FDD Talk Daily: Average Net Sales of Great American Cookies Stores at Traditional Mall Locations

Highlights of Great American Cookies’ Item 19 Financial Performance Representations (2012 FDD) – Part 1

• GAC Franchising, LLC offers franchises for the operation of retail stores selling cookies, brownies, and related food items and beverages under the Great American Cookies mark (“Stores”).

• The total investment necessary to begin operation of a Great American Cookies franchise is $148,350 to $280,350 for a Traditional Store, $121,000 to $239,600 for a Non-Traditional Store, and $44,550 to $138,394 for a Satellite. This amount does not include rent for the Store. This includes $20,000 to $43,000 that must be paid to the franchisor or its affiliates.

• The total investment necessary to begin operation of a Great American Cookies Area Development franchise is $52,500 and up. This includes $52,500 or more that must be paid to the franchisor or its affiliates.

• The data below presents historical revenue and limited expense information for calendar year 2010 for certain Great American Cookies Stores.

Average Net Sales of Great American Cookies Stores at Traditional Mall Locations

• The sample used to obtain this information includes only traditional mall Stores that had been continuously in operation for 3 full years or more as of December 31, 2010, that were not co-branded with another concept or supplemented with satellite locations, and that provided the company with the presented financial information for the full calendar year 2010.

• The Average Net Sales was determined using the interquartile method (“IQM”) of statistical analysis. The IQM is a statistical measure that is designed to eliminate results that are anomalies from the data set and therefore provides a more reliable method of determining the true average.

• In calculating the IQM, the franchisor first calculated the interquartile range (“IQR” which is the middle 50%). Once the IQR is established, the franchisor then calculated a Lower Control Limit (the statistical formula is LCL = Q1 – 1.5*IQR) and an Upper Control Limit (UCL = Q3 + 1.5*IQR) for the sample. The items outside the control limits were discarded from further calculations.

• There were 279 Stores open and operating as of December 31, 2010.

• Of these, 196 Stores are Traditional Stores that are operated in mall locations and had been open and operating for 3 or more years as of December 31, 2010.

• Of these Stores, 142 provided the franchisor with the presented financial information for the full calendar year 2010 and were therefore included in the sample for the determination of the upper and lower quartiles (upper and lower 25%, based on the Average Net Sales).

• Once the Stores outside the control limits were eliminated from the sample, there were 136 Stores.

• Of the 136 Stores represented in the sample, 62 Stores (or 45.6% of the sample group) attained or exceeded the Average Net Sales below.

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