FDD Talk Daily (Children’s Franchises): Average Gross Sales and Average Enrollment of Lil’ Kickers Businesses

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 Lil’ Kickers’ Item 19 Financial Performance Representations (2012 FDD)

• Lil’ Kickers LLC is offering franchises to operate a children’s soccer program under the service mark “Lil’ Kickers” that includes soccer classes, clinics, camps, parties, and other events for children varying in age from 1 through 9.

• Franchisees will participate in the advertising, marketing, and information systems, and quality standards designed and implemented by the company.

• The total investment necessary to begin operation of a Lil’ Kickers franchise ranges from approximately $18,250 to $46,232. This includes approximately $14,250 to $17,500 that must be paid to the franchisor or an affiliate.

Statement of 2011 Gross Sales and Enrollment

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  The table below presents unaudited information about the actual gross sales and enrollment figures for all Lil’ Kickers franchisees and all Arena Sports licensees who were in business and operating for all or most of the 12-month period ending December 31, 2011 (the “Reporting Outlets”).

• The table excludes franchisees and licensees that opened or closed during the 2011 calendar year, as well as all corporate locations.

• The Arena Sports licensees operate businesses very similar to the type being franchised, though they are not permitted by their license agreements to use any trademark of the company or of Arena Sports. Incorporating the information from these licensees provides a much larger set of data than franchisees alone, thereby allowing a more accurate representation of historical performance.

• As of December 31, 2011, there were 50 franchisees in the Lil’ Kickers system and 21 licensees in the Arena Sports system. The Reporting Outlets consist of 39 franchisees (29 who were franchisees for all of 2011, and 11 licensees that converted to a franchise during 2011), and all 21 licensees. (Ambrosio’s note: The number of Reporting franchisees do not add up to 39, probably due to a typographical error in the FDD.)

• Gross sales means the aggregate of all revenue from the sale of services from all sources in connection with the Franchised Business, including, without limitation, all sales of classes, camps, parties, facility memberships, field trips, local program sponsorships, and proceeds from any business interruption insurance, but excluding:

• (a) all refunds made in good faith,
• (b) any sales and equivalent taxes that are collected by an outlet for or on behalf of any governmental taxing authority and paid thereto, and
• (c) any rebate received by an outlet from a manufacturer or supplier.

• Membership sales refer to individuals who paid annual membership or registration fees charged by a facility as a direct result of signing up for a Lil’ Kickers program.

• Enrollment figures represent individuals who registered for one quarter of classes. An individual is counted each time he or she enrolls, so participants may be counted 4 times in one year’s results if they participated for the entire year.

• Enrollment occurs on a rolling basis, so the enrollment figures may also include partial seasons, for which class fees are typically pro-rated.

• Outlets use different number of fields in connection with the Franchised Business. Of the 60 Reporting Outlets, 1 outlet uses up to ten fields, 7 outlets use three fields, 31 outlets use two fields, and 18 outlets use one field. (Ambrosio’s note: These numbers do not add up to 60.)

• Some outlets also have different sized fields, which accommodate different numbers of class participants, and some that have multiple fields do not use all fields as part of the Franchised Business.

• The breakdown by number of fields in the table below corresponds to the number of fields at each facility, but does not take the size or actual use of those fields into account.

• Subject to the company’s standards, outlets can run classes at local community centers, fitness clubs, gymnasiums, or, in the summer months, local parks, within their Exclusive Area. Of the 60 Reporting Outlets, 11 run off-site programs. The gross sales and enrollment figures in the table below include activities at off-site locations, if any. Your area may not be suitable for off-site programs.

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