(Ambrosio’s note: Over the next few days, I will be discussing the Item 19 financial performance representations of 10 up-and-coming pizza franchises that you’ve probably never heard of.
Unlike Papa John’s, Papa Murphy’s, Marco’s Pizza, and Hungry Howie’s (all of which I’ve featured previously on FDD Talk), these franchises are not yet household names. But I do think they are worth examining because they can provide us with helpful clues on the profit potential of pizza franchises in general.
Please stay tuned for my industry-level bottom line analysis to be published at the end of this series.)
Highlights of Extreme Pizza’s 2011 Franchise Disclosure Document
- The total investment necessary to begin operating a single franchised Extreme Pizza restaurant ranges from $209,200 to $462,500. This includes the $30,000 initial franchise fee payable to the franchisor before opening.
- Extreme Pizza also offers to qualified individuals the right to operate multiple franchised restaurants under an Area Development Agreement. The total investment necessary to begin operating an Area Development Business will vary depending upon the number of franchised restaurants you will open in your designated area (the “Development Area”).
- You must pay the full initial franchise fee for your first franchised restaurant ($30,000), and 1/2 of the initial franchise fee for each additional franchised restaurant you are allowed to open in the Development Area when you sign the Area Development Agreement. The remainder of the initial franchise fee for each additional franchised restaurant shall be due and payable when you sign a Franchise Agreement for the additional franchised restaurant.
- Extreme Pizza also offers to qualified individuals the right to be an Area Representative and recruit franchisees to own and operate franchised restaurants, provide support services to franchisees within a given territory (“Territory”), as well as open your own franchised restaurants.
- The total investment necessary to begin operating an Area Representative Business ranges from $119,500 to $1,085,500, which includes the Area Representative Fee of $0.05 to $0.20 per person within your Territory.
Average Total Income, Cost of Goods Sold, Gross Profit, Certain Costs and Expenses, and Operating Profit of Company and Affiliate-Owned Restaurants
- This section sets forth Extreme Pizza’s company and affiliate-owned restaurants’ Average Total Income, Cost of Goods Sold, Gross Profit, Certain Costs and Expenses, and Operating Income After Certain Costs and Expenses. In 2010, Extreme Pizza had 9 company and affiliate-owned restaurants.
Company and Affiliate-Owned Restaurants (January 1, 2010 through December 31, 2010)
*Percentages are given for each category as a percentage of Average Total Income.