FDD Talk: Pro Forma Projections of Annual Revenues, Cost of Revenues, and Fixed Costs Payable to the Franchisor for Expedia CruiseShipCenters

Highlights of Expedia CruiseShipCenters’ Item 19 Financial Performance Representations (2011 FDD)

• Expedia CruiseShipCenters are retail service center travel businesses that offer reservations for cruise ships, airlines, car rentals, and hotels, as well as other related travel services and products.

• The total estimated investment required to begin operation of an Expedia CruiseShipCenters Franchised Travel Business ranges from $110,000 to $187,995, including the $29,000 that must be paid to the franchisor as a non-refundable initial fee.

• The following section illustrates projected annual revenues, the cost of revenues, and fixed costs payable to Expedia for a Franchised Travel Business after the first year of operation.

• These are not time-based projections, but rather, are a comparison of gross profit versus sales to illustrate the scalability of the franchise system.

• This discussion is intended to support your determination of possible financial performance as you pass the breakeven point of your business, “which [Expendia] does not expect you to reach during the first year of operation of the Travel Business.”

• These projection levels are based on the 2010 operations of Travel Business franchises as entered into the CruiseDesk system by franchisees.  The assumptions as to the average booking value and, consequently, the number of bookings needed to achieve these revenue levels are based on this historical data.

• The projections are intended ONLY to demonstrate possible scenarios and are in no way a guarantee.

• These projections assume you act as manager of your center and do not receive a separate salary.  They assume you only use commissioned sales agents (consultants) who are independent contractors and you do not hire any other employees to help you.

Tagged as: Expedia CruiseShipCenters