entire fiscal year 2020

• 2019 and 2020 average total gross sales, cost of goods sold, personnel expenses, advertising expenses, operating expenses, occupancy expenses, general and administrative expenses, and EBITDA for the 304 franchised traditional Jamba stores that were open for all weeks of fiscal year 2019 and fiscal year 2020 and that provided Jamba with complete financial information sufficient for it to complete the average profit and loss statement
  

Section I – Background Information

19 Things You Need to Know About the Jamba Franchise

Evolution Helps Company Weather COVID Storm

1. Near the end of August 2020, QSR Magazine posted a feature about how the changes Jamba has made over the past few years have helped the brand weather the difficulties of the ongoing COVID-19 pandemic. Following a $200 million sale to Focus Brands in late 2018, the 30-year-old brand set off on a broad refresh. Jamba wanted to present an image that encompassed a wider array of offerings. In this case, Jamba brought the tagline “Smoothies, Juices and Bowls” into play and placed the focus on a renewed commitment to balanced ingredients, plant-based options, and reduced sugar selections.

2. The change went live June 6, 2019, and included a host of updates. Perhaps the most visible was a fresh prototype, complete with new logo, and enhanced design elements, like light wood, “freshness cues,” and colorful and expressive elements. The menu transformed to spotlight clear categories and guide consumers into tiers – Power (enhanced smoothies), Classic favorites, and expanded Plant-Based items. Yet less outward changes were brewing behind the curtain, too. And while the chain didn’t realize it then, these have turned out to be Jamba’s COVID-19 lifeboats.

3. Brand President Geoff Henry, named to the role January 2019 from Coca-Cola, where he led lifestyle and beverage business growth in the water, tea, and coffee divisions, points to Jamba’s digital accessibility and stack investments. Among the changes, it’s really the one that’s lifted the brand through historic challenges. In the last 15 months (prior to the release of the article), Jamba rolled out a new point-of-sale across its stores, launched a new mobile app and integrated rewards loyalty program, fresh ecommerce-enabled website, and expanded partnerships with third-party aggregators. Today, online transactions are running 300-plus percent higher, year-over-year.

4. Henry said, “To be frank, even without the crisis, we had plenty of bumps in the road when we launched our new programs. It took a few weeks to work through that last summer. But fortunately, we were in a great spot by the middle of last year and we could really accelerate with the crisis in terms of making sure the guest knew about it.”

5. Jamba has enjoyed the luxury of turning its COVID-19 attention to awareness in recent months instead of infrastructure. It integrated order ahead in Q1 – pre-virus – and synched third-party delivery with POS terminals. Jamba also introduced first-party delivery via Olo’s Dispatch in February, which Henry says has “taken off” during the crisis. The main change was, before February, customers could open the app, order ahead, and pick up. It’s evolved to where guests can access delivery from the app as well. Jamba offers third-party delivery and direct, via its site and app. The key is, given the ample challenges COVID-19 presents, having avenues to get food to customers. Henry added, “We were fortunate to have a variety of ways to get our product to the guest.”

6. Henry says average ticket sizes have risen significantly – like they have for many quick-serves – as solo occasions slide in favor of group orders. It’s been more than double-digits, he says. The 2019 refresh helped in other ways as well. The store designs unlock updated features, like grab-and-go coolers that support digital convenience and access. Customers pull up and grab and go without needing to enter the store. Other units have taken a makeshift drive-thru approach, especially in non-traditional venues. Operators purchased signs and cones, tables, tents, and set up an operation out front for consumers to pickup food. This helped a lot of Jamba’s restaurants remain open from day one forward. Henry says more than 95 percent were up and running, and the majority avoided temporary closures throughout.

7. COVID inspired model innovation. Jamba launched its first food truck in Atlanta – providing franchisees with a lower-cost-to-entry opportunity. Henry says it’s also helped Jamba get the brand to more places and deliver food in new ways, an important lever as lockdown behavior limits travel patterns. “If you were a franchisee and you were interested in a food truck, I think the best combination would be if you already had a store, the food truck would help you extend the reach in the marketplace and help build the brand and get the product in more places, and perhaps unexpected places,” Henry said.

8. He continued, “Obviously, time will tell what the ultimate impact of COVID-19 will be on behaviors and habits. But, certainly, I think the food truck and its capabilities are highly relevant for urban locations. I could also see it in suburban or more coastal locations.” Consider it an extension of a new-look Jamba. The brand tapped a local Atlanta artist to create a mural and, like all food trucks, it’s serving as a roaming billboard for Jamba.

