Fro-Yo Financing Program Eases the Way for Expansion

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Desserts, Equipment, Finance

Growing a quick-service concept can be challenging, especially when it’s in a market segment that’s relatively young and in which the competition increases every day.

That’s why Donper America, a company that provides refrigeration solutions like frozen-yogurt machines, is lending fro-yo brands and franchisees a helping hand with its new financing options.

“In order for any franchise to get a better foothold or a better grasp within the market, they need to grow,” says Dan Doromal, director of marketing for Donper America. “And one of the ways that they’re [prevented] from growth is by the amount of cash that they have upfront.”

The program, which aims to lower upfront costs paid by operators and franchisees—therefore cutting down on the time required to open a new store—lets operators pay just 50 percent of the cost of fro-yo machinery upfront. The remaining balance is then financed internally by Donper America over the course of 12–18 months.

“That allows the companies, either independent of franchisees, to get up and running and get into their business and expand their footprint within a given geography,” Doromal says.

He says the company believes 2013 will be the biggest year for fro-yo growth yet, due to the segment’s growing maturity. “So rather than the play be, ‘Hey, let’s get into business,’ it’s more of, ‘Let’s establish our brand … as the quality that’s in the market,’” Doromal says.

In addition, the frozen-yogurt market’s growth potential doesn’t seem to be slowing, he says, noting that the top four fro-yo chains—Orange Leaf, Menchie’s, Red Mango, and Yogurtland—grew a whopping 210 percent in terms of sales last year.

“The market is there as far as the potential. It’s just who comes to the game with the fastest growth opportunities in the right geographic market,” Doromal says.

He says the company has seen several concepts and franchisees already taking advantage of the financing program, especially in regions like the Northeast and Midwest. This allows some of the smaller brands to “run with the big dogs” and expand their unit-count at a faster pace.

“By taking advantage of this type of program, they are able to expand quicker into markets that maybe haven’t been picked up by an Orange Leaf or Pinkberry.”

By Mary Avant