How to Finance a Menchie’s Frozen Yogurt Franchise: Lease Rules
By Anthony Cornella
A Menchie’s Frozen Yogurt franchise loan usually finances a leased storefront fitted out as a self-serve frozen yogurt shop: a wall of yogurt machines, a toppings bar, refrigeration, a bright interior and a checkout where guests pay by weight. The real estate is rarely owned, so the lease and the equipment sit at the center of the deal.
Below we cover what makes Menchie’s distinctive, how the brand’s SBA Franchise Directory note on leases works, the cost categories to expect and the financing options for new shops and resales.
US Professional Funding is not affiliated with, sponsored by or endorsed by Menchie’s; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to approval. Nothing here is legal, tax or investment advice, and buyers should review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Menchie’s Frozen Yogurt Franchise Loan at a Glance
- Concept: self-serve frozen yogurt shops where guests build their own cups from yogurt flavors and toppings.
- Origins: the company says it started as a single frozen yogurt shop in Southern California.
- System size: the company describes itself as the largest self-serve frozen yogurt franchise in the world, with hundreds of locations around the world.
- Typical setting: leased retail space, so the lease is a key part of any financing.
- Ways in: a new shop or an existing store purchase; the franchise site has a section devoted to buying an existing store.
- Costs and fees: confirm the initial franchise fee, royalty and Item 7 investment range in the current FDD.
- SBA Franchise Directory: listed as “Menchie’s” (code S1103) with a note about the lease addendum and collateral assignment of lease.
What Is Menchie’s Frozen Yogurt?
Menchie’s is a self-serve frozen yogurt franchise. Guests choose from a range of yogurt flavors, add toppings and pay by weight, in a family-friendly shop built around the brand’s focus on making guests smile. The company says it began with a single shop in Southern California and grew into what it calls the world’s largest self-serve frozen yogurt franchise.
Why the model matters to lenders. Self-serve shops run with lean staffing compared with a full kitchen, and the menu is simple. On the other hand, sales depend on foot traffic, weather and season, and most of the investment goes into leasehold improvements and specialized equipment in a space the owner does not own. Lenders focus on the site, the lease and the owner’s liquidity.
Typical locations. Shops generally sit in retail centers near families, schools, entertainment and dining. Visibility, parking and nearby evening traffic all influence results, so site selection carries real weight in underwriting.
Menchie’s Frozen Yogurt Franchise Costs
The franchisor’s site states that offers are made only through its FDD, and current figures belong in that document. This section explains the cost categories; use Items 5, 6 and 7 of the current FDD for exact amounts.
Initial franchise fee. Item 5 of the FDD states the fee for a single shop and any multi-unit or development fees, along with when the fee is due and whether any part is refundable.
Leasehold improvements. Converting retail space into a frozen yogurt shop involves plumbing and drains for yogurt machines, electrical capacity, flooring, lighting, counters and the brand’s decor package. Second-generation restaurant or dessert spaces can reduce some of these costs.
Equipment. Frozen yogurt machines are the core asset, along with toppings bars, freezers, walk-in or reach-in refrigeration, scales, a point-of-sale system and signage.
Opening costs and working capital. Opening inventory of yogurt mixes and toppings, training, grand opening marketing, deposits and insurance come before the first sale. Additional funds cover the early months while sales build.
Total investment. Expect the Item 7 table to include categories such as:
- Initial franchise fee
- Lease deposits and pre-opening rent
- Leasehold improvements and construction
- Frozen yogurt machines and other equipment
- Furniture, fixtures, decor and signage
- Technology and point-of-sale systems
- Opening inventory and supplies
- Training, travel and grand opening marketing
- Licenses, permits, insurance and professional fees
- Additional funds for the initial operating period
Compare the Item 7 total with local contractor bids, because build-out costs vary widely by market and by the condition of the space.
Ongoing Fees and How They Affect Your Loan
Royalty and marketing. Item 6 of the FDD lists the royalty, any marketing or brand fund contribution, local advertising requirements, technology fees and other recurring charges. Fees based on sales come off the top before rent, labor and debt service.
Rent. Occupancy is often the largest fixed cost for a frozen yogurt shop. Lenders compare rent and common area charges with realistic sales and want enough room for slower months.
Product costs. Self-serve pricing by weight means cost of goods depends on what guests choose. Projections should use a realistic mix of yogurt and toppings rather than a best-case margin.
How lenders factor these costs in. When sizing a Menchie’s Frozen Yogurt franchise loan, lenders model sales by season, subtract royalties, marketing fees, rent, labor and product costs, and confirm that the remaining cash flow covers the payment with a cushion.
