This thread is a continuation of the Pinkberry Yogurt Franchise blog posted back in December 2006. I like to further explain the business aspect of venturing into this particular business. And if you are reading this, I assume that you are either interested in pursuing the Pinkberry franchise, learning about the so-called Pinkberry, or to open a similar small business. Let me remind you that I am not associated with Pinkberry, Inc. and its staffs, and the information here are deemed reliable but not guaranteed.

A new 600 to 800 square foot retail store attracts more foot traffic in any given time of day than the neighboring tenants that started their business years before. The neighbors wonder how a new entrant is doing so well in a short period of time. Securing a set amount of advertising expense is not necessary as each Pinkberry yogurt stores thrive simply through a word of mouth and online marketing. Within a few days after a grand opening, an ongoing customer base has been created without any effort by the business owner(s).

According to Pinkberry.com (as of January 22, 2007), nine stores are operating today in Southern California: Koreatown, Larchmont, Little Santa Monica, Melrose, Studio City, Temecula, West Hollywood, West Los Angeles, and Westwood. Three stores are operating in the east coast: 2nd Ave., 32nd St., and Chelsea in New York City. A year from today, there were less than five stores opened.

The growth rate will not be increasing steadily but rather escalating at a higher rate starting 2007. A vigorous expansion plan is already in progress that involves many new stores lined up for opening in the State of California and New York. It would make economical sense if a limited amount of stores would be opened in Las Vegas or Henderson in Nevada since a large percentage of the residents are middle class and their discretionary income are fairly high. New expansions are inevitable especially in this early stage of the thriving business because the demand exceeds the supply.

Current Pinkberry owners wouldn't want to see new stores opening near the vicinity of their store due to competition and the likelihood of a saturation problem in the Los Angeles City. Therefore new Pinkberrys are scheduled to open in the Inland Empire and in Orange County.

As I was conducting an online research to write the above post, I found a quality article that is worth reading fro any prospective franchisee and entrepreneurs.

The blog is titled "What to learn from this Subway lawsuit" written by Ryan (an attorney in a medium-sized law firm). Read the article and a few other posts relevant to the franchise business. Learn from other people’s mistake.

I was particularly interested in the Subway Restaurant franchise because the franchiser earns top awards for being the #1 franchiser in the fast food industry. Franchisees rate Subway a high score due to its winning product line, perfected operation management, a good return on investment (ROI), and last but not least the franchise fee is affordable compared to other franchises in the industry. But who would've thought that the Subway franchiser would deceive a franchisee with such unethical practice.

Point: Fully understand the contract word by word and consult a professional before signing any agreements; the nominal fee can save you money in the long run.

After hearing the word that the Walt Disney Company gave a proposal to acquire the Pinkberry, Inc. company, two things popped into my head: how fortunate for the Pinkberry owners as they are now multimillionaires and how I wished I was one of the franchisees.

Yet a few weeks down, the proposal was not accepted and the acquisition never finalized. Pinkberry's founder has a greater plan: turning Pinkberry into a nationally recognized frozen yogurt company. Sherry and Young are reinvesting their capital on new store expansion in New York City and Southern California. At this point, we can speculate that each store is in a healthy position financially and that the net profit from each store are achieving great numbers.

In New York City alone, "the Los Angeles-based company signed two leases in Manhattan and one in Queens for stores that will begin operations in early spring. Pinkberry is on track to launch as many as 15 stores in the city this year, and its executives intend to open at least that many in 2008."
Thrifty tenants go to side streets; Subcontractor, law firm head to W. 36th; more yogurt shops, 22 January 2007, Crain's New York Business, Volume 23; Number 4
A new Pinkberry is due to open in the Victoria Gardens shopping center (located in the Rancho Cucamonga city in Southern California) in late March of this year.

The two news show a bold move by the company. Pinkberry is seeking the upper scale retail stores in a highly priced locations. The rent price per square feet in Manhattan will easily costs over $200 in addition to other charges by the lessor. The region where Victoria Gardens resides is an affluent neighborhood. A majority of the companies leasing in the Victoria Gardens mall are high-end tenants and a high percentage of shoppers are middle-upper class members. The rent price per square feet in the Victoria Gardens shopping mall is priced above $100 and not just a simple net lease. As you can tell, Pinkberry is confident in their product line and from experience and financial backings, the company knows that they can achieve a break-even despite the high rent lease.

Pinkberry company carefully analyzed its financial health, the quarterly growth rate, and a vision. And don't you think it would be difficult for Sherry to sell a company she started through sweat and stress? And Pinkberry, Inc. may profit more in the long term by holding unto the company instead of the quick sale to the Walt Disney Company. Either way, we'll see which direction Pinkberry is heading.

Who knows, Sherry is stirring ideas on how to get her product presented in one of the widely viewed television broadcast in California or nationwide. Think Oprah Winfrey Show or even Donald Trump's The Apprentice (sixth season of The Apprentice is being recorded in the Los Angeles region) Mr. Trump wouldn't refuse a few million dollars in advertising feet to showcase Pinkberry frozen yogurt but is it an effective marketing strategy for Pinkberry? Not really.

