FDD Talk 2016: The Miracle-Ear 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 Miracle-Ear franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Miracle-Ear franchise, based on Item 7 of the company’s 2016 FDD

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

• 2015 average sales, cost of goods sold, store labor expense, marketing expenses, credit card fees, back office expense, rent concession expense, facility other expense, owner expense, interest income expense, and net earnings for the 383 Miracle-Ear stores that had been in operation for at least 12 months, grouped by sales levels

Section I – Background Information

Kenneth Dahlberg worked for Telex Communications, a company that manufactured hearing aids among other things. He left in 1948 to start his own company, Dahlberg Electronics. His first line of products included pillow radios produced for motels and hospitals, but when transistor technology came along, Dahlberg got back into the hearing aid business in the 1950s, producing the first “Miracle-Ear” hearing aids.

In 1953, the company introduced the very first “in-ear” hearing aid, and has been innovating ever since. Miracle-Ear started franchising in 1983 and now boasts 1,265 locations (6 of which are company-owned), which is a slight decline from a high of 1,357 in 2012.

In 1959, Dahlberg sold his company to Motorola, but then bought it back in 1964. Then in 1993 he sold the company again, this time to Bausch & Lomb. Now operating as a subsidiary of Amplifon, the Italian hearing aid distributor, which acquired the company in 1999, and headquartered in Plymouth, Minnesota, here’s how Miracle-Ear gets its voice heard in the hearing aid industry:

A Trustworthy Brand

There’s no doubt that Miracle-Ear is by far the most trusted and well-known hearing aid brand in the U.S. All locations offer free hearing tests and consultations, and any hearing aid can be tried risk-free for 30 days before making a final decision to purchase or not.

Consumers can also enjoy service, warranty protection (3-year limited warranty and 3-year loss and damage protection), and lifetime aftercare of hearing aid checkups, cleaning, and adjustments, completely free of charge.

A History of Innovation

Miracle-Ear has a long history of firsts:  The first hearing aid using integrated circuitry in 1962, the first ultra-low circuit utilizing in-house hybrid production in 1971, the first programmable hearing aid in 1988, and the first hearing aid to win FDA approval for its claim of improving hearing even with background noise present in 1997.

In the new Millennium, Miracle-Ear went all-digital for all its hearing aids in 2003, rolled out its “Open Fit” design in 2005, and launched a completely invisible (fitted deeply into the ear canal) hearing aid in 2011, along with a new waterproof model (good up to three feet for up to 30 minutes).

Getting Connected

Miracle-Ear even has a hearing aid with a wireless transmitter that allows for streaming sound from devices that are BlueTooth enabled, such as smartphones and televisions, and even from devices with BlueTooth.

Help with Hearing

The Miracle-Ear Children’s Foundation was started in 1990 specifically to help needy children get the hearing aids they need, but was recently (2013) overhauled into the Miracle-Ear Foundation to provide free hearing aids to needy people of all ages.

In 2014, it started sponsoring its One Day Without Sound challenge where people with normal hearing go a full day without sound to see what it’s really like.

Section II – Estimated Costs

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

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