Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2014: Our Latest Views on MOD Pizza’s Average Gross Sales, Cost of Goods Sold, and Labor Costs

by Franchise Chatter on June 3, 2014

in Franchise Earnings, Pizza Franchises

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MOD Pizza 2Highlights of MOD Pizza’s Item 19 Financial Performance Representations (2014 FDD)

Analysis of Average Sales and Expenses (Unaudited) for Certain Company-Operated MOD Pizza Restaurants

  • The sales and expense information which follows was aggregated from five Seattle-area restaurants. These five locations were selected because they are the most similar in size, location, configuration, and operational aspects, including type of location and degree of competition from other restaurants, to the prototype for a franchised MOD Pizza Restaurant you will operate.
  • In order to include a cr0ss-section of trade areas, operating history, and maturity, one store was included for each of MOD Pizza’s five years of opening restaurants, including the first MOD Pizza Restaurant which opened in November, 2008.
  • All locations were open and operating for a minimum of 12 weeks.
  • Sales will vary from restaurant to restaurant. In particular, the sales and expenses of your MOD Pizza Restaurant will be directly affected by factors which include:
  • the Restaurant’s geographic location;
  • competition in the market;
  • the quality of both management and service at the MOD Pizza Restaurant;
  • contractual relationships with lessors and vendors;
  • the extent to which you finance the operation of your MOD Pizza Restaurant;
  • your legal, accounting, and other professional fees;
  • federal, state, and local income taxes, gross profit taxes, or other taxes;
  • cost of any automobile used in the business;
  • other discretionary expenditures;
  • accounting methods used and certain benefits and economies of scale which MOD SFP (the franchisor) may derive as a result of operating MOD Pizza Restaurants on a consolidated basis.
  • MOD Pizza’s auditors have not performed any procedures on the financial information in the tables below, and assume no responsibility for that information.
  • The figures presented do not include significant operating expenses, including royalties, that will be incurred by franchisees. A new franchisee’s individual financial results are likely to differ from the results described below.
  • This information covers restaurants that opened as early as November 1, 2008 through as late as October 5, 2013. As of December 31, 2013, MOD SFP had fourteen operating MOD Pizza Restaurants.
  • The five restaurants used in this Financial Performance Representation are located in the greater Seattle area. The most mature unit opened in November 2008 and the newest unit opened in October 2013.
  • “Gross Sales” is defined as total sales less taxes collected at the point of sale, such as sales taxes.
  • “Net Sales” is defined as Gross Sales less the value of promotional and complimentary products.
  • “Cost of Goods Sold” includes cost of food sold and packaging costs; and excludes guest supplies and cleaning supplies.
  • “Total Labor” includes all store level wages, payroll taxes, benefits, and bonuses.

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