Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2013: Average Net Sales, Expenses, and Operating Profits for Auntie Anne’s Stores (2013 FDD)

by Franchise Chatter on May 16, 2013

in Franchise Earnings, Pretzel Franchise

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Highlights of Auntie Anne’s Item 19 Financial Performance Representations (2013 FDD)

  • Tables 1 through 8 present net sales or average net sales, average expenses, and average net operating income figures for the year ended December 31, 2011 for a majority of Auntie Anne’s franchises that operated under the same ownership for the entire year, obtained from the unaudited profit and loss statements submitted by Auntie Anne’s franchisees.

Definition of Terms for Auntie Anne’s Profit and Loss Statements

As used throughout the following Tables 1-8, the following definitions apply:

  • Auntie Anne's Franchise Photo by Nick StangoNet Sales – Net Sales includes, without limitation, monies, gift card redemptions, or credit received from the sale of food, beverages, and merchandise, from tangible property of every kind and nature, promotional or otherwise, and for services performed from or at the Shop, including, without limitation, off-premises services such as catering and delivery.
  • Net Sales will not include the initial sales or reloading of gift cards, coupon discounts, the sale of food or merchandise for which refunds have been made in good faith to customers, employee meals, the sale of equipment used in the operation of the Franchised Business, nor will it include sales, meals, use, or excise tax imposed by a governmental authority directly on sales and collected from customers; provided that the amount for the tax is added to the selling price or absorbed therein, and is actually paid by you to a governmental authority.
  • Cost of Goods Sold – Cost of Goods Sold is a figure which reflects the cost of materials used to produce the products you sell to your customers. It includes the cost of food ingredients (pretzel mix, butter, beverages, etc.), paper products (cups, napkins, bags, straws, etc.) and retail items (Auntie Anne’s at Home pretzel kits, etc.).
  • Gross Profit – Gross Profit is Net Sales minus Cost of Goods Sold.
  • Operating Expenses – Operating Expenses are the day-to-day costs incurred in conducting normal business operations.
  • Labor – Labor includes wages paid to your employees; payroll taxes paid for your employees; and actual wages and related expenses you pay to yourself.
  • Rent – Rent includes the base rent for your lease including extra charges, such as common area maintenance (CAM) charges, real estate taxes, percentage rents, etc.
  • Other Expenses – Other expenses include such things as utilities (electric, telephone), royalties, ad fund fees, advertising, insurance (Workers’ Comp, property, casualty, liability, health, etc.), licenses, permits, repairs, uniforms, store supplies, etc.
  • Total Expenses – The total of Labor, Rent, and Other Expenses.
  • Net Operating Income – Gross Profit minus Total Expenses.

Auntie Anne’s Stores By Region

Auntie Anne’s includes the following Regions, and their respective states, in the information presented in Tables 1-9:

  • Mid-Atlantic Region: (i) West Virginia; (ii) District of Columbia; (iii) Virginia; (iv) Maryland; (v) Pennsylvania; and (vi) Delaware.
  • Northeast Region:  (i) New York; (ii) Connecticut; (iii) New Hampshire; (iv) Massachusetts; (v) New Jersey; (vi) Vermont; and (vii) Rhode Island.
  • Southeast Region:  (i) North Carolina; (ii) Georgia; (iii) Alabama; (iv) Arkansas; (v) Tennessee; (vi) Florida; (vii) South Carolina; (viii) Louisiana; and (ix) Mississippi.
  • Midwest Region:  (i) Kansas; (ii) North Dakota; (iii) Iowa; (iv) Kentucky; (v) Michigan; (vi) Illinois; (vii) Indiana; (viii) Missouri; (ix) Nebraska; (x) Ohio; (xi) Minnesota; (xii) Wisconsin; and (xiii) South Dakota.
  • Western Region:  (i) Nevada; (ii) Oregon; (iii) Texas; (iv) Oklahoma; (v) California; (vi) Washington; (vii) New Mexico; (viii) Colorado; and (ix) Arizona.

Notes and Assumptions for Tables 2-8 (Average Net Sales and Net Operating Income for Enclosed Mall Stores Systemwide and By Region)

  • Auntie Anne's Franchise Photo by qinnApproximately 80% of Auntie Anne’s franchises are located in enclosed malls. Tables 2-8 relate only to Auntie Anne’s franchises operated in enclosed malls and do not include franchises operated in airports, outlet centers, Walmarts, alternative locations, train stations, casinos, concession trailers, farmer’s markets, seasonal locations, strip malls, colleges, and universities.
  • As of December 31, 2011, there were 605 enclosed mall Auntie Anne’s locations.
  • Of those 605, 538 Auntie Anne’s locations within enclosed malls were open for business and under the same ownership from January 1, 2011 through December 31, 2011. This table does not include 67 enclosed malls which were neither under the same ownership nor open for the entire 2011 fiscal year.
  • Of those 538 locations, 507 are included within the information contained in Table 2. Auntie Anne’s has not included financial information in Table 2 for an enclosed mall location if:  (i) the franchise was not in operation for the entire 2011 fiscal year; (ii) the ownership of the franchised location changed during the 2011 fiscal year; or (iii) the franchisee submitted late, incomplete, or illegible financial information, or submitted such information in an unacceptable format.

Notes and Assumptions for Table 9 (Average Net Sales Per Transaction for Enclosed Mall Stores Systemwide and By Region)

  • The table below shows Net Sales Per Transaction (NSPT) averages experienced by Auntie Anne’s enclosed mall locations which were open and reported sales for the entire fiscal year ended December 29, 2012.
  • The NSPT averages are based on data received from 536 of 600 Auntie Anne’s franchised locations that operated in enclosed malls and reported sales for all 52 weeks of 2012. Data from company-owned stores is not included in Table 9.

Table 1 – Net Sales Range for 2011 Fiscal Year – Various Venues (All Regions)

Enclosed Malls

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