Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2014: Our Latest Views on the Average Gross Sales and Cost of Goods Sold for Rita’s Italian Ice

by Franchise Chatter on October 31, 2014

in Franchise Earnings, Frozen Dessert Franchise



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In this FDD Talk post based on Item 19 of the 2014 FDD of Rita’s Italian Ice, you will find the answers to the following questions:

  • What were the estimated average sales for the Top Third, Middle Third, and Bottom Third of franchised Rita’s Italian Ice shops in 2013? How many shops were included in the sample and what were the criteria for their inclusion?
  • What constitutes one selling season for a Rita’s Italian Ice shop?
  • How are Rita’s royalty fees and advertising fees on proprietary products calculated? Are these based on actual or estimated sales? What are the current rates for Rita’s royalties and advertising fees?
  • What factors were considered in estimating average gross sales? What assumptions were used in the calculations?
  • What are Rita’s proprietary products? What are examples of non-proprietary products?
  • What are the product percentages (i.e. sales percentage for each proprietary product relative to the total sales of proprietary products) for the 2013 season, as determined from franchisees’ franchised shop register tapes?
  • In calculating royalties and average sales, what percentage was used to account for wastage?
  • Which franchised shops may be more likely than others to be in the bottom third in sales?
  • What was the estimated cost of goods sold for franchised Rita’s Italian Ice shops in 2013? How did Rita’s estimate this cost of goods sold percentage? What assumptions were used in the calculations?
  • What are Franchise Chatter’s views on Rita’s Italian Ice’s most recent financial performance representations?

Rita's Italian Ice Photo by infinitesmilesx



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