April 2007 SCORE Expert Answers

Expert interviews featured in SCORE Expert Answers give how-to advice and provide inspiration for business success. Send your business questions to a SCORE expert today.

Betty Otte is an entrepreneur who owned and operated multiple franchises in a network spanning Southern California. She is a noted expert on www.score.org. She owned, operated, grew and sold her franchises over a span of 16 years. She is a marketing and management expert serving as a SCORE leader and marketing advisor. Below, Betty shares her real-life secrets on the reality of franchise ownership.

Q: What makes franchise ownership an attractive option for prospective small business owners?
A: The obvious answer is that it lets you be in business for yourself without being by yourself. The franchisor provides a tested and proven business base structure of the, freeing the franchisee from having to invent the operational wheel. Franchisors also provide guidance, innovations and tested marketing materials on a regular basis.

Q: Does owning a franchise require a unique set of skills?
A: Much of the skill set is usually provided by the franchisor through training. However, if a person is going into a market-specific business, such as automobile lube and tuning, it is good to have an appropriate background. There are hundreds of different kinds of franchises, and some do require training in the given area. That is one reason why fast food franchises are so popular; the skills required are very trainable.

Q: What else is essential to successful franchise ownership?
A: As with any other type of enterprise, you need to be genuinely interested in the type of business you’re considering. If you want to buy a tax preparation franchise, for example, it is best to have excellent math skills and a long attention span. Remember that you will be living the business 24/7. You need to be certain that you can accept some level of sacrifice in your personal life, and that your family will support this kind of commitment.

Q: What are some common misconceptions about franchise ownership?
A: The biggest mistake is believing that franchises never fail. Although the failure rate is much lower than that of independent business, the franchisee still must have the necessary commitment and drive. Also, franchise owners have no special legal protection after they purchase the business. The Uniform Franchise Operating Circular (UFOC), a legal document that lays out the rules and requirements for full disclosure, only protects the buyer before the sale. Finally, a common misconception deals with the goals of the franchisor and franchisee. The one common thread between the two is building the brand. Other than building the brand, the franchisor and franchisee may not have congruent goals.

Q: What are some musts to consider in evaluating franchise opportunities?
A: Prospective franchise owners should conduct the same thorough research that any new business owner should do. Franchisors cannot research each individual market, so it is the responsibility of the prospective franchisee to do his or her homework. The Internet is a wonderful source of information, but it’s also helpful to literally “walk the street” and ask people if this kind of business is needed in the neighborhood. You should also study the competition. Find out what they are doing, and figure out how can you do it better. After all, you will have to do it better to succeed.

Q: Is it also helpful to visit other franchisees as well?
A: Absolutely. Make arrangements to visit their locations and examine their processes. Ask them if they would buy the franchise again, if the franchisor is providing enough support, if the experience is living up to their expectations, and if they are meeting their business goals. These relationships will also be helpful should you decide to move forward with the franchise purchase. You can develop a network of friends that have the same base knowledge and abilities. It’s a good feeling to know that you can call any of them with questions or good ideas to share.

Q: Should a franchise owner have a growth strategy in mind from the outset?
A: A business plan is as crucial for a franchise as it is for an independent business. Where do you want to go and what is the best way to get there? Will you make the money you wish with only one unit or territory? And how does the business fit with your personal goals? A person looking for a major career will have different objectives than a semi-retired person who wants to keep active and busy.

Q: How important is it for new business owners to work with a mentor like SCORE as they explore franchise opportunities?
A: It couldn’t be more important. By working with SCORE counselors who have “been there done that,” you can potentially avoid many of the mistakes that we all made. SCORE’s resources are outstanding whether you work with a counselor one-to-one, through a workshop, or via the Internet with our online counseling through Ask SCORE.

Q: What is your best bit of practical advice to prospective franchise owners?
A: Spend time up front doing the research. There is no hurry. Once the franchise is yours, you own it. Make sure it fits into your lifestyle—and that it is something you will enjoy doing—and it will make the money your business plan projects.

Here is a compilation of all the frozen yogurt companies that are operating here in the United States:

• Pinkberry
• Kiwiberri
• CéFiore (formerly Fiore)
• Red Mango
• Ice Kiss
• Snow Berry
• Iceberry
• Yogurberry
• Menchie
• Berri Good
• Yogen Früz
• RoseGreen (formerly Roseberry)
• Yogotango
• Yogurtland
• Yoku Yoku
• Big Chill
• Golden Spoon
• Penguin
• Studio Yogurt
• Toppers
• 21 Choices
• and Korean cafes

Quite a list.

Sutton Class-Action Settlement against Pinkberry, Inc.
Case No: BC370909
Superior Court of Los Angeles, County of Los Angeles


In a recent class action settlement between Lisa Sutton (individually and on behalf of others) v. Pinkberry, Inc. and its subsidiaries, Pinkberry decided to settle the class action to prevent distraction with their ongoing businesses. The defendant (Pinkberry, Inc.) agreed to pay $750,000 (no including other monetary fees) to Para Los Ninos and the Los Angeles Regional Foodbank, both non-profit organizations supporting the Los Angeles community. The plaintiff will receive $5,000 for her efforts.


Please download and read the posted Summary Class Notice pdf and the Class Notice pdf on http://www.suttonclassaction.com for complete details.