9. Looking ahead, Henry said there’s been a steady increase in franchisee interest. He believes COVID-19 and shelter-in-place mandates inspired a lot of people to start thinking about their future from angles they hadn’t before. And the helplessness of the situation, in many ways, shoved entrepreneurial-centric options in the spotlight.

10. Franchising fits the bill, as the pandemic’s impact on the workplace leads professionals to reevaluate what they want to do and why they do it. “The industry is getting more attention from folks who have been looking at it for a while and now see it as potentially the right opportunity to step in or step in and learn before they expand,” he said.

11. Jamba’s inclusion in Focus Brands’ seven-unit portfolio (Moe’s, Schlotzsky’s, McAlister’s Deli, Cinnabon, Carvel, and Auntie Anne’s) stirs some unique possibilities. Jamba touts co-branding activations with Auntie Anne’s, but there’s also some tri-branding taking form with Cinnabon included. “One, they’re small footprint,” he said. “Two, they’re designed for on-the-go. So there’s a lot of synergies, at least from an operations and design standpoint, relative to Jamba, which can make for a very efficient build-out, which is great for a guest experience. While we have different product offerings and different frequency of loyal guest visits, it can certainty be the same guest but perhaps at different times.”

12. In more recent days with dine-in coming back, Jamba witnessed digital transactions hold after March and April spikes. Henry doesn’t believe customers’ sudden affinity for convenience and accessibility are going to fade when COVID-19 cases do. Consumers will continue to turn on the channels they leaned on during the pandemic, especially at brands built around speed and convenience to begin with (like a smoothie-focused chain). Henry also sees a chance for wellness brands to progress forward with immunity-boosting options and balance their menus with made-to-order products that meet evolving consumer demand. In Jamba’s small footprint, customers see the entire restaurant once they walk through the door. There’s zero mystery, which is becoming essential given the invisible enemy in the room.

Launches New Breakfast Items

13. In mid-April 2021, Jamba launched new fuel-good food menu items for breakfast with in-store and delivery options perfect for any commute. The new items include two Handwiches – Jamba’s take on the classic breakfast sandwich designed to pack flavor into a small package to fit in one hand for eating on-the-go – and a delicious Veggie Egg Bake.

• Impossible Handwich (SRP $3.79): With Impossible Sausage made from plants, and made for people who love and crave meat, with fewer calories and less fat than traditional sausage. Crafted with your busy lifestyle in mind, each handwich is layered with melty white cheddar cheese between toasted sprouted grain buns, boasting 12 grams of protein and only 220 calories.

• Classic Sausage, Egg & Cheese Handwich (SRP $3.49): Made with all-natural pork sausage, egg, and melty white cheddar cheese layered between toasted sprouted grain buns. The perfect size for a grab-and-go breakfast whether at home or on the move, each handwich has five layers of deliciousness that pair perfectly with your smoothie or juice. An excellent option for kickstarting your day, it’s packed with 12 grams of protein and contains 320 calories.

• Spring Veggie Egg Bake (SRP $3.99): Light, fluffy, and bursting with red bell peppers, spring leeks, and artichoke hearts. Under 200 calories and free of gluten ingredients, it’s a portable good source of protein and calcium to help you stay on track.

15. Danielle Fisher, vice president of marketing for Jamba, said, “At Jamba we pride ourselves in offering our guests a wide selection of menu items that meet all lifestyles. For years we’ve been a go-to morning stop with our freshly blended smoothies, juices, and bowls. Now, the Impossible Handwich, featuring delicious sausage made from plants, along with our Classic Handwich and Egg Bake, deliver guests flavor-packed, hand-held options that bring even more variety as they kickstart their day.”

Company History

16. Jamba, formerly Jamba Juice, was founded in 1990 by Kevin Perron in San Luis Obispo, California. Perron, who was an avid cyclist and an advocate for a healthier lifestyle, developed the idea for Jamba (initially called Juice Club) as his senior project while attending California Polytechnic State University. From the beginning, Perron’s juice bar was a hit and by the end of his second year in business, Perron was ready to expand. After failing to secure a small business loan, Perron decided to expand through franchising. The first franchised location opened in Irvine, California and by the end of 1994, there were 16 Jamba locations.

17. Also around that time, Perron and his juice club business had attracted the attention of venture capitalist Bob Kagle as well as Howard Schultz, who was the chairman and CEO of Starbucks at the time. Perron was able to raise tens of millions of dollars to invest in Jamba and continue growing the business. In 1995, Perron changed the company’s name from Juice Club to Jamba Juice. Over the next few decades, Jamba Juice continued to grow around the country, and even acquired Zuka Juice in 1999.