Franchisor Requirements for New Owners
Menchie’s asks prospects about their available capital and net worth during the inquiry process, and its franchise site addresses whether restaurant experience is required and what makes a good franchise owner. Confirm current liquidity and net worth expectations directly with the franchisor and in the FDD.
The approval process. Prospects request information, review the FDD, discuss available markets and site options with the franchise team, and sign once approved. Lenders generally want franchise approval and a lease or letter of intent in hand before final loan approval.
Ways to Own a Menchie’s
Opening a new shop. A new shop requires a lease, a build-out and an equipment package. Lenders underwrite it on projections, the owner’s equity and the site. Our page on franchise start-up financing explains how we approach new units.
Buying an existing store. The franchise site includes a section on purchasing an existing store, and resales can offer a running business with sales history. Lenders can underwrite actual results, but buyers should check the remaining lease term, equipment condition and any remodel requirement. Read our article on buying a franchise resale for the transfer process.
Lease assignment on a resale. A resale usually means taking over the seller’s lease, which needs landlord consent and often the franchisor’s lease documents. Our article on restaurant lease assignment explains what to watch for.
Financing Options for a Menchie’s Franchise
SBA 7(a) loans. Menchie’s is on the SBA Franchise Directory, so the SBA 7(a) loan program is available to qualified borrowers. A 7(a) loan can combine the franchise fee, build-out, equipment and working capital, which suits a leased storefront.
SBA 504 loans. The 504 program is designed for owner-occupied real estate and long-lived fixed assets. Because most shops are leased, 504 fits only when an owner buys the building.
Conventional term loans. Owners with strong credit or existing shops may use a conventional business loan, especially to add a location.
Build-out financing. Plumbing, electrical and interior work can be a large share of the cost. Read about restaurant build-out financing and how lenders treat improvements in leased space.
Equipment financing. Frozen yogurt machines, freezers, toppings bars and point-of-sale systems can be financed with equipment loans or leases that use the equipment as collateral. Learn more about restaurant equipment financing and leasing.
Working capital and lines of credit. Frozen yogurt sales typically peak in warm months and slow in winter, while rent and loan payments continue. A line of credit can smooth those swings. Explore our restaurant working capital options.
Seller financing on resales. A seller may carry part of the price on an existing store. Any seller note must be acceptable to the senior lender, is typically subordinate to it and may be limited by program rules. Our article on restaurant seller financing covers how these notes work.
SBA Loans for Menchie’s Frozen Yogurt Franchisees
The SBA Franchise Directory lists brands whose franchise agreements have been reviewed for SBA eligibility. SBA lenders generally require a brand to appear on the directory before making an SBA-guaranteed loan to one of its franchisees. A listing clears the franchise relationship for review; it does not approve any borrower.
Menchie’s listing and note. Menchie’s is listed under code S1103 with this note: when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Addendum to Lease and Collateral Assignment of Lease may not be executed.
What the note means in plain English. Many franchisors require a lease addendum and a collateral assignment of lease, documents that let the franchisor step into the tenant’s lease if the franchise ends. Those documents make sense when the franchisee rents from an outside landlord. But if the franchisee or an affiliate owns the building and pledges it as collateral for the SBA loan, those documents may not be signed, so the franchisor’s lease rights do not compete with the lender’s claim on the property. For the typical leased Menchie’s shop, the lease documents work as usual.
Loan size and tips. The SBA 7(a) program maximum is currently $5 million, though program rules can change. For an SBA-backed Menchie’s Frozen Yogurt franchise loan, bring a lease or letter of intent, contractor bids, equipment quotes and seasonal projections. Use our SBA loan calculator for early estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a Menchie’s Deal
Personal credit and financial history. For any Menchie’s Frozen Yogurt franchise loan, lenders review credit, tax returns and a personal financial statement, and typically require a personal guarantee.
Net worth and liquidity. Lenders look at the cash available for the equity injection and the reserves left afterward to cover slow seasons.
Industry and management experience. Retail, food service or management experience helps. Lenders also weigh the franchisor’s training and how much time the owner will spend in the shop.
Business plan and projections. Projections should show month-by-month sales with seasonal swings, realistic product costs, staffing and rent. Our article on how lenders read a Franchise Disclosure Document explains which FDD items feed these numbers.
The FDD and franchise agreement. Lenders review Items 5, 6, 7 and 17, including term, renewal and transfer conditions. Item 10 shows whether the franchisor offers financing, and Item 19 shows whether the FDD includes financial performance representations.
The lease. Lenders want a lease term that covers the loan, reasonable assignment rights and the franchisor’s lease documents reviewed in light of the SBA note.
