FDD Talk Daily: Caveats to Kolache Factory’s Earnings Disclosures for Company-Owned Stores

Highlights of Kolache Factory’s Item 19 Financial Performance Representations (2012 FDD) – Part 3

• Kolache Factory Inc.’s (KFI) average store manager expense, including employee tax contributions, was approximately $42,000 in 2010 and 2011. Each Store usually employs one management level employee and five hourly employees. If you serve as the manager, you will not incur this cost unless you pay yourself a salary.

• Almost all of the company-owned Stores are located in strip centers in the Houston area. There is one Store in the low range located in Indianapolis, Indiana and one Store in the middle range that is located in a free-standing building in Houston, Texas.

• The ages of the Stores are from 1 year to 22 years. However, after the start-up phase, the franchisor does not consider age a significant factor in a Store’s revenue or profit potential.

• If you become a Kolache Factory franchisee, your Store’s financial results are likely to differ from those of company-owned Stores. In determining how relevant the sales data of existing Stores may be to your situation, the franchisor cautions you to keep the following points in mind:

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