Highlights of Palm Beach Tan’s Item 19 Financial Performance Representations (2013 FDD) – Part 1
Following are 2 sets of data analyzing Palm Beach Tan Locations:
- Part I – Analysis of the actual operating results of Palm Beach Tan Locations owned by the franchisor’s Parent; and
- Part II – Analysis of the actual operating gross revenues of Franchised Palm Beach Tan Locations.
Explanatory Notes for Part I – Analysis of the Actual Operating Results of Palm Beach Tan Locations Owned by the Franchisor’s Parent
- Part I of this analysis contains information regarding average sales, average operating costs, average Gross Sales per tanning session, average retail sales per tanning session, and average number of tanning sessions per month for the 100 Prototype Palm Beach Tan Locations owned by the franchisor’s Parent which were in operation during the entire 24-month period ended December 31, 2012, with an overall average of 8.16 years of operation (“Company-Owned Prototype Locations” or “Prototype Locations”).
- Table 1 presents the arithmetic mean average of Square Footage, EFT Revenues, Other Revenues, Total Revenues, Operating Expenses, EBITDA, and EBITDA as a Percentage of Revenues for the Company-Owned Locations. Table 2 presents the arithmetic mean average of average Gross Sales per tanning session, average retail sales per tanning session, and average number of tanning sessions per month for the Company-Owned Locations.
- Prototype Locations incorporate many of the elements of a “tanning location”; from the choice of the location, to the square footage, to the location design, to the equipment mix. The Prototype Locations are located in high profile shopping centers in highly visible and accessible space. They average approximately 3,136 square feet, are characterized by a bright, clean, impressive design, and feature the highest quality equipment.
- All Company-Owned Prototype Locations are similar in operation to the Franchised Locations offered by the franchisor under the disclosure document; however, there are differences. A new franchisee’s results are likely to differ from the results set forth in Part I of this analysis primarily because “start-up” Locations traditionally experience lower revenues and higher costs than those which have been operating for some time.
- In addition, certain fees which you must pay to the franchisor under the Franchise Agreement and other differences between the expenses of a Franchised Location and a Company-Owned Prototype Location are not reflected in the tables. Those fees and expenses include initial franchise fees, ongoing royalties, and any interest expense you would incur if you finance any of the initial investment for the Location or its operation.
- In addition, while the Company-Owned Prototype Locations included in this analysis average 3,136 square feet, the company has recently moved to a smaller prototype.
Table 1 – Average Operating Data for the 100 Company-Owned Prototype Locations as of December 31, 2012
Average Unit Information for the 12 Months Ended December 31, 2012