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

by Franchise Chatter on June 28, 2017

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



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In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the Zoup! franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Zoup! 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 Zoup! franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Zoup!’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 average, high, and low gross sales for the 77 Zoup! Restaurants located in the USA that were opened for a full 12 months during 2016, divided into 2 subgroups, namely:  (a) Franchise Restaurants operated in the USA (74 Restaurants); and (b) Affiliate Restaurants operated in the USA (3 Restaurants)
  • 2016 average percentage of annual revenue per quarter for the 74 Zoup! Franchise Restaurants operated in the USA that were open for a full 12 months during 2016
  • 2016 average payroll costs, including compensation for the general manager, as a percentage of gross sales, for the 2 Zoup! Restaurants owned and operated by the franchisor’s affiliates for a full 12 months during 2016
  • 2016 average cost of goods sold (food and paper), as a percentage of gross sales, for the 2 Zoup! Restaurants owned and operated by the franchisor’s affiliates for a full 12 months during 2016
  • 2016 average ticket information for the 74 Zoup! Franchise Restaurants opened for the full 12 months during 2016

Section I – Background Information

12 Things You Need to Know About the Zoup! Franchise

Opened 100th Restaurant



1.  In early March, Zoup! opened its 100th location in Southfield, Michigan, which is where the original and flagship Zoup! restaurant is located. This second Southfield location is the 8th Zoup! in the greater Detroit area and the 17th in Michigan.

2.  Franchisee Tonisha Bryant, who owns the new location with her husband Vincent, says she is truly honored to open the 100th Zoup! location. To celebrate the location’s opening, all customers had the chance to be one of ten customers to win free soup for a year (12 free bowls of soup, one per month for a year).

3.  Zoup! founder and CEO Eric Ersher says the company was able to reach this big milestone because of the hard work of Zoup!’s team and franchise partners.

New Locations Open in New Territories

4.  At the start of 2017, Zoup! announced that it would be opening several new locations in new territories such as New Jersey; Seattle, Washington; and Pittsburgh, Pennsylvania.

5.  Franchisee Mark Barbour, an experienced New Jersey businessman, plans to open three Zoup! locations in the state over the next five years. The first New Jersey location opened in the spring.



6.  In early February, Zoup! broke ground on the site of its first Seattle, Washington location. The Seattle Zoup! restaurant, which is owned by franchisee Kari Hingst, was opened in mid-April.

7.  At the beginning of March, Zoup! opened its first Pittsburgh, Pennsylvania location, which is owned by franchisees Richard and Jackie Cagley.

Souped Up Summer Event

8.  From May 30 until June 2, Zoup! kicked off the summer season by holding its Souped Up Summer Event. During each day of the event, each Zoup! location gave away exclusive “Summer is for Zoup! Lovers” cards that entitled recipients to a free menu item each month.

9.  Each location also awarded ten winners with soup for a year (one free bowl of soup for every month) and a grand prize winner at each location won a free bowl of soup every week for a year. The last day of the event, June 2, was 98-cent Sandwich Day where customers were able to buy any half sandwich for 98 cents with the purchase of any soup.

Company History



10.  Zoup! was founded in 1998 in Southfield, Michigan by Eric Ersher, after he was inspired to open a restaurant that could meet consumer demand for high quality soups. Ersher felt that soup had always been an afterthought in restaurants and worked for a year with an experienced chef to develop fresh soup with premium ingredients.

11.  A few years after opening the first location, Zoup! added salads and sandwiches to its menu and opened five more Detroit-area locations. In 2003, Zoup! opened its first franchised location in Ann Arbor, Michigan and today there are over 100 Zoup! franchises in the U.S. and Ontario, Canada.

Entrepreneur’s Franchise 500

12.  Zoup! has appeared on Entrepreneur’s annual Franchise 500 list most years in the last decade, except from 2007 to 2010. The company’s highest rank was No. 181 in 2017, while its lowest rank was No. 332 in 2014.

