Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

  • Anytime Fitness
  • CruiseOne
  • Firehouse Subs
  • Jimmy John's
  • Massage Envy
  • Menchie's
  • Orange Leaf Frozen Yogurt
  • Planet Fitness
  • The UPS Store
  • Yogurt Land
  • And Hundreds More...

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FDD Talk: Average Revenue and Forecast of Future Financial Performance for Planet Beach Contempo Spa Businesses (2013 FDD)

by Franchise Chatter on March 19, 2014

in Franchise Earnings, Tanning Franchise

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

  • The performance results included in this item relate to the historical results and are not the actual or probable performance results that you should expect to achieve through the operation of your Planet Beach Spa. Some outlets have achieved these annual gross revenues. Your individual results may differ.

Explanatory Notes for Part 1 – Highest Annual Reported Revenue and Average Revenue for Top 10, Top 50, and Top 100 Domestic Locations

  • Planet BeachAs of December 31, 2012, there were 244 open Planet Beach outlets, including 218 U.S. locations. The franchisor does not have any company-owned outlets since February 2011. The following data relates to the U.S. locations only.
  • The gross revenues reported below were derived from unaudited financial reports submitted by franchisees for the purpose of computing royalty fees. In some instances, lower reported annual revenues may be attributable to franchisee non-compliance, including under-reporting and/or late reporting of sales figures. All franchise outlets are contractually obligated to submit monthly reports to the franchisor.
  • In the franchisor’s experience, those outlets that aggressively followed the Franchised System and participated in all training opportunities generally had the highest annual gross revenues.

Explanatory Notes for Part 2 – Forecast of Future Financial Performance

  • The following representations are a forecast of future financial performance, with a particular emphasis on expenses. The expenses identified below are not the only expenses that you will incur in connection with the operation of your business.
  • Average operating expenses are based on worksheets that franchisees have provided to the franchisor.
  • You may incur other additional expenses including, but not limited to, insurance, legal, accounting, interest on debt service, depreciation/amortization, property taxes, other taxes, and licenses. These figures are only estimates of what the franchisor thinks you may earn. Your individual results may vary.
  • The assumptions are based on a 1,400 square foot location generating $300,000 in annual revenues.
  • The target for payroll should be 25% of revenues. This can be impacted by an owner being the manager therefore reducing payroll by taking a capital gain disbursement in lieu of a salary.
  • Bank charges can vary based on the amount of business you do with credit cards.
  • Insurance can be impacted by the amount of coverage your lender or landlord requires above the coverages listed in the FDD.
  • Maintenance covers facility and equipment. This number will vary based on age and usage of the equipment. Preventative maintenance varies by unit and you should follow the manufacturer’s guidelines to protect the lifetime of the unit.
  • Operating supplies include bathroom and cleaning products. Other items include distilled water, session additives, and session supplies.
  • Cost of Goods Sold (“COGS”). This is based on the Spa generating 25% of total revenue in retail sales ($300,000 x 0.25 = $75,000) $75,000 x. 0.40 = $30,000 COGS
  • This does not include other items your tax advisor would write off as a business expense.
  • Interest on Debt Service does not include the principal paid on debt service.
  • Actual results will vary from franchise to franchise and the franchisor cannot estimate the results of any particular franchise. You must accept the risk that your actual numbers may or may not reach or exceed these reported calculations.

Part 1 – Highest Annual Reported Revenue and Average Revenue for Top 10, Top 50, and Top 100 Domestic Locations

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