Highlights of Kilwins Chocolates’ Item 19 Financial Performance Representations (2012 FDD) – Part 2
Cost of Sales
- Cost of Sales includes the cost of purchased and manufactured product that is sold in the Store, computed as a percentage of gross sales.
- These figures are for Stores open during 2010, the most recent period for which figures have been reported.
- The information included in these figures was accumulated from internally generated Store financial statements and tax returns provided to the franchisor by 32 franchised Stores from whom the franchisor was able to obtain applicable information.
- These financial statements and tax returns have not been audited and the franchisor relies on the representations of the Store owners for their accuracy.
- The franchisor believes that the results below are a reasonable representation of the entire population of Stores, however, expense classification differences between Stores can have a material impact on the actual results reported, and, as a result, expense percentages actually achieved will vary from those reported below.
- Cost of sales figures will vary significantly from Store to Store and you need to prepare your own estimates of the cost of sales you expect to achieve in your Store.
- Some of the items impacting cost of sales, many of which will have a material impact on actual cost of sales percentages, include: actual product sales mix; the cost of commodities, including chocolate, sugar, milk, and other materials over which you will have little control; the availability of local supply for products not supplied by Kilwins; the amount of product manufactured in the Store and the efficiency with which it is made; control over serving sizes by your employees; and customer pricing sensitivity in your market.