FDD Talk Daily (Children’s Franchises): Unit Growth, Profit Margin, and Cost Percentages for i9 Sports Franchises

This special FDD Talk series will highlight the financial performance representations of over 20 Children’s franchises, with a cross-analysis of the featured franchises to be published at the end of the series.

Highlights of i9 Sports’ Item 19 Financial Performance Representations (2012 FDD) – Part 2

Part II – Same Unit Revenue Growth

• The following section details the yearly revenue growth of “same units” (whether that unit is operated by the franchisor or one of its franchisees) in the 2009, 2010, and 2011 calendar years. In order for the total revenue of an i9 Sports Franchise to be included in a given calendar year’s calculation of revenue growth, that i9 Sports Franchise must have been open and operating that entire calendar year and the entire preceding calendar year.

• The figures below also exclude any i9 Sports Franchises that: (i) offered Adult Sports; or (ii) were not open and operating at any time from January 1, 2008 and December 31, 2011.

• The purpose of this measurement is to reflect the true organic growth of the franchise network from year to year, without the revenue lift generated by new franchise units.

• Revenue Growth 2009:  8.5%

• Revenue Growth 2010:  11.6%

• Revenue Growth 2011:  19.5%

Part III – Profit Margin

• The following section sets forth information as provided by area developers through a Financial Benchmarking Study dated June 16, 2011 detailing financial and operational results based on data provided by 39 full-time i9 Sports Franchises (the “Reporting Area Developers”) that were open and operating for at least 12 months as of December 31, 2010.

• The information presented is for the period from January 1, 2010 through December 31, 2010 (the “Measurement Period”).

• The Owner’s Discretionary Profit Margin is a profitability measurement used in the Financial Benchmarking Study, and is defined as the profit before taxes plus all owners’ compensation and benefits, including automobile and other discretionary expenses as reported by the
  Reporting Area Developers.