Highlights of Mr. Sparky’s Item 19 Financial Performance Representations (2013 FDD)
- The amount of revenues and expenses incurred will vary among Mr. Sparky franchisees. In particular, the revenues, expenses, and profitability of your franchise will be directly affected by factors which include:
- the geographic location;
- local and national economic conditions;
- competition in the market;
- the quality of management and service persons of the business;
- contractual relationships with lessors and vendors;
- legal, accounting, and other professional service fees;
- federal, state, and local income taxes, gross profits taxes, or other taxes;
- discretionary expenditures;
- accounting methods used;
- certain benefits and economies of scale which you may derive as a result of operating multiple franchises;
- and the fees payable to the franchisor by you.
- You should also consider that many Mr. Sparky’s franchisees are Conversion Franchisees and have been operating for many years before becoming a franchisee. A new franchisee’s individual financial results may differ from the results stated in this financial performance representation.
Summary of Same Store Sales for Franchised Businesses
- Same store sales for Franchised Businesses are based on “Net Sales.” Although the definition of “Net Sales” may change slightly from year to year, it is generally defined as all revenues received by a franchisee for the performance of all services and the sale of all products from or related to the Franchised Business (including revenues received for performing commercial services) less sales taxes, refunds to customers, discounts, payments to subcontractors, and permit costs related to the Franchised Business.
- A Franchised Business’ Net Sales are obtained from individual financial packages submitted to the franchisor on a monthly basis. These financial packages include profit and loss statements with sales data for the franchisor to calculate franchise fees.
- Franchise fees are calculated on Net Sales, as defined in each individual franchisee’s Franchise Agreement.
- Net Sales are captured in electronic work papers and are the basis for this historic presentation. Occasionally, franchisees fail to report. In such circumstances, estimates based on other financial records provided by non-reporting franchisees such as required daily sales reports are employed. None of these estimates have a material impact on the total amounts reported below.
- The franchisor reasonably relies on this data and believes it to be true and correct. However, the franchisor has not audited this data and cannot therefore provide any further assurances as to its accuracy or completeness.