18. In 2006, Jamba was acquired by Services Acquisition Corp. International for $265 million. A few years later, around 2009, Jamba began expanding its offerings beyond juices and smoothies. Wraps, sandwiches, and flatbreads were added to the menu. Jamba continued its growth into the 2010s and in 2018, the company was acquired by Atlanta-based Focus Brands, which also owns Schlotzsky’s, Carvel, Cinnabon, Moe’s Southwest Grill, McAlister’s Deli, and Auntie Anne’s. Today, there are Jamba stores all across the United States and internationally in Japan, the Philippines, Taiwan, South Korea, Thailand, and Indonesia.

Entrepreneur’s Franchise 500

19. Jamba did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Jamba franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Jamba’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year: 739
• Outlets at the End of the Year: 719
• Net Change: -20

2019

• Outlets at the Start of the Year: 719
• Outlets at the End of the Year: 777
• Net Change: +58

2020

• Outlets at the Start of the Year: 777
• Outlets at the End of the Year: 762
• Net Change: -15

Company-Owned

2018

• Outlets at the Start of the Year: 53
• Outlets at the End of the Year: 52
• Net Change: -1

2019

• Outlets at the Start of the Year: 52
• Outlets at the End of the Year: 2
• Net Change: -50

2020

• Outlets at the Start of the Year: 2
• Outlets at the End of the Year: 5
• Net Change: +3

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• This Item 19 presents information about the financial performance of certain franchised Traditional Stores during the fiscal year ended December 29, 2019 (“Fiscal Year 2019”) and the fiscal year ended December 27, 2020 (“Fiscal Year 2020”).

• Jamba has not made permanent, material changes to its concept as a result of the COVID-19 pandemic.

• Jamba has not included in this Item 19 any data related to Non-Traditional Stores and affiliate-owned Stores, because certain aspects of their operations can vary significantly from the Traditional Stores that are represented in this Item 19.

• “Net Sales” includes all revenues generated by a Store or conducted from or with respect to a Store, whether the sales are evidenced by cash, check, credit, charge, account, barter, or exchange, but does not include (a) the initial sales or reloading of gift cards, (b) discounts, (c) the sale of food or merchandise for which refunds have been made in good faith to customers, (d) the discounted portion of employee meals, (e) sales, meals, use, or excise tax imposed by a governmental authority directly on sales and collected from customers, provided that the amount for the tax is added to the selling price or absorbed therein and is actually paid by you to a governmental authority, (f) the sale of equipment used in the operation of the Store, or (g) tips.

• The Fiscal Year 2020 data includes 570 franchised Traditional Stores that were active franchises throughout the entire Fiscal Year 2020 (out of 762 franchised Stores that were active franchises as of the end of Fiscal Year 2020). An “active franchise” is a franchise that has opened a Store and has not permanently closed such Store.

• The data includes franchised Traditional Stores that were temporarily closed for periods of Fiscal Year 2020 for any reason, which could include, for example, temporary closures for renovations, repairs, or personal reasons, as well as temporary closures due to the COVID-19 pandemic and related government restrictions on the operation of Stores.

• The Fiscal Year 2019 data includes 531 franchised Traditional Stores that were active franchises throughout the entire Fiscal Year 2019 (out of 777 franchised Stores that were active franchises as of the end of Fiscal Year 2019).

• It includes franchised Traditional Stores that were temporarily closed for periods of Fiscal Year 2019 for any reason, which could include, for example, temporary closures for renovations, repairs, or personal reasons.

• These sales figures do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit.

Part 1 – Average Net Sales by Quarter for Certain Franchised Traditional Stores for Fiscal Year 2019 and Fiscal Year 2020

Fiscal Year 2020 – Franchised Traditional Stores (570 Locations)

Quarter 1

• Average Net Sales: $144,683
• Percentage Change from 2019: -2%
• Number and Percentage at or Above Average Net Sales: 248/44%
• Median Net Sales: $137,170
• Lowest Net Sales: $24,350
• Highest Net Sales: $386,681
• Average Weeks Open: 12.94
• Median Weeks Open: 13
• Lowest Weeks Open: 12
• Highest Weeks Open: 13
• Number Open All Weeks: 537

