Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2014: Our Latest Views on California Closets’ Average and Median Gross Revenue, Closing Rate, and Revenue Per Job

by Franchise Chatter on August 22, 2014

in Franchise Earnings, Storage Franchise



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California Closets Photo by Growers and Nomads

Highlights of California Closets’ Item 19 Financial Performance Representations (2014 FDD)

  • This Item sets forth certain historical data submitted by California Closets franchisees, including average and median annual gross revenue, annual gross revenue in quartiles, average revenue per job, and average closing rates for the period from January 1, 2013 to December 31, 2013 (the “Measurement Period”).
  • Franchisees whose results are included in this Item signed franchise agreements to operate Manufacturing Facilities.
  • During the Measurement Period, there were 78 California Closets franchisees, some of which operated more than one outlet. This Item sets forth historical data for the 73 California Closets franchisees that were open and operating for more than 12 months as of December 31, 2013 for whom California Closets has complete sales data (the “Reporting Franchisees”).
  • California Closets has not audited this information, nor independently verified this information.
  • California Closets does not make any financial performance representations regarding the operation of the Showroom franchise model offered through the Disclosure Document. As stated above, this Item 19 presents financial data relating solely to Reporting Franchisees who signed Franchise Agreements to operate Manufacturing Facilities (although some operate as Showroom only franchises) that have been open and operating for at least 12 months as of December 31, 2013.
  • Your results may vary depending on the location of your franchise.
  • This Item 19 does not contain any information regarding operating costs. Operating revenues and expenses may vary substantially from business to business.

Explanatory Notes for Part I – Average and Median Annual Gross Revenue

  • The chart below presents the Average Annual Gross Revenue and Median Annual Gross Revenue for all Reporting Franchisees during the Measurement Period.
  • “Gross Revenue” is defined as the total of all sales invoices or other items or services billed to the customer for all “completed sales” less any discounts during the Measurement Period. Sales of products and services are considered “completed sales” when the franchisee collects final payment from the customer or by the date that is 1 month after final installation of all products and/or services sold to the customer, whichever is earlier.
  • “Median” means that 1/2 of the Reporting Franchisees achieved Annual Gross Revenue that exceeded the Median Annual Gross Revenue, and 1/2 had Annual Gross Revenue below the number presented.
  • Prior to the issuance of this Disclosure Document, all franchisees signed franchise agreements to operate Manufacturing Facilities. However, certain Reporting Franchisees began using other franchisees and 3rd parties to manufacture storage products they designed. The revenues disclosed above may include revenue earned by some of the Reporting Franchisees from providing Manufacturing Services to other System franchisees.

Explanatory Notes for Part II – Reporting Franchisees’ Annual Revenues in Quartiles

  • The tables below set forth Reporting Franchisees’ Annual Revenues during the Measurement Period. California Closets has categorized franchisees into quarters based on Annual Revenues (“Quartiles”), and provide the Average Annual Gross Revenue per Quartile and Median Annual Gross Revenue per Quartile for each Quartile.

Explanatory Notes for Part III – Reporting Franchisees’ Average Closing Rate and Average Revenue Per Job

  • The table below presents the Reporting Franchisees’ Average Closing Rate and Average Revenue Per Job during the Measurement Period.
  • “Closing Rate” is defined as the percentage of consultations that resulted in a sale during the Measurement Period.
  • “Revenue Per Job” is defined as the total revenue earned from the completion of a Job. A “Job” is any project or series of projects that are billed on a single invoice, less authorized discounts and allowances.

Part I – Average and Median Annual Gross Revenue



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