(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 the 2011 Franchise Disclosure Document of Figaro’s Pizza
- Figaro’s Pizza restaurants offer a limited menu of pizza, calzones, submarine sandwiches, and/or other food and beverage products. Based upon the type of franchise you purchase, the franchisor will grant you the rights to use the marks “Figaro’s” or “Sargo’s Subs” or both.
- The total investment necessary to begin operation of an individual Figaro’s Pizza or Sargo’s franchised store is approximately $91,000 to $398,450. This includes $5,000 to $65,000 that must be paid to the franchisor (or affiliate). For franchises purchased with the Multiple Franchise Purchase Addendum to the Franchise Agreement, multiply the estimated initial investment range by the number of stores purchased.
- The initial franchise fee for an individual franchise ranges from $5,000 to $52,500 depending on whether you purchase a Standard, Express, Co-Branding, Retail Premises, or additional franchise.
- An Express franchise is a reduced size franchise purchased with the Express Addendum to the Franchise Agreement. A Co-Branding franchise is a Figaro’s or Sargo’s franchise operated in connection with another concept purchased with the Co-Branding Addendum to the Franchise Agreement. A Combined Franchised Store is a franchise in which the Figaro’s and Sargo’s concepts are operated in connection with each other.
- In addition, for your first franchise store, you must pay a Grand Opening Advertising Fee of $12,500.
- The company also offers franchises for you to act as a Figaro’s and Sargo’s Master Franchisee. A Master Franchisee acts as the franchisor’s representative to advertise for and market to prospective franchisees within a territory, and to support the relevant franchised stores located in that territory.
- The initial investment for a Master Franchise ranges from $253,500 to $1,348,000. This includes the initial Master Franchise fee that must be paid the franchisor (or affiliate), which ranges from $100,000 to $1,000,000. In addition, a Master Franchisee must pay the cost of opening at least one required Standard Figaro’s or Standard Sargo’s franchise, or at least one Combined Figaro’s/Sargo’s franchise.
Financial Performance Representations: Individual Unit Figaro’s Franchises
- As of December 31, 2010, there were 77 unit franchised stores (including both Figaro’s and Sargo’s stores) and no company-owned stores. Of the 77 franchised stores, 70 were Figaro’s stores that had been open for at least 12 months as of December 31, 2010. Of these 70 stores, all reported sufficient financial performance information to be included in this financial performance representation.
- This section provides the average revenues for the system’s top 10% revenue producing stores; top 25% revenue producing stores (which includes the stores that are in the top 10%); and the second, third, and bottom 25% revenue producing stores.
Average Gross Revenues (for the 12 Months Ended December 31, 2010)