FDD Talk: Average, Median, and Gross Sales by Quartile of Pandora Franchised Stores (2012 FDD)

(Ambrosio’s note:  Welcome to FDD Talk 2.0, a more comprehensive version of our flagship content, featuring not only the Item 19 financial performance representations of select franchises, but their estimated initial investment, unit growth, and other key items of their 2012 FDD as well.)

Highlights of Pandora’s 2012 Franchise Disclosure Document – Part 2

Other Fees Under the Franchise Agreement

• Pandora franchisees do not pay an initial franchise fee or ongoing royalty fees. However, you must purchase your entire inventory of jewelry from the company. The initial inventory will cost between $350,000 and $550,000. In very limited situations, Pandora may finance the initial inventory up to 12 months (generally 30 to 90 days).

• Upon termination or expiration of the Franchise Agreement, the company has the option to buy from you, but are not contractually required to do so, all unsold inventory items at a price equal to the dollar amount paid by you to acquire such items. If the company elects not to purchase your unsold inventory upon termination or expiration of your franchise, it may permit you to sell such inventory to an existing Pandora franchisee.

• Local Advertising Expenditures: 4% of Gross Sales annually, although Pandora may increase this fee to a maximum of 6% of Gross Sales on 90 days prior notice to you.

• Marketing Fund Fee:  An amount not to exceed 3% of monthly Gross Sales.

Actual and Average Gross Sales

• Below is a statement of actual and average Gross Sales compiled from 108 franchised Pandora stores located in the United States and Puerto Rico (“Franchised Stores”), which were continuously open and operating from January 1, 2011 through December 31, 2011 (the “Accounting Period”).

• As used in this Item 19, the term “Gross Sales” means all revenue and income from any source derived or received by the franchised stores, from, through, by, or on account of the operation of the store, whether received in cash, in services, in kind, from barter, and/or exchange, on credit (whether or not payment is actually received) or otherwise, less the amount of any documented refunds given in good faith to customers by you and less any sales taxes.

• The company obtained this Gross Sales information from unaudited franchisee reports submitted to it consistent with its reporting requirements. The company has not audited or otherwise reviewed the Gross Sales information submitted to it.

• The Franchised Stores included in this Item 19 are primarily located within regional shopping centers or malls.