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FDD Talk 2016: The Great American Cookies Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on October 27, 2016

in Cookie Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings

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Great American Cookies Photo by RetailByRyan95

In this FDD Talk 2016 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 2016 FDD
  • Section III – Presentation and analysis of Great American Cookies’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average net sales, costs of goods sold, labor costs, and rent for the 210 franchised Traditional Stores that had been continuously in operation for the entire calendar year 2015, that were not co-branded with another concept or supplemented with a Satellite, and that provided the franchisor with the presented financial information for the full calendar year 2015
  • 2015 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
  • 2015 average net sales for the top third, middle third, bottom third, and all 21 Great American Cookies-Marble Slab Creamery Co-Brand Stores that had been continuously in operation for the entire calendar year 2015, that were not supplemented with a Satellite, that were using the co-brand model for the full calendar year of 2015, and that provided the franchisor with the presented financial information for the full calendar year 2015

Section I – Background Information

Grandma’s Recipe Leads to Success

Michael Coles and Arthur Karp started Great American Cookies in 1977. Armed with a chocolate chip cookie recipe from Karp’s grandmother, the two opened their first location in Atlanta, Georgia’s Perimeter Mall.

The duo was initially met with skepticism, as no one believed that selling gourmet cookies in a mall would work. Their first location saw tremendous success within its first month and is still in operation today.

Karp and Coles started franchising in 1978. Today, Great American Cookies has become an American mall staple. The company now has over 300 locations throughout the United States and the world.

The cookie franchise has gone through a few name changes. It was initially called The Original Great American Chocolate Chip Cookie Company, but was shortened to the Great American Cookie Company in 1985. Eventually, they changed the name to its current Great American Cookies.

Coles and Karp sold Great American Cookies in 1998 to Mrs. Fields Famous Brands. A decade later, the company was sold again to NexCen Brands Inc. to add to its quick service restaurant portfolio. This portfolio included franchises like Marble Slab Creamery, Pretzelmaker, and MaggieMoo’s Ice Cream and Treatery.

In 2010, Global Franchise Group (GFG), LLC acquired this portfolio of brands, including Great American Cookies.

Home of the Cookie Cake

Great American Cookies claims to be the inventor of the Cookie Cake, a giant chocolate chip cookie decorated with frosting that serves a large crowd. Each Cookie Cake is made from the original chocolate chip cookie recipe. These Cookie Cakes can be custom decorated with images and text. In addition to their famous Cookie Cake, Great American Cookies sells a variety of other sweet treats.

All of their products are baked fresh daily at each of their locations. To ensure consistency, the batters of all of their desserts are made in a facility in Atlanta.

Great American Cookie flavors include the Original Chocolate Chip, Birthday Cake, Snickerdoodle, White Chunk Macadamia, Peanut Butter Supreme, and Chocolate Chip with M&M’s.

Great American Cookies also offers another innovative treat they call Double Doozies®. This concoction takes frosting and sandwiches it between two cookies. Double Doozies® flavors include Peanut Butter Double Doozie with Chocolate Fudge Icing and Double Doozie with Vanilla Icing and M&M’s Chocolate Candies.

They Make Life a Little Sweeter

Great American Cookies really appreciates its customers and often uses holidays to reward them for their loyalty with free treats. Since 2012, the company has been giving out free cookies on tax day. They see this small act as a way to make people feel better during a stressful time of the year. The best part of this tax day treat is that it comes with no strings attached; no purchase is necessary and no proof of tax completion is required.

The cookie franchise also enjoys kicking off the holiday season by celebrating National Cookie Day, which falls in October. During National Cookie Day, they offer any customer wearing a Santa Hat a free cookie.

To celebrate their 35th anniversary in 2012, Great American Cookies honored its customers by handing out free slices of large Cookie Cakes.

Global Franchise Group Offers Co-Branded Location Opportunities

Of all the franchises in the Global Franchise Group portfolio, Great American Cookies seems to be the one that pairs well with the others. GFG often opens locations that co-brand Great American Cookies with one of their other properties.

In 2013, GFG partnered with the Atlanta Hawks and the Philips Arena to open a co-branded Great American Cookies and Pretzelmaker location in the arena. In addition to the co-branded store, two Great American Cookie carts and two Pretzelmaker carts are located in the Philips Arena. This was a natural fit for both Great American Cookies and Global Franchise Group as their headquarters and manufacturing facilities are located in Atlanta.

In addition to this Pretzelmaker co-branding, since 2015, GFG has given existing franchisees the opportunity to open co-branded Great American Cookies and Marble Slab Creamery locations. Global Franchise Group opened up this opportunity to new franchisees in early 2016.

Number One in Their Category

Great American Cookies maintains a steady spot on Entrepreneur Magazine’s annual Franchise 500 list every year. The company tends to hover around the top half of the list. For 2016, Great American Cookies landed at No. 128. This is up from 2015’s rank of 145.

The cookie company experienced its lowest rank in 2010 at No. 294. However, the following year, Great American Cookies shot up to No. 116, their highest rank to date.

The one area of Entrepreneur’s Franchise 500 list where Great American Cookies excels is in its own category. For the past few years, Great American Cookies has ranked No. 1 in the “Baked Goods – Cookies” category.

Section II – Estimated Costs

  • Please click here for detailed estimates of Great American Cookies franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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