FDD Talk Daily: Revenue and Cost of Goods Sold of Franchised Savory Spice Shop Businesses

Highlights of Savory Spice Shop’s Item 19 Financial Performance Representations (2012 FDD)

• Savory Spice Shop businesses offer a variety of seasonings and spices, original blends, extracts, sauces, spice ware, and gift sets under the trademark “Savory Spice Shop” and related trademarks in a high end retail environment.

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  The total investment necessary to begin operation of a standard Savory Spice Shop franchise is between $187,386 to $309,653, including between $47,675 to $72,000 that must be paid to the franchisor.

• The franchisor also offers Savory Spice Shop franchises that operate in larger retail spaces with expanded storage. The total investment necessary to begin operation of a larger Savory Spice Shop is between $215,011 to $354,153, including between $58,300 to $84,500 that must be paid to the franchisor.

• The franchisor also offers to those franchisees that qualify the right to operate a Savory Spice Stop franchise which operates in a smaller retail space and offers a limited selection of Savory Spice Shop products under the Savory Spice Stop name. The total investment necessary to begin operation of a Savory Spice Stop franchise is between $141,011 to $255,653, including between $35,800 to $59,500 that must be paid to the franchisor.

2011 Total Revenue and Costs of Goods Sold

• This section presents information about the total revenues realized by seven franchisees during the period from January 1, 2011 until  December 31, 2011 (“Reporting Period”). The total revenue information shows the aggregate revenues derived from the sale of all products prior to discounts.

• The total revenue information in Item 19 was prepared from sales records from the POS system. The numbers have not been audited and the franchisor has not independently verified the numbers.

Franchised Retail Centers

• As of the issuance date of the company’s 2012 FDD, Savory Spice Shop had 17 franchised Retail Centers open and operating.

• The information below is a historical financial performance representation for the 7 franchised Retail Centers that were in operation for the entire Reporting Period (“Reporting Centers”). All Reporting Centers operate Full-Sized Retail Centers.

• Because the cost of shipping product to the Reporting Centers varies widely depending on the location of the Reporting Center, Cost of Goods Sold (COGS) is shown prior to any shipping charges to the Reporting Centers. The average shipping charges to the Reporting Centers was 1.6% of total revenue. (Of the Reporting Centers, 4 had shipping charges at or above this average and 3 were below.)