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FDD Talk 2013: Average Net Sales and Selected Average Costs for Bruegger’s Bagels (2013 FDD)

by Franchise Chatter on August 14, 2013

in Bagel Franchise, Bakery Franchise, Franchise Earnings



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

  • In this Item 19, the franchisor provides certain historical operating results of franchised and company-owned Bruegger’s Bakeries.

Explanatory Notes for Table 1 – Average Net Sales for Fiscal Year Ending December 25, 2012

  • Bruegger's Bagel Photo by Doogie51Table 1 provides average Net Sales for franchised and company-owned Bakeries during fiscal year 2012.
  • “Net Sales” excludes the dollar value of coupons redeemed at the Bakery and the dollar value of other sales discounts given by the Bakery.
  • The figures in Table 1 are the mean averages of the reported Net Sales of 179 company-owned Bakeries and 94 franchised Bakeries that were open throughout the entire 64-week period ending December 25, 2012.
  • For the company-owned Bakery calculation, the franchisor excluded 3 Bakeries that opened during the 64-week period, 3 Bakeries that closed during the 64-week period, 5 non-traditional Bakeries, and 2 Bakeries that BEI acquired from franchisees during the 64-week period.
  • For the franchised Bakery calculation, the franchisor excluded 7 Bakeries that opened during the 64-week period, 6 Bakeries that closed during the 64-week period, 2 non-traditional Bakeries, and 2 Bakeries that BEI acquired from a franchisee during the 64-week period.
  • The figures in Table 1 reflect average Net Sales and not profits. Revenue is not necessarily indicative of profits.

Explanatory Notes for Table 2 – Selected Average Costs for Company-Owned Bakeries for the Fiscal Year Ending December 25, 2012

  • Table 2 presents selected average costs of company-owned Bakeries during the fiscal year ending December 25, 2012, presented both as a dollar average and as a percentage of average Net Sales.
  • Table 2 includes the same 179 company-owned Bakeries that are included in Table 1. The results in Table 2 are the arithmetic average for the 179 company-owned Bakeries.
  • The Bakeries in Table 2 have been open for an average of more than 15 years; none had been open for less than 15 months as of December 25, 2012. New outlets typically require a period of time to build revenue and may not perform as well as outlets that have been operating for many years.
  • Cost of Goods Sold (COGS) represents food, beverage, and paper products used when serving guests.
  • The company-owned Bakeries purchase certain food, beverage, and paper products from commissaries that BEI operates. In order to more accurately reflect the COGS, the financial results of operation of the commissaries were added to COGS. The allocation is of the commissary’s operating gain or loss before interest, depreciation, amortization, and state and federal income taxes.
  • The franchisor has negotiated contracts with vendors of certain products under which company-owned Bakeries and franchised Bakeries may qualify for volume discounts based on total purchases by the franchise system. There is no assurance that these discounts will continue to be available. Without these discounts, the COGS in Table 2 would have been higher.
  • The cost of items that must be purchased locally, such as fresh produce, will vary according to the location of the Bakery.
  • Payroll includes the actual salaries, wages, and related expenses incurred by the company-owned Bakeries included in Table 2. This includes the costs of the general manager, assistant managers, crew, payroll taxes, vacation benefits, the employer portion of group health benefits, workers’ compensation expenses, and bonuses for Bakery personnel.
  • Operating Expenses include cost of utilities (e.g. gas, electric, and telephone), restaurant supplies, repairs and maintenance, uniforms, smallwares, security, and outside service contracts (e.g. trash collection, equipment service, music rental, cleaning supplies, and janitorial and linen services).
  • The figures do not include expenses that BEI incurred for the grand openings of acquired, new, and relocated company-owned Bakeries.
  • Operating Expenses do not include rent and other occupancy costs. Operating Expenses do not include royalties or other fees that you would pay as a franchisee.
  • The franchisor requires you to spend 3.75% of Net Sales on Marketing, which consists of 2% for local Bakery marketing and 1.75% for your contribution to the NAC Fund. Figures shown in Table 2 are for an average company-owned Bakery in 2012, when the NAC contribution was 1.50%.
  • You will incur Occupancy Costs which will vary depending upon your specific circumstances, e.g. whether you rent or own, the size of your Bakery, etc.
  • “EBITDA” means Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA does not take into account additional costs  that you will or may incur. These additional expenses include, among other things:
  • initial franchise fees and franchise royalties;
  • grand opening expenses;
  • depreciation and amortization;
  • interest expense;
  • allocation of corporate and regional overhead;
  • non-Bakery payroll and related expenses;
  • accounting and legal fees;
  • general insurance; and
  • federal and state income taxes.
  • The franchisor obtained the Gross Sales and Cost data for the company-owned Bakeries in Tables 1 and 2 from BEI’s internal operating records. The franchisor obtained the Gross Sales data for the franchised Bakeries in Table 1 from the financial reports submitted by the franchisees for the purpose of computing royalties.

Table 1 – Average Net Sales for Fiscal Year Ending December 25, 2012



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