FDD Talk 2016: The Batteries Plus Bulbs Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the Batteries Plus Bulbs franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Batteries Plus Bulbs franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Batteries Plus Bulbs’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average net revenue and merchandise margin for franchised and company-owned Batteries Plus Bulbs Stores that were in operation for the entire 12-month period ended December 31, 2015

• 2015 average annual net revenue percentage increase for Stores that were in operation for the entire 12-month period ended December 31, 2015

• 2015 average annual net revenue percentage increase for all Stores in operation as of the last day of the most recent year

• 2015 average merchandise margin for retail and commercial customers for all Stores in operation as of the last day of the most recent year

• 2015 average retail and commercial revenue as a percentage of total revenue for all Stores in operation as of the last day of the most recent year

• average net revenue for the first full 12 calendar months of operation for franchised Stores opened in 2012, 2013, and 2014

• average net revenue and average merchandise margin for Stores that were in operation for the entire 12-month period ended December 31, 2015, by length of time a Store has been in operation (1 to 3 years, 4 to 6 years, and 7+ years)

• 2015 average net revenue, expenses, and EBITDA for company-owned Stores owned and operated for 10 years or more

Section I – Background Information

Modern society is highly dependent on batteries of all shapes and sizes to power the many devices people rely on from day to day. Whatever kind of battery or bulb you might need, this chain can get it. It has access to more than 45,000 different bulbs, batteries, and related accessories.

The chain was started back in 1988 and began franchising in 1992, although in those days it was only about selling replacement batteries. It wasn’t until 2010 that the proverbial light bulb went off and the company added replacement light bulbs into the mix.

This privately-held company, with headquarters in Hartland, WI, now has 682 locations, 48 of which are company-owned. Here’s how Batteries Plus Bulbs keeps the light-bulb moments rolling for its customers in this unique niche segment:

The Repair Angle

When the chain realized that many people who came in for a replacement battery for their mobile device also needed repair services, it was natural to add in this service as a value-added aspect of its value proposition in 2014.

Batteries Plus Bulbs has trained technicians who will first test and accurately diagnose what the issue is with a device to ensure that the only parts and repairs made are those needed. After repairs are made, the device is then fully tested to makes sure it’s working properly.

It will repair cell phones, MP3 players, tablets, and eReaders. The idea is that rather than sending the device off to who knows where, customers can bring it in to the store for repairs. And they stay up to date on all the latest models and technologies. They can fix cracked screens, broken buttons and charge ports, and much more.

Serving an Ever-Growing Market

The chain sells no fewer than 1,600,000 batteries and light bulbs on a weekly basis. That’s impressive.

Part of what they have going for them is their specialization. If you need an uncommon or hard-to-find item, you can bet that the giant box stores that carry a wide range of product lines simple won’t have it. Because it focuses on batteries and bulbs, it can get even the rarest of items for its customers, and has a lot more in stock than its competitors.

When you think about it, people are now so reliant upon their devices that even when the economy is down, people will keep buying the batteries they need to maintain their plugged-in lifestyles. It’s probably about as close to being recession-proof as it can be. The same applies to light bulbs as well.

A Good Franchising Opportunity

Forbes magazine does annual rankings of what it considers to be the best franchise investment opportunities available. In the medium-investment category, Batteries Plus Bulbs ranked number four in the nation, with an average investment needed to get up and running of $302,000.

An April article in the Long Island Press called it The Coolest Company Most Long Islanders Have Never Heard Of.

Section II – Estimated Costs

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

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