As the son of the developer behind the expanding North Hills complex in Raleigh, John Kane Jr. admits that even he is a little bit surprised that he ended up in the yogurt business.
"Part of me wanted to go into real estate by default," he said. "When I saw this it really just kind of intrigued me. It was really out of nowhere."
What he saw, and what he successfully pitched to his father, John Kane Sr., is Yogen Fruz, a frozen yogurt retail business that has been around for 23 years but only recently began expanding in the United States.
Over the past year and a half, father and son have purchased the franchise rights for Yogen Fruz in Maryland, Virginia and Washington, D.C. After opening three stores in those markets, with another three expected to open soon, the Kanes have expanded into North Carolina.
Last week, they held a seminar in Greensboro designed to draw in prospective franchisees.
Although real estate and frozen yogurt may seem like very different business ventures, the younger Kane said it was North Hills that first led him to see the frozen dessert's potential.
Finding a brand
Kane, 24, grew up in Raleigh and attended the University of Pennsylvania before transferring to N.C. State to play football. Injuries cut short his playing career, and he ended up leaving NCSU 18 hours short of a degree to start this business.
Kane Jr. was visiting New York City when he sampled the product of a Yogen Fruz competitor, Pinkberry. After telling his father that the yogurt would be a perfect fit at North Hills, the son began investigating what was involved in franchising the product.
His research on Pinkberry led him to Yogen Fruz, a brand headquartered in Toronto that has about 1,200 stores in 25 countries.
"I think [my father] may have been taken aback by the yogurt, but when we really sat down and looked at it, the history and the long-term success of Yogen Fruz, it was an investment that both he and I were very comfortable with," Kane Jr. said.
Tough market
The Kanes negotiated with Yogen Fruz's corporate office to determine a price for the franchising rights in different markets. Kane Jr. runs the day-to-day business from Washington.
"They're a very proven company with a great product," adds Kane Sr.
Yogen Fruz franchisees pay a $25,000 franchise fee as well as the cost of the yogurt-making equipment, the lease and improvements required to the space, up to 1,500 square feet.
Kane Realty is not involved in the venture. The Kanes have tenant representatives who work with franchisees to find suitable real estate.
Kane Sr. said the recession has provided good and bad news for prospective franchisees. The good news is that several of the Kanes' franchisees in the Washington area have been able to open up in prime retail locations that in a better economy would not have been available.
"The bad news is you need to have mostly cash, because there's not a lot of financing available," he said.
Kane Jr. said they would like to open 50 stores in North Carolina over the next five years, including at least one or two in the Triangle in the next 12 months.
He said they will target locations that have lots of foot traffic and plenty of visitors willing to pay anywhere from $2.95 to $6.50 for a cup of yogurt. Finding a suitable franchisee for North Hills, which is expanding east across Six Forks Road, is high on the list.
Among the challenges that Yogen Fruz franchisees will likely face in the Triangle is a lack of familiarity with the product and increasing competition during a slow economy. The Raleigh-based Goodberry's frozen-custard chain has nine Triangle locations.