Quarter 2

• Average Net Sales: $152,151
• Percentage Change from 2019: -20%
• Number and Percentage at or Above Average Net Sales: 247/43%
• Median Net Sales: $142,993
• Lowest Net Sales: $0
• Highest Net Sales: $513,634
• Average Weeks Open: 12.21
• Median Weeks Open: 13
• Lowest Weeks Open: 0
• Highest Weeks Open: 13
• Number Open All Weeks: 501

Quarter 3

• Average Net Sales: $198,209
• Percentage Change from 2019: 8%
• Number and Percentage at or Above Average Net Sales: 257/45%
• Median Net Sales: $185,953
• Lowest Net Sales: $0
• Highest Net Sales: $586,592
• Average Weeks Open: 12.85
• Median Weeks Open: 13
• Lowest Weeks Open: 0
• Highest Weeks Open: 13
• Number Open All Weeks: 556

Quarter 4

• Average Net Sales: $142,203
• Percentage Change from 2019: 10%
• Number and Percentage at or Above Average Net Sales: 248/44%
• Median Net Sales: $133,590
• Lowest Net Sales: $0
• Highest Net Sales: $470,454
• Average Weeks Open: 12.83
• Median Weeks Open: 13
• Lowest Weeks Open: 0
• Highest Weeks Open: 13
• Number Open All Weeks: 560

Full Year

• Average Net Sales: $637,247
• Percentage Change from 2019: -2%
• Number and Percentage at or Above Average Net Sales: 247/43%
• Median Net Sales: $597,028
• Lowest Net Sales: $42,787
• Highest Net Sales: $1,957,362
• Average Weeks Open: 50.84
• Median Weeks Open: 52
• Lowest Weeks Open: 13
• Highest Weeks Open: 52
• Number Open All Weeks: 494

Fiscal Year 2019 – Franchised Traditional Stores (531 Locations)

Quarter 1

• Average Net Sales: $147,741
• Number and Percentage at or Above Average Net Sales: 227/43%
• Median Net Sales: $140,039
• Lowest Net Sales: $32,867
• Highest Net Sales: $385,669
• Average Weeks Open: 12.99
• Median Weeks Open: 13
• Lowest Weeks Open: 12
• Highest Weeks Open: 13
• Number Open All Weeks: 527

Quarter 2

• Average Net Sales: $189,399
• Number and Percentage at or Above Average Net Sales: 229/43%
• Median Net Sales: $176,391
• Lowest Net Sales: $40,751
• Highest Net Sales: $514,924
• Average Weeks Open: 13
• Median Weeks Open: 13
• Lowest Weeks Open: 13
• Highest Weeks Open: 13
• Number Open All Weeks: 531

Quarter 3

• Average Net Sales: $183,522
• Number and Percentage at or Above Average Net Sales: 241/45%
• Median Net Sales: $176,649
• Lowest Net Sales: $39,896
• Highest Net Sales: $466,528
• Average Weeks Open: 13
• Median Weeks Open: 13
• Lowest Weeks Open: 12
• Highest Weeks Open: 13
• Number Open All Weeks: 529

Quarter 4

• Average Net Sales: $129,354
• Number and Percentage at or Above Average Net Sales: 241/45%
• Median Net Sales: $122,892
• Lowest Net Sales: $21,718
• Highest Net Sales: $346,980
• Average Weeks Open: 12.97
• Median Weeks Open: 13
• Lowest Weeks Open: 5
• Highest Weeks Open: 13
• Number Open All Weeks: 525

Full Year

• Average Net Sales: $650,017
• Number and Percentage at or Above Average Net Sales: 238/45%
• Median Net Sales: $620,514
• Lowest Net Sales: $147,249
• Highest Net Sales: $1,696,376
• Average Weeks Open: 51.96
• Median Weeks Open: 52
• Lowest Weeks Open: 44
• Highest Weeks Open: 52
• Number Open All Weeks: 519

Part 2 – Profit and Loss Statement for Fiscal Year 2019 and Fiscal Year 2020 for Franchised Traditional Stores Open Continuously Throughout Fiscal Year 2019 and Fiscal Year 2020

• This financial performance representation reflects the average Fiscal Year 2019 and Fiscal Year 2020 Gross Sales, Cost of Goods Sold, Personnel Expenses, Advertising, Operating Expenses, Occupancy Expenses, General and Administrative Expenses, and EBITDA, as Jamba describes those terms below, for franchised Traditional Stores that were open continuously during both Fiscal Year 2019 and Fiscal Year 2020 and that provided Jamba with complete financial information sufficient for it to complete this profit and loss statement (“P&L Statement”).

