Highlights of Menchie’s Item 19 Financial Performance Representations (2013 FDD)
- Menchie’s Item 19 contains certain historical data relating to the operation of its franchised and company-owned locations.
- The franchisee data included in this Item 19 was taken from the information reported to Menchie’s by its franchisees through the company’s electronic point-of-sale system.
- The franchised and company-owned data included in this Item 19 reflects information for the 53-week annual period from January 2, 2012 to January 6, 2013 (the “Measurement Period”).
- Menchie’s has not audited this information, nor independently verified this information.
Explanatory Notes for Section I – Average Gross Sales for Menchie’s Reporting Franchises
- Section I of this Item 19 includes the average Gross Sales for 115 of Menchie’s franchised locations in operation during the entire Measurement Period (the “Reporting Franchises”).
- As of January 2, 2012, Menchie’s had 130 franchised locations operating under the Menchie’s trademarks. Of these 130 franchised locations, 124 were open and operating during the entire Measurement Period. The Reporting Franchises do not include 9 franchised locations that were open and operating during the Measurement Period but were not included in this Item 19 due to their operational issues and their inability to follow the Menchie’s System (the “Excluded Franchises”).
Explanatory Notes for Section II – Company-Owned Menchie’s Gross Sales
- Section II of this Item 19 includes the actual Gross Sales earned by its one company-owned location. Menchie’s acquired the company-owned location from an existing franchisee in September 2011.
Explanatory Notes for Section III – Gross Sales for Menchie’s Stores in Los Angeles County and Cleveland Metropolitan Area
- Section III of this Item 19 includes the average Gross Sales earned by its 20 franchised locations located in Los Angeles County and 8 franchised locations located in the Cleveland metropolitan area that were in operation during the entire Measurement Period.
- Los Angeles County and the Cleveland metropolitan area contain the greatest number of Menchie’s franchised locations in a particular metropolitan region or county.
Explanatory Notes for Section IV – Historical Profit and Loss Information for 1 of 124 Franchised Locations
- Section IV of this Item 19 includes the actual profit and loss information for 1 of 124 franchised locations in operation during the entire Measurement Period. This franchised location was selected because its actual Gross Sales during the Measurement Period was the closest to the average Gross Sales for the 115 Reporting Franchises included in Section I.
- The franchised location included in this Section IV has been operating for approximately 1.5 years as of January 6, 2013. The information in the table below represents actual figures from the Measurement Period.
- The Cost of Goods Sold includes the costs associated with purchasing the goods sold for the franchised location and the associated freight costs incurred in shipping the goods sold to the franchised location.
- Payroll includes the sum of hourly employee wages, federal and state employment tax expenses, and worker’s compensation insurance. Payroll does not include any payments made to the owners of the franchised location in the form of an owner’s draw, a dividend, or other distribution.
- Marketing and Royalties include the marketing and royalty fees the franchised location is required to pay under the terms of its Franchised Agreement.
- The Rent Expenses include rental payments and Common Area Maintenance charges.
- Utilities include electric, gas, and water expenses.
- The Miscellaneous Expenses included in the table below include expenses for accounting fees, security, bank charges, charitable donations, cleaning supplies and services, credit card fees, dues and subscriptions, equipment rental, insurance, legal fees, licenses and permits, office and restaurant supplies, computer system and internet charges, pest control, postage, repairs and maintenance, trash removal, and uniforms.