Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2014: Our Latest Views on Gigi’s Cupcakes’ Average Net Sales, Operating Expenses, and EBITDA

by Franchise Chatter on August 7, 2014

in Cupcake Franchise, Franchise Earnings

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Gigi's Cupcakes Photo by Epilepsy Foundation South

Highlights of Gigi’s Cupcakes’ Item 19 Financial Performance Representations (2014 FDD)

Explanatory Notes for Part I – Gross Business Volume Data

  • All franchisees report Gross Business Volume of their Units to Gigi’s Cupcakes. During the fiscal year ending December 31, 2013, the 51 Units open more than 12 months as of January 1, 2013 reported annual Gross Business Volume. The historical financial information reported by franchisees has not been audited or reviewed.

Explanatory Notes for Part II – Financial Performance Data

  • The information included below is based on historical financial performance reports for 2013 submitted to Gigi’s Cupcakes by an accounting firm that compiles financial statements for certain Units. Included in the data below are the results of 26 Units which were open more than 12 months as of January 1, 2013. These 26 Units represent 51% of all Units open more than 12 months as of January 1, 2013.
  • Table 1 shows the grand totals for all of the 26 Units combined and Table 2 is the arithmetic average of annual revenues and expenses for these 26 Units. Tables 1 and 2 also present expense dollars as a percentage of Net Sales.
  • The information has not been audited or reviewed by an independent accounting firm and Gigi’s Cupcakes is relying solely on the information provided to it by the accounting firm, which may not be independent with respect to all Units.
  • Net Sales exclude:  (1) sales, use, or service taxes collected from customers and paid to the appropriate taxing authority; and (2) all bona fide customer refunds, discounts, and approved rebates.
  • Cost of Goods Sold includes food, packaging, beverage, and paper goods.
  • Labor Costs include compensation and benefit costs for salaried and hourly employees and all employer-paid payroll taxes.
  • Operating Expenses include advertising, franchise royalties, supplies, discounts, and all other general, administrative, and sales-related expenses.
  • Location Expenses include rent, common area maintenance, property and casualty insurance, property taxes, utilities, cleaning, and other fees and charges paid by the tenant under triple net leases.
  • EBITDA is an accounting term meaning Earnings Before Interest, Taxes, Depreciation, and Amortization.
  • The Gigi’s Units represented in the Gross Business Volume and the Financial Performance Unit Data are substantially similar to the concept being offered to you and to the existing franchised Gigi’s Units. There is no assurance you will do as well.

Part I – Gross Business Volume Data

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