Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk: Certain Cost and Expense Information for Alphagraphics Business Centers (2013 FDD)

by Franchise Chatter on February 1, 2014

in Franchise Earnings, Printing Franchise



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Highlights of Alphagraphics’ Item 19 Financial Performance Representations (2013 FDD) – Part 2

  • The table below describes certain cost and expense information as a percentage of Gross Sales for U.S. franchisees operating an Alphagraphics Business Center as of the fiscal year ended June 30, 2013. This section provides data for 195 of the 245 Business Centers that were in operation as of June 30, 2013.
  • Alphagraphics Photo by Diversified ConstructionThe table excludes data from the Business Centers which fell into one or more of the following categories:
  • (i) multi-unit Business Centers which did not allocate sales and costs accurately to each Business Center;
  • (ii) Business Centers that were missing financial data or that did not provide financial data to the franchisor in the proper format;
  • (iii) Business Centers that were not in operation for all 12 months as of June 30, 2013; and
  • (iv) Business Centers that were transferred during the applicable fiscal year.
  • Of the 195 Business Centers, the Top 50% of Business Centers by EBITDA represented 97 Business Centers for the fiscal year ended June 30, 2013. The Top 25% of Business Centers by EBITDA represented 48 Business Centers for the fiscal year ended June 30, 2013.
  • Gross Profit is defined as Gross Sales less Cost of Goods Sold. Cost of Goods Sold includes material costs, equipment costs, and vendor services (outsourced tasks) but does not include Labor or Rent. In the table, Gross Profit is expressed as a percentage of Gross Sales.
  • Rent is defined as the rent paid to the landlord of the premises where the Business Center is located and any property taxes paid on the building. In the table, Rent is expressed as a percentage of Gross Sales.
  • Advertising and Marketing is defined as the total advertising, promotion, Alphagraphics Integrated Marketing (AIM) Fund fees, and all other advertising and marketing expenses. In the table, Advertising and Marketing is expressed as a percentage of Gross Sales.
  • Insurance is defined as the total liability and property insurance. In the table, Insurance is expressed as a percentage of Gross Sales.
  • Utilities is defined as the total telephone, internet, gas, and electric expense. In the table, Utilities is expressed as a percentage of Gross Sales.
  • EBITDA is defined as the earnings before interest, taxes, depreciation, and amortization. In many cases it does not include owner’s salary. EBITDA is expressed as a percentage of Gross Sales.
  • Median is the numerical value separating the higher half of the sample from the lower half of the sample. As a result, in all cases when a median number is stated, approximately 50% of the Business Centers met or exceeded the stated median.
  • The information presented in this Item is based on sales and cost information reported to the franchisor by its franchisees. The franchisor has not independently investigated the amounts reported.
  • The above figures exclude finance charges, depreciation, delivery expenses, royalties, travel and entertainment, training, office supplies, and other administrative and miscellaneous expenses.


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