Highlights of Waxing the City’s Item 19 Financial Performance Representations (2014 FDD) – Part 1
- The following are statements of projected revenues and earnings for a franchised Waxing the City studio. These projections are for a second, third, and fifth year of operation, to show the anticipated ramp up for a Waxing the City studio.
- Waxing the City does not make any projections for the first year because it expects first year results to vary significantly, depending on a large number of factors, including the population in your market and immediate trade area, nearby competition, the number of aestheticians you initially hire and whether they have any existing customers, the extent of promotion you initially do for your Waxing the City Studio, and the continued promotion you do during your first year of operation.
- Waxing the City had 5 franchised outlets open during all of 2013. These outlets are all operated by the principals of the franchisor’s predecessor.
- The revenues projected below are based on the actual number of services performed by franchisees in their first 5 years and Waxing the City’s current pricing recommendations.
- The expenses projected below are based on the actual expenses incurred by these franchised businesses, adjusted by the fees you will pay under the Franchise Agreement.
- These outlets operate under a lower pricing schedule than Waxing the City currently uses in its company-owned studios and that it recommends to franchisees.
- All 5 of these franchisees have been open for at least 2 years, and while none of them exceeded the Year 2 projection for Revenues in their second year (operating under an earlier pricing schedule), all 5 exceeded the Income Before Depreciation, Interest, Taxes, and Debt Expense that Waxing the City projects for Year 2.
- Five of those studios have been open 3 years or longer. One of the 5 exceeded the Year 3 Revenue projection in their third year operating under the prior pricing schedule, and 3 of the 5 exceeded the Year 3 projection for Income Before Depreciation, Interest, Taxes, and Debt Expense in their third year.
- Four of those studios have been open for more than 5 years. Two of the 4 exceeded the Year 5 Revenue projection in their fifth year operating under the prior pricing schedule, and all 4 exceeded the Year 5 projection for Income Before Depreciation, Interest, Taxes, and Debt Expense in their fifth year.
- The assumptions made in compiling these projections are detailed in Part 2. Any changes in these assumptions would require material alterations to the projections.
- These figures are only estimates of what Waxing the City thinks you can earn based on the assumptions described below. Your results may differ. There is no assurance that you will sell as many services or earn as much.
- These figures were prepared without an audit. Prospective franchisees or sellers of the franchises should be advised that no certified public accountant has audited these figures or expressed his/her opinion with regard to the content or form.
- Waxing the City rounded most revenues and expenses to the nearest $100.
- Waxing the City did not provide any amount for corporate or personal income taxes.
- Waxing the City did not include any expense for depreciation, amortization, interest, or the repayment of debt on your business. It anticipates every franchisee will fund his or her investment differently. It therefore cannot project how you would account for these items.
- These projections are based on economic conditions that existed in March 2014, with no consideration in any category for inflation-related adjustments, market changes, or further weakness in general economic conditions.
- Because these projections extend out for 5 years, you should understand that your actual results in these years will likely vary from the projection, as a projection cannot take into account changes in the business and the economy, and other factors that will occur, over the next 5 years.
- These projections assume you follow Waxing the City’s guidelines in terms of the products and services you offer and the way you operate your Waxing Studio. If you do not, your results will likely vary dramatically from the results it has projected.
Statement of Annual Projected Revenues and Earnings for a Waxing the City Studio