Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2014: Our Latest Views on V’s Barbershop’s Average Revenues, Payroll, Rent, and Other Operating Expenses

by Franchise Chatter on November 23, 2014

in Franchise Earnings, Salon Franchise



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V's Barbershop Photo by ShortcutsUSA

Highlights of V’s Barbershop’s Item 19 Financial Performance Representations (2014 FDD)

Explanatory Notes for Section I – Unaudited Chart Reflecting Reported 2013 Gross Revenue, Reported Number of Total Visits for Units, and Average Ticket Per Visit for Units Opened at Least One Calendar Year

  • Section 1 below reflects reported Gross Revenue, reported Number of Visits, and calculated Average Ticket Per Visit for 2 corporate V’s Barbershops and 14 franchised V’s Barbershops for the calendar year ended December 31, 2013.
  • Each of the 16 V’s Barbershops identified in the chart below were open for at least 1 year as of December 31, 2013.
  • The Average Ticket Per Visit was calculated by dividing the total reported Gross Revenue for a location by the reported Number of Visits for each location. For example, the Average Ticket Per Visit for Franchise Unit 1 was calculated as follows:  $481,982/16,440=$29.32 Average Ticket Per Visit.
  • Average All Units reflects the average reported Gross Revenue, average Number of Visits, and Average Ticket Per Visit for all 16 locations included in the chart.
  • The Average Company Unit and Average Franchise Unit include the same information but only include the 2 company locations (for Average Company Units 1-2) and 14 franchise locations (for Average Franchise Units 1-14).
  • The Company Units and several of the Franchise Units included in the table are mature businesses, having operated for several years. As a result, they have established significant goodwill and a referral network. A new V’s Barbershop will not have established goodwill or a referral network and, therefore, its gross sales are likely to differ from the results reflected below.
  • Further, your Gross Sales and your financial results will depend upon, among other things, such factors as:
  • how much you follow V’s Barbershop’s methods and procedures;
  • your management skill, experience, and business acumen;
  • whether you personally manage your V’s Barbershop or hire a manger;
  • the region in which your V’s Barbershop is located;
  • local and national economic conditions;
  • whether the premises is in a new or existing center;
  • the physical size and location of your V’s Barbershop;
  • the skill and experience of your barber staff;
  • your ability to retain your barber staff;
  • the condition of the premises and the amount and nature of tenant improvements required;
  • the architectural criteria of the center;
  • the HVAC and electrical systems present or necessary;
  • the local market for the services and products offered by V’s Barbershops;
  • the prevailing wage rate;
  • competition and the sales level reached during the initial period.

Explanatory Notes for Section II – Unaudited Chart of Operating Results for Company-Owned Units

  • Payroll costs include wages, salaries, commissions, bonuses, and the related payroll taxes. Barbers at company-owned units are generally paid a commission equal to 50-55% of that barber’s production. Commission rates for barbers located outside the Phoenix, Arizona metropolitan area generally range from 35-50%.
  • Occupancy costs include all rent, common area maintenance, and any other pass-through expenses from the landlord.
  • Other Operating Expenses include utilities, supplies, credit card processing fees, resale merchandise, and miscellaneous other operating expenses.
  • Net Operating Income excludes franchise royalties, advertising fund contributions, and depreciation.
  • The company-owned V’s Barbershops included in the table below are mature businesses, having operated for several years in the metropolitan Phoenix area. As a result, they have established significant goodwill and a referral network. A new V’s Barbershop will not have established goodwill or a referral network, and therefore, its gross sales are likely to differ from the results reflected below.

Section I – Unaudited Chart Reflecting Reported 2013 Gross Revenue, Reported Number of Total Visits for Units, and Average Ticket Per Visit for Units Opened at Least One Calendar Year



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