Bottom line
- Total investment $725K – $1.3M including a $40K franchise fee, 5.0% ongoing royalty.
- Average unit revenue of $1.4M/year (median $1.3M). Estimated payback in 2.5 years.
- Rated MODERATE with a risk score of 64/100.
- System growing at 400.0% CAGR over 3 years with 24 total units — strong expansion trajectory.
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Sprinkles Cupcakes Bakery unit return on the cash you put in?
Unlevered ROIC · per unit
22%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Sprinkles Cupcakes Bakery units return on equity?
Equity IRR · 5-yr
37.8%
4.97× MOIC
Year-1 DSCR
2.20×
EBITDA ÷ debt service
Equity required
$4.1M
on $13.0M purchase
Total debt
$8.9M
SBA $5.0M + senior + seller note
Overview
About
Sprinkles franchisees operate upscale cupcake bakeries focused on premium, made-to-order cupcakes with gourmet flavor profiles and decorative designs. Daily operations include baking fresh inventory, managing retail counter sales, fulfilling custom orders and celebrations, maintaining a high-end customer experience, and managing a small team in a typically compact retail footprint.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 31 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
No SBA loan data available for this brand.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
While unit growth and profitability metrics appear solid, the combination of recent regulatory violations, going concern status, unprotected territory, and high capital requirements creates meaningful investment risk requiring thorough diligence.
Score breakdown · what drove the 64 / 100 rating
- 01HIGHGoing Concern status is False, indicating potential financial instability or undisclosed operational challenges at corporate level
- 02MINORRegulatory violation in California (December 2024) shows compliance failures with franchise registration law and surety bond requirements
- 03MINORZero territorial protection exposes franchisees to direct competition from other Sprinkles locations and potential cannibalization
- 04MINORHigh initial investment range ($725K-$1.31M) combined with 25% YoY unit growth suggests possible oversaturation strategy
- 05MED5% royalty on gross sales provides limited margin cushion given modest 27.8% net margin in financials
- 06MEDRecent regulatory penalty indicates governance gaps that could signal additional undisclosed issues
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
35 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Sprinkles Cupcakes Bakery · FDD (2025) PDF