Historical financials for resales. On an existing store, expect to provide several years of profit and loss statements, sales reports and tax returns.
Equipment and the Self-Serve Layout
The self-serve wall of frozen yogurt machines is the heart of every shop. Machines need adequate electrical service, water and drainage, and regular maintenance. Toppings bars, freezers and refrigeration support the line, while scales and point-of-sale systems handle pay-by-weight checkout.
Replacement and upgrades. On a resale, ask about the age and service history of the machines, because replacements can be a significant cost. Equipment financing can spread that cost over the asset’s useful life.
Multi-Unit Growth and Development
Owners who succeed with one shop often look at a second in a nearby trade area. Lenders can underwrite the existing shop’s cash flow alongside the new one and may finance each unit separately. Ask the franchisor about available markets and any development agreement, and plan management coverage before signing for more units.
Real-World Scenarios
A family opening its first shop. A family signs a lease in a retail center near schools and parks. An SBA 7(a) loan covers the franchise fee, build-out, equipment and working capital, and projections show a summer peak and a slower winter.
A buyer taking over an existing store. A buyer acquires a running shop from an owner who is relocating. The lender reviews several years of sales, the remaining lease term and machine condition, and a modest seller note sits behind the senior loan.
An owner who buys the building. An owner purchases a small retail building and opens a shop in it, pledging the property for an SBA loan. Under the directory note, the franchisor’s lease addendum and collateral assignment are not executed.
An owner adding a second shop. An owner with a strong first shop opens a second in a nearby town, financing the equipment separately and using a line of credit for winter months.
Common Mistakes to Avoid
- Projecting summer sales for the whole year
- Signing a lease shorter than the loan term
- Overlooking the SBA note when buying the building
- Underestimating plumbing and electrical work for yogurt machines
- Buying a resale without checking machine age and service records
- Leaving too little working capital for the first winter
For more pitfalls, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Menchie’s Franchise
Step 1: Request the FDD. Get the current FDD and confirm fees, investment range and capital expectations.
Step 2: Review it with advisors. Study Items 5, 6, 7 and 17 and the lease documents with a franchise attorney and accountant.
Step 3: Choose a site or store. Discuss available markets, or evaluate an existing store’s financials and lease.
Step 4: Talk with a financing specialist. Compare SBA 7(a), conventional and equipment financing before signing a lease.
Step 5: Apply and coordinate approvals. Submit financial statements, tax returns, projections, bids and franchise documents, and align the loan with lease signing and construction.
Step 6: Close and open. Fund the build-out, install equipment, train staff and keep reserves for slower months.
Menchie’s Frozen Yogurt Franchise Loan FAQs
How much does it cost to open a Menchie’s?
The total depends on the site, build-out and equipment. The current FDD’s Item 7 table states the estimated initial investment range and its line items.
What is the Menchie’s franchise fee and royalty?
Item 5 of the current FDD states the initial franchise fee, and Item 6 lists the royalty, marketing contributions and other ongoing fees.
Can I get an SBA loan for a Menchie’s?
Yes, if you qualify. Menchie’s is listed on the SBA Franchise Directory under code S1103, with a note on the lease addendum and collateral assignment of lease.
What does the SBA note mean for my lease?
If the real estate where the shop operates will secure the SBA loan, the lease addendum and collateral assignment of lease may not be executed. For a typical leased shop, the documents work normally.
Does Menchie’s offer financing?
The franchise site includes guidance on financing a Menchie’s. Item 10 of the FDD discloses whether the franchisor offers any financing directly.
Do I need restaurant experience?
The franchise site addresses this question directly, so ask the franchise team about your background. Lenders value management experience but can work with first-time owners who show strong liquidity and a solid plan.
Can I buy an existing Menchie’s?
Yes. The franchise site has a section on purchasing an existing store. Transfers need franchisor and landlord approval.
Can I finance the yogurt machines separately?
Yes. Frozen yogurt machines and other equipment can often be financed with equipment loans or leases.
Can I own more than one shop?
Yes, subject to franchisor approval and available markets. Lenders finance additional units based on existing performance.
What documents do I need to apply?
Expect a personal financial statement, tax returns, a resume, a business plan with seasonal projections, the FDD and franchise agreement, a lease or letter of intent, contractor bids and equipment quotes.
Final Thoughts
A Menchie’s shop is a leased, equipment-heavy business with seasonal sales. Owners who read the FDD carefully, understand the SBA lease note, budget for build-out and plan for winter put themselves in a strong position to finance their first shop and beyond.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, equipment, working capital and refinancing. Learn more about our franchise financing and restaurant financing solutions.