Section II – Estimated Costs

  • Please click here for detailed estimates of Zoup! 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 Zoup!’s 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

  • This financial performance representation consists of five parts.
  • Part 1 of this Item presents historical sales data for 77 Restaurants located in the USA that were opened the entire year. This includes all USA Restaurants that were opened for a full 12 months during 2016.
  • Part 1 includes 2 subparts:  (a) Franchise Restaurants operated in the USA (74 Restaurants); and (b) Affiliate Restaurants operated in the USA (3 Restaurants) at the end of 2016.
  • Of the 77 Restaurants that were used in preparing the sales information presented in this Item, 2 Restaurants were owned and operated by the franchisor’s affiliates for the entire year, 1 Restaurant was owned and operated by the franchisor’s affiliate from June 2016 through the end of the year, and 74 were Franchise Restaurants for the entire year.
  • These 77 Restaurants represent 78% of the 99 Zoup! Restaurants that were in operation at the end of 2016. The remaining 22 Restaurants consist of 9 Restaurants operated in Canada and 13 USA Restaurants that were not opened for the full year in 2016.
  • Part 2 of this Item presents information relating to the seasonality of the Zoup! Restaurants’ sales. The franchisor has provided the average percentage of annual revenue per quarter for the 74 Zoup! Franchise Restaurants operated in the USA that were open for a full 12 months during 2016. These 74 Franchise Restaurants represent 75% of the 99 Zoup! Restaurants that were in operation at the end of 2016.
  • Part 3 of this Item presents historical cost of labor information, including taxes and costs relating to a general manager, as a percentage of sales. Part 3 also includes the average general manager’s salary.
  • This cost information is provided for a subset of Zoup! Restaurants consisting of 2 Restaurants owned and operated by the franchisor’s affiliates for a full 12 months during 2016. These 2 Restaurants represent 66.6% of the affiliate-owned Restaurants operating at the end of 2016 and 2.0% of the total Restaurants operating at the end of 2016.
  • The franchisor has used cost information from its affiliate-owned Restaurants operated for a full 12 months during 2016 because it does not have the actual labor costs from all of its franchisees to determine an average for its franchisees.
  • Part 4 of this Item presents historical cost of goods information (food and packaging costs), as a percentage of sales.
  • This cost information is provided for a subset of Zoup! Restaurants consisting of 2 Restaurants owned and operated by the franchisor’s affiliates for a full 12 months during 2016. These 2 Restaurants represent 66.6% of the affiliate-owned Restaurants operating at the end of 2016 and 2.0% of the total Restaurants operating at the end of 2016.
  • The franchisor has used cost information from its affiliate-owned Restaurants because it does not have the actual food and packaging costs from all of its franchisees to determine an average for its franchisees.
  • Part 5 of this Item presents historical average ticket information for the 74 Franchise Restaurants operated in the USA that were opened for the full 12 months during 2016.
  • These 74 Restaurants represent 75% of the 99 Zoup! Restaurants that were in operation at the end of 2016.
  • Gross Sales less the Cost of Goods Sold and Labor Expenses does not reflect the actual potential income of a Restaurant and should not be relied on in calculating profitability. There are a number of fixed and variable costs associated with a Restaurant, not all of which are reflected in the information below, and that vary among individual Restaurants.
  • These expenses, which are likely to be significant, include, but are not limited to, the following:
  • the certain costs listed in Parts 3 and 4
  • costs described in Items 6 and 7 of the Disclosure Document, including the 6% royalty fee
  • interest or finance charges if you finance some or all of the costs of the franchise
  • depreciation on property and equipment
  • occupancy costs (including rent, maintenance, insurance, and utilities)
  • store supplies
  • credit card fees
  • worker’s compensation and general liability insurance
  • taxes
  • national brand marketing fund
  • customer service and training fund
  • tech fund
  • accounting and legal fees and general administrative expenses
  • any pre-opening or amortization of organization costs
  • costs associated with regulatory compliance
  • management costs
  • fringe benefits
  • certain repairs and maintenance
  • You should be aware that you may incur expenses that may not be incurred by affiliate-owned Restaurants.

Part 1a – Average Sales of USA Franchise Operations (December 28, 2015 to December 26, 2016; 52 Weekly Sales Periods)

  • “Gross Sales” means the entire amount of all of the revenues from the operation of the Restaurant net of applicable sales tax.
  • This table does not contain any information regarding the expenses you may incur in operating your business.
  • The Zoup! Restaurants included in the sample are located in Michigan (15 units), Ohio (21 units), Pennsylvania (7 units), Missouri (1 unit), Colorado (3 units), Illinois (10 units), Indiana (4 units), Virginia (2 units), Delaware (1 unit), Massachusetts (1 unit), Kentucky (1 unit), Nebraska (1 unit), New York (2 units), South Dakota (1 unit), Wisconsin (1 unit), and Oregon (3 units), for a total of 74 units.

Highest Gross Revenue Zoup! Location



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