FDD Talk 2015: The Great American Cookies Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2015 post, you’ll learn the following:

• Section I – Background information on the Great American Cookies franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Great American Cookies franchise, based on Item 7 of the company’s 2015 FDD

• Section III – Presentation and analysis of Great American Cookies’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:

• 2014 average net sales, cost of goods sold, labor costs, and rent for the 201 franchised Traditional Stores that had been continuously in operation for the entire calendar year 2014, that were not co-branded with another concept or supplemented with a Satellite, and that provided the company with the presented financial information for the full calendar year 2014

• 2014 average net sales for the franchised Traditional Stores in the sample owned by franchisees with 1-2 stores, 3-5 stores, and more than 5 stores, respectively

Section I – Background Information

Great American Cookies Continues to Dominate Market

Great American Cookies is enjoying steady success among companies that sell baked goods, as evidenced by being the top brand listed in the “Baked Goods – Cookies” category of Entrepreneur’s Franchise 500 list for the fifth straight year in 2015. The brand was No. 143 overall on the list.

Accelerated Franchise Opportunities Available

Franchise opportunities are available in all 50 U.S. states, with accelerated opportunities in Arizona, Colorado, New Mexico, Oklahoma, Texas, Minnesota, Illinois, Indiana, Ohio, Virginia, West Virginia, Pennsylvania, New York, Maryland, New Jersey, Connecticut, Maine, Georgia and Florida. In these states, potential franchisees can expect store openings sooner than in the rest of the U.S.

Great American Cookies is also seeking units in Africa, Asia, Australia/New Zealand, Canada, Central America, Eastern Europe, the Middle East, the Philippines, South America and Western Europe.

Family-Favorite Recipe Sparked Brand

Michael Cole and Arthur Karp founded Great American Cookies in 1977 with a single store in Perimeter Mall in Atlanta, Georgia, that is still in operation. The brand stemmed from Arthur and Susan Karp’s chocolate-chip cookie recipe that had been passed down for generations. The store was originally called The Original Great American Chocolate Chip Cookie, but the name was changed to Great American Cookie Company in 1985 and later changed to Great American Cookies.

Amid immediate popularity, the company began to grow quickly, beginning franchising the following year. The brand was acquired by Mrs. Fields Original Cookies Inc. in 1988; at the time, Mrs. Fields Famous Brands included The Original Cookie Company, Pretzel Time, Hot Sam, Pretzelmaker and Mrs. Fields Cookies.

In 2008, Great American Cookies was acquired by NexCen Brands Inc.; that portfolio of brands has, since 2010, been owned by Global Franchise Group LLC, a strategic brand management company that specializes in franchising. Its other quick service restaurant franchise businesses include Pretzelmaker, Marble Slab Creamery and Hot Dog on a Stick.

Locations Primarily in Malls

The brand has more than 330 stores in the U.S., focusing on mall-based locations and lifestyle centers. Great American Cookies also operates in Puerto Rico and internationally in the Bahamas, Bahrain, Guam, Mexico, Russia, Saudi Arabia and the United Arab Emirates, with about 25 international locations.

The majority of Great American Cookies franchisees operate multiple units, from two locations to more than 40.

Cookies, Cookie Cakes and Brownies Lead Brand

Great American Cookies sells a wide range of cookies, its signature Cookie Cakes, and several flavors of fudge and cheesecake brownies. The brand uses a proprietary cookie dough. Cookie Cakes are available in a number of designs, including holiday themes, other special occasions, birthday and sports themes. Customers can choose cookies in a variety of shapes, sizes and flavors, including, of course, Original Chocolate Chip.

Marketing Company Capitalizes on ‘Impermissible Icing’ Buzz

In August 2014, the University of South Carolina reported an infraction of “impermissible icing” on Great American Cookies Cookie Cakes that were given to football recruits at the university. USC thought the decorative icing could constitute an NCAA violation.

Sports reporters called the situation frivolous, and the NCAA quickly made a statement that no violation was made. And MGH, the marketing communications agency that provides services to Great American Cookies, quickly responded by crafting a press release applauding the NCAA’s decision, distributing it nationally, ordering a dozen “Thank You” Cookie Cakes to be delivered to the NCAA and arranging for a photographer to capture the PR stunt, and continuing to pitch the story across social media amid the growing buzz.

The marketing campaign sparked attention for Great American Cookies and earned MGH honorable mention in the Best Real-Time Response category of the Shorty Awards, which honors the best brands and organizations using social media.

MGH in February 2015 expanded its relationship with Global Franchise Group to include social media management. The company had been providing marketing and public relations services to GFG since April 2014.

Bribe Kids With Cookies for Good Behavior, Brand Suggests

To go along with a study, conducted on behalf of Great American Cookies, that indicates 94 percent of parents have rewarded their kids for good behavior, the brand launched its inaugural National Bribe Your Child Week in August 2015. Parents could download a pledge sheet, work with their children to fulfill the items on the sheet, and bring it to any Great American Cookies location during the week to get a free regular chocolate chip cookie.

The study showed that 80 percent of parents with children ages 2-4 have used sweet treats to reward their kids. Other rewards included toys (62 percent), extra TV/tablet time (59 percent), and later bedtime (47 percent). Rewards were given for behavior such as finishing chores (66 percent) and getting good grades (60 percent).

NCR Silver POS Platform Launches

Great American Cookies began using the NCR Silver cloud-based point-of-sale platform in 89 stores in the U.S. in February 2015, with plans to continue rolling out the platform in more stores.

NCR silver enables franchisees to easily manage and modernize their business processes. NCR Small Business migrated the brand’s data from its previous POS system.

Focus on Pleasing Customers

Great American Cookies has a bright, fun atmosphere both in its stores and on its website and offers a number of opportunities to brighten customers’ days:

• The brand has a dual mascot, George A. Cookies, who is energized by milk to become the superhero Cookie Man. Kids can print numerous coloring pages of the two mascots.
• Customers who sign up on the brand’s website can get free cookies for their birthdays along with news and special offers all year.
• Participating Atlanta locations have a Tax Day tradition of offering free regular sugar cookies to customers on April 15. The stores have treated taxpayers for three years.

Section II – Estimated Costs

• Please click here for detailed estimates of Great American Cookies franchise costs, based on Item 7 of the company’s 2015 FDD.

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis