Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk: Median Percentage of Costs, Expenses, and Profits in Relation to Revenue for Allegra Centers (2013 FDD)

by Franchise Chatter on February 13, 2014

in Franchise Earnings, Printing Franchise



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

Explanatory Notes for Part D – 2011 Median Percentage of Costs, Expenses, and Profits in Relation to Revenue

  • Each year since 1992, the franchisor or its affiliates have conducted an annual Operating Ratio Study that summarizes and reports information provided on financial statements prepared by Participating Centers. The data provided below has been extracted from the results of the latest study which was conducted in 2012 for fiscal year ending December 31, 2011.
  • Allegra Network LogoA total of 211 centers (“Participating Centers”) out of 302 (73.26%) centers located in the U.S. and Canada (the “Total Centers”) participated in this study. These 211 Participating Centers include Allegra, American Speedy Printing, Speedy Printing, Zippy Print, and Insty-Prints Centers. Total Centers include all Allegra, American Speedy Printing, Speedy Printing, Zippy Print, and Insty-Prints Centers as of December 31, 2011.
  • The 211 Participating Centers were operated by 186 franchisees. With respect to a franchisee that operates multiple centers, the franchisor aggregated the financial information received for all the franchisee’s centers and reported this information as 1 Participating Center.
  • Total Centers do not include 14 centers which fall into one of the following categories:
  • (i) Centers that had not been operated by the current owner during the entire 2011 calendar year;
  • (ii) Centers that were impacted by significant consolidation/acquisition activity during calendar year 2011;
  • (iii) Centers that were in the process of being transferred to a new owner during the first quarter of 2012;
  • (iv) Centers that were abandoned by the franchisee in 2012, before the end of April.
  • In calculating median expenses and revenue, the franchisor did not convert amounts reported in Canadian dollars by the Centers located in Canada into U.S. dollars. Therefore, Canadian dollars were treated as the equivalent of U.S. dollars for purposes of calculating median expenses and revenue of Participating Centers. The median numbers would be different if Canadian dollars had been converted into United States dollars.
  • The “median” is the middle value of all the Participating Center percentages arranged in order. The same number of Participating Centers are above and below the median. Because these are median percentages, the sum of the percentages from each category will not equal 100%.
  • “High Profit Participating Centers” include the Centers that fall in the highest quartile in terms of Owner’s Discretionary Profit Percentage.
  • “Cost of Goods Sold” means the percentage of revenue spent by the franchisee on paper and other materials used in the production process.
  • “Gross Margin” means the percentage of revenue earned by the franchisee, minus the Cost of Goods Sold.
  • “Staff Costs” means the percentage of revenue spent by the franchisee on wages, taxes, benefits, recruitment, and other employee-related expenditures.
  • “Operating Expenses” means the percentage of revenue spent on rent, advertising, utilities, insurance, and other overhead expenses. Amounts paid to the franchisor for royalties and marketing fund contributions are included as expenses.
  • “Capital Asset Cost” means the percentage of revenue spent on capital asset costs, including amortization, depreciation, operating leases, and interest expense.
  • “Net Profit Margin” means the percentage of revenue retained by the Center, after owner(s) salary, benefits, and taxes.
  • “Owner’s Discretionary Profit” means the percentage of revenue retained by the franchisee, including owner(s) salary, benefits, and taxes, plus the net income or minus the net loss.
  • 30 Participating Centers (14.22% of Participating Centers) had sales that were more than $2,000,000.
  • 28 Participating Centers (13.27% of Participating Centers) had sales that were between $1,200,000 and $2,000,000.
  • 55 Participating Centers (26.07% of Participating Centers) had sales that were between $700,000 and $1,200,000.
  • 60 Participating Centers (28.44% of Participating Centers) had sales that were between $400,000 and $700,000.
  • 38 Participating Centers (18.01% of Participating Centers) had sales that were less than $400,000.

Part D – 2011 Median Percentage of Costs, Expenses, and Profits in Relation to Revenue

Median of All Participating Centers



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