• Jamba did not use any reports that were submitted late, included incomplete or illegible financial information, involved unique circ*mstances, or for which the information was presented in a manner that prohibited Jamba from applying the information to one of the categories in the P&L Statement.

• The data for both Fiscal Year 2019 and Fiscal Year 2020 includes average financial performance for 304 (70%) of the 434 franchised Traditional Stores that were open for all weeks of Fiscal Year 2019 and Fiscal Year 2020.

• While there were 762 franchised Stores that were active franchises at the end of Fiscal Year 2020, 178 were excluded because they were Non-Traditional Stores, 107 franchised Traditional Stores were excluded because they were not open for all weeks of Fiscal Year 2019 and Fiscal Year 2020, 43 franchised Traditional Stores were excluded because they were refranchised by Jamba in Fiscal Year 2019 or Fiscal Year 2020, and 130 franchised Traditional Stores were excluded because they did not submit complete data.

Fiscal Year 2020 – Franchised Traditional Stores (304 Locations)

• Average Total Gross Sales: $731,285 (100.0%)
• Average Cost of Goods Sold: $152,546 (20.9%)
• Average Personnel Expenses: $231,196 (31.6%)
• Average Advertising Expenses: $58,239 (8.0%)
• Average Operating Expenses: $104,510 (14.3%)
• Average Occupancy Expenses: $76,743 (10.5%)
• Average General and Administrative Expenses: $18,913 (2.6%)
• Average EBITDA: $89,137 (12.2%)

Fiscal Year 2019 – Franchised Traditional Stores (304 Locations)

• Average Total Gross Sales: $751,825 (100.0%)
• Average Cost of Goods Sold: $151,858 (20.2%)
• Average Personnel Expenses: $229,894 (30.6%)
• Average Advertising Expenses: $78,196 (10.4%)
• Average Operating Expenses: $100,041 (13.3%)
• Average Occupancy Expenses: $78,195 (10.4%)
• Average General and Administrative Expenses: $11,476 (1.5%)
• Average EBITDA: $102,165 (13.6%)

• “Total Gross Sales” is calculated as total Net Sales, plus the amount of any discounts from redemptions of coupons or other reductions made to calculate Net Sales.

• “Cost of Goods Sold” (“COGS”) includes the cost of food, beverages, merchandise, packaging, and other products included in the preparation and sale of food, beverages, and other products to customers. The Cost of Goods Sold may vary considerably based on whether a Store is located within the geographical area serviced by Jamba’s Approved Suppliers and distributors.

• “Personnel Expenses” includes wages paid to management and employees of a Store, including managers and shift supervisors, management bonuses, payroll taxes, health insurance, workers’ compensation, vacation, other employee benefits, and associated payroll taxes paid to employees.

• “Advertising” includes Advertising Contributions, contributions to Co-ops, local marketing, discounts, coupons, and sponsorships.

• “Operating Expenses” includes costs for supplies, including smallwares, paper supplies, cleaning supplies; waste removal; controllable expenses like employee uniforms, repairs and maintenance on the equipment and Store premises, service contracts, computer expenses, office supplies, utilities, janitorial services, and Royalty Fees.

• “Occupancy Expenses” includes base rent, percentage rent, common area maintenance, real estate taxes, equipment lease expenses, and other miscellaneous expenses.

• “General and Administrative Expenses” includes non-controllable expenses like credit card fees, payroll processing fees, accounting and other professional fees, employee recruiting costs, general liability insurance, business licenses and fees, and bank service charges.

• “EBITDA” means Store level earnings before interest, taxes, depreciation, and amortization. In addition to those items, this category does not include pre-opening expenses and other miscellaneous expenses a franchisee may incur. Jamba does not include costs for interest and other debt service costs, taxes, depreciation, or amortization, because they vary considerably depending on the particular organization and typically are excluded when calculating the free cash flow from a Store’s operation.

• There may be other expenses in operating a Store that are not identified in the P&L Statement. You should consider these costs, as well as other costs and expenses you may incur, when creating a business plan for your Store.

• Some Stores have sold or earned this amount. Your individual results may differ. There is no assurance that you will sell or earn as much.

• Jamba calculated the figures in the tables in these financial performance representations using financial reports submitted by franchisees. Jamba has not audited or independently verified these financial reports nor has it asked questions of the submitting franchisees to determine whether they are in fact accurate and complete, although Jamba has no information or other reason to believe that they are unreliable. No certified public accountant has audited these figures or expressed his or her opinion concerning their content or form.

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