FDD Talk: Average Sales, Expenses, and Operating Income for Medifast Weight Control Centers

Highlights of Medifast Weight Control Centers’ Item 19 Financial Performance Representations (2011 FDD)

• Medifast Weight Control Centers are retail weight loss centers that sell Medifast-branded meal replacement products and lifestyle education services to overweight and obese individuals.

• All franchisees must agree to develop a minimum of 3 Medifast Centers within a defined geographic territory.

• The total investment necessary to begin operation of a Medifast Weight Control Center business with the rights to open 3 Medifast Centers is from $190,000 to $273,000.  This includes the $80,000 to $82,500 that must be paid to the franchisor or affiliate.

• The following income statement demonstrates the average performance of the 27 Medifast Centers operated by the company’s affiliate, Jason Properties, LLC throughout the entire calendar year of 2010, with figures rounded to the nearest thousand.

• Take note that the financial performance information for twelve of the thirteen Centers that the affiliate began operating in 2010 were not included in compiling the data below, and the financial performance information for its two Centers that were closed during 2010 is not included in the average performance figures provided below.  The data for one new Center that opened in January 2010 is included in the data set.

• The affiliate Centers benefit from economies of scale inherent in the operation of several different Centers within a metropolitan area, particularly in Dallas, Texas; Houston, Texas; and Washington, D.C. areas, and their ability to jointly advertise and promote the Centers’ business. If your Center is the first one in your area, you may need to incur substantially greater promotional and other costs, particularly during your first year of operations.