FDD Talk Daily (Children’s Franchises): Average Gross Revenues of Certain Young Rembrandts Franchisees for Calendar Years 2010 and 2011

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 Young Rembrandts’ Item 19 Financial Performance Representations (2012 FDD) – Part 1

• The franchisee will provide art classes and teach art techniques to preschool and elementary school children.

• The total investment necessary to begin operations of a Young Rembrandts standard Gold Franchise ranges from a low of $40,380 to a high of $48,600. This includes $31,900 to $32,100 for the initial franchise fee for a standard Gold Franchise, and the initial software license fee.

Statement of Average Gross Revenues of Certain Franchisees for Calendar Years 2010 and 2011

• The following is a statement of average annual gross revenues for the calendar years 2010 and 2011 for Young Rembrandts franchisees who achieved annual gross revenues in excess of $60,000 per franchise territory.

• The Young Rembrandts Franchise Agreement requires that beginning on the 1 year anniversary from the Opening Date of the Business and through the end of the term, franchisees must achieve gross revenues sufficient to generate an average monthly royalty payment of at least $500.

• Based on the royalty fee of 10%, a franchisee must generate annual gross revenues of $60,000 or more in order to meet this requirement of the Franchise Agreement.

• This requirement is designed to encourage compliance with the requirements under the Franchise Agreement that the franchisee business be operated on a full-time basis and that the franchisee use best efforts to promote the Young Rembrandts business in the franchise territory.

• In 2010, 19 franchise territories in operation for at least 12 months were excluded from the averages presented, and in 2011, 14 franchise territories in operation for at least 12 months were excluded from the averages presented for not meeting these minimum gross revenue requirements.

• The revenue information was compiled from monthly gross revenue reports submitted to the company by the franchisees. This statement has not been audited.

• The time period the franchise territories included in this financial performance representation have been in business varies. In 2010, it ranged between 12 and 124 months. In 2011, it ranged between 12 and 136 months.

• The revenue data of 46 franchise territories owned by 42 different franchisees was included in calculating the average for the calendar year 2010. The revenue data of 52 franchise territories owned by 47 different franchisees was included in calculating the average for the calendar year 2011.