FDD Talk 2017: What You Need to Know About the Batteries Plus Bulbs Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk 2017 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 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Batteries Plus Bulbs franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Batteries Plus Bulbs’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 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, 2016

• 2016 average annual net revenue percentage increase for Stores that were in operation for the entire 12-month period ended December 31, 2016

• 2016 average annual net revenue percentage increase for all Stores in operation as of the last day of the most recent year

• 2016 average merchandise margin for retail and commercial customers for all Stores in operation as of the last day of the most recent year

• 2016 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 2013, 2014, and 2015

• average net revenue and average merchandise margin for Stores that were in operation for the entire 12-month period ended December 31, 2016, by length of time a Store has been in operation (1 to 3 years, 4 to 6 years, and 7+ years)

• 2016 average net revenue, expenses, and EBITDA for company-owned Stores owned and operated for 10 years or more

Section I – Background Information

9 Things You Need to Know About the Batteries Plus Bulbs Franchise

Company Acquired by Another Private Equity Firm

1.  In July 2016, after over eight years of ownership by Atlanta-based Roark Capital, Batteries Plus Bulbs was acquired by Los Angeles-based private equity firm Freeman Spogli & Co. The financial terms of the acquisition were not disclosed.

2.  Freeman Spogli also owns hhgregg, Sur La Table, and Boot Barn. According to Freeman Spogli partner Benjamin Geiger, “Batteries Plus Bulbs is uniquely positioned as the category specialist in its large and growing markets.” Geiger also says that Batteries Plus Bulbs has “successfully established customer loyalty through its unmatched product offering and knowledgeable staff.”

Franchisees Celebrate 10th Anniversary

3.  In early October 2016, John Dombrowski and business partner John Butts, owners of Batteries Plus Bulbs in Flushing, Michigan, celebrated their store’s 10th anniversary. According to the two, they decided to open a Batteries Plus Bulbs after a chance meeting with an owner of several Batteries Plus Bulbs stores. After speaking with the multi-unit franchisee, Butts and Dombrowski immediately liked the concept.

Combating the “Amazon Effect”

4.  With the rise of Amazon, many retail stores have been struggling to compete with the online giant when it comes to pricing and the ease and convenience of shopping online rather than going to a physical store. Despite the competition from Amazon, Batteries Plus Bulbs has remained successful, with a 7 percent growth in sales for 2016.

5.  According to Russ Reynolds, CEO of Batteries Plus Bulbs, Amazon can’t offer immediate service. Reynolds says, “Most people, when they have an energy outage, don’t want to wait 48 hours to replace that battery.” The CEO also says that Batteries Plus Bulbs has an edge over Amazon through its service. Customers unfamiliar with electronics often need products installed for them, which Batteries Plus Bulbs can do.

Company History

6.  The first Batteries Plus opened in 1988 in Green Bay, Wisconsin as a store that sold and recycled batteries of varying sizes and voltages. The company began franchising in 1992 and the first franchised location opened in Fort Wayne, Indiana. In 2010, the company began selling light bulbs and in 2012 changed its name to Batteries Plus Bulbs.

7.  In order to keep up with a changing market, in 2014 Batteries Plus Bulbs launched smartphone and tablet repair services nationwide, providing in-store repairs for cracked screens, battery replacements, and more.

8.  Today, there are over 650 Batteries Plus Bulbs stores in the U.S.

Entrepreneur’s Franchise 500

9.  Batteries Plus Bulbs has appeared on Entrepreneur’s annual Franchise 500 list every year in the last decade. The company’s highest rank was No. 71 in 2012 and 2013, while its lowest rank was No. 147 in 2017.

Section II – Estimated Costs

• Please click here for detailed estimates of Batteries Plus Bulbs franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Batteries Plus Bulbs’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis