In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the UBREAKIFIX franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a UBREAKIFIX 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 UBREAKIFIX franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of UBREAKIFIX’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average total revenue, cost of goods sold, gross profit, continuing royalty (imputed), miscellaneous expenses, occupancy expense, payroll expenses, promotions and advertising, sales tax, technology fee (imputed), and net income for company-operated UBREAKIFIX stores that have been operating one full year (12 stores), two full years (13 stores), three full years (13 stores), four full years (12 stores), five full years (8 stores), and six full years (3 stores), respectively, as of December 31, 2016
Section I – Background Information
11 Things You Need to Know About the UBREAKIFIX Franchise
Partners with Google to Provide Phone Repair Service to Hurricane Harvey Victims
1. In early September, UBREAKIFIX announced that it had partnered with Google to offer “small relief” to people in the Houston, Texas area that were affected by Hurricane Harvey. The company offered to fix any Google Pixel and Pixel XL phones, which are not waterproof, free of charge until the end of that month.
2. Customers were able to bring their Pixels to one of seven Houston area UBREAKIFIX locations (The Heights, Rice Village, Pearland, Pasadena, West Chase, Sugar Land, and Webster). UBREAKIFIX was able to repair any type of damage, stating: “We are offering motherboard replacements on devices that are beyond economical repair due to liquid damage, etc.”
Plans Expansion in Metro Detroit
3. At the start of September, UBREAKIFIX announced plans to further its expansion efforts in the metro Detroit area over the next two years. In a little over a year, the company has opened five new stores in the Detroit area, which is one of the brand’s fastest growing markets in the U.S.
4. Justin Wetherill, co-founder and CEO of UBREAKIFIX, celebrated the company’s Detroit growth with a ribbon cutting ceremony at its Troy location. The other Detroit stores are located in Royal Oak, Southfield, Sterling Heights, and Bloomfield Hills. UBREAKIFIX will expand into Wayne and Macomb counties next, followed by additional locations in Ann Arbor, Brighton, and Flint over the next two years.
Adds Two New Members to Corporate Team
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5. At the end of August, as UBREAKIFIX continues its strong growth across the U.S., the company welcomed Scott Jones as Vice President of Strategy and Kevin Cundiff as Vice President of Services and Development. Jones and Cundiff come to the company with more than 41 years of combined experience in the technology sector.
6. In his new position, Jones will focus on strategy and creating a roadmap for the future of the company. Prior to joining UBREAKIFIX, he most recently led Strategic Growth and Acquisitions for The Cellular Connection, the nation’s largest Verizon Wireless Indirect Partner.
7. Cundiff previously served as Vice President of Fortegra and National Sales Director of ProtectCELL, a Fortegra subsidiary. In his new role at UBREAKIFIX, he will be responsible for leading teams charged with strategic partnerships; client acquisition, development, and retention as well as leading teams responsible for the creation of new products and services. He will also focus on client relationships, data-driven analysis, team member growth, sales execution, and the overall development of UBREAKIFIX.
8. UBREAKIFIX was founded in 2009 by Justin Wetherill and his friend David Reiff in Orlando, Florida. Wetherill got the idea for a high-quality smartphone repair service after he immediately dropped his newly-purchased iPhone and was unable to repair the phone himself, despite being “an avid tech geek.”
9. So Wetherill teamed up with Reiff to teach themselves how to repair iPhones. They eventually became skilled enough to run an eBay store offering iPhone glass repairs for a flat rate of $79.99. As demand for their service grew, the pair decided to open a storefront with their friend Eddie Trujillo.
10. They began franchising the UBREAKIFIX brand in 2013 and within a few short years, there are now over 300 locations in the United States, Canada, and the Caribbean.
Entrepreneur’s Franchise 500
11. Although UBREAKIFIX has only been franchising since 2013, the company made its debut on Entrepreneur’s annual Franchise 500 list in 2014. UBREAKIFIX has appeared on the list every year since then. The company’s highest rank was No. 93 in 2017, while its lowest rank was No. 499 in 2016.
Section II – Estimated Costs
- Please click here for detailed estimates of UBREAKIFIX franchise costs, based on Item 7 of the company’s 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on UBREAKIFIX’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
- The following table sets forth historical information on certain revenues and expenses for company-operated UBREAKIFIX Stores (“company-operated” includes those operated by the franchisor’s Affiliates), and do not include revenues and expenses for franchisee-operated UBREAKIFIX Stores.
- UBREAKIFIX has not included franchisee-operated UBREAKIFIX Stores in the table because UBREAKIFIX cannot verify and/or control the level or type of expenditures made by individual franchisees.
Statement of Average Revenues and Expenses for UBREAKIFIX Company-Operated Stores (1st, 2nd, 3rd, 4th, 5th, and 6th Full Year of Operations)
- The following table contains the average revenues and expenses of all company-operated UBREAKIFIX Stores: (i) that were company-operated stores as of December 31, 2016; (ii) that were not a closed store; (iii) for which accurate financial records exist in UBREAKIFIX accounting records; and (iv) that have been operating one full year (12 stores), two full years (13 stores), three full years (13 stores), four full years (12 stores), five full years (8 stores), and six full years (3 stores), respectively, as of December 31, 2016.
- The stores had to be open the entirety of the year to be included in the table for that respective year.
- The figures in the table represent the average of the revenues and expenses of each included company-operated UBREAKIFIX Store during the indicated time period for that store (e.g. for its first, second, third, fourth, fifth, and sixth year of operation).
- Total Revenue is the sum of all income received from the sale of repair services and the sale of accessories. This amount also includes any Sales Tax amount collected.
- Merchant Account Fees is the sum of processing charges and fees from credit card merchant processing services.
- Parts and Materials is the sum of all expenses associated with inventory, including the purchase of accessories, parts, and the cost of shipping inventory to the business. This value is the sum of all these costs less any credits given for merchandise returned for refurbishment, and damaged or defective merchandise returned for return merchandise authorization (“RMA”).
- Total Cost of Goods Sold is the sum of all Merchant Account Fees and Parts and Materials cost.
- Gross Profit is calculated as Total Revenue less the Total Cost of Goods Sold.
- Continuing Royalty (Imputed) is 7% of franchisee’s Gross Sales other than Recommerce Revenue during the accounting period.
- Miscellaneous Expenses are the sum of all general and administrative expenditures related to the day-to-day operations of a UBREAKIFIX Store not referenced in other expense categories, including: bank service charges, insurance expense, shipping cost, accounting/professional fees, security cost, and all other miscellaneous cost. The table does not reflect state or federal income taxes, amortization, or depreciation.
- Occupancy Expense is the sum of all business occupancy cost including: rental space cost, common area maintenance (CAM), property taxes, real estate insurance, internet and telephone cost, general store supplies, electric, water, and gas utilities. No depreciation of build out is included in this expense. UBREAKIFIX pays in full for all build out upon receipt of invoice.
- Payroll Expenses is the sum of all business personnel cost, including: salaries and hourly pay for both full-time and part-time employees, employee and employer contributions for FICA taxes, federal unemployment taxes, state unemployment taxes, workers’ compensation insurance, group insurance, and payroll processing fees. Company-operated UBREAKIFIX Stores generally open with 2 to 4 employees.
- Promotions and Advertising is the sum of all advertising expenses, including: online advertising, social media costs, in-store artwork and brochures, giveaways, and job advertisements. Some UBREAKIFIX Stores were in close proximity to each other and may have combined advertising.
- Sales Tax is the sum of all state, city, and local tax collected and paid to the corresponding department.
- Technology and Customer Service Fee (Imputed) is 1% of franchisee’s Gross Sales during the accounting period to defray a portion of the costs and expenses incurred by the Company.
- Total Expense is the sum of Continuing Royalty, Miscellaneous Expenses, Occupancy Expense, Payroll Expenses, Promotions and Advertising, Sales Tax, and Technology Fee Expense. The figures are adjusted to reflect an imputed Continuing Royalty and Technology Fee that are not paid by company-operated UBREAKIFIX Stores.
- Net Income is Total Gross Profit less Total Expense.
Year 1 (12 Businesses)
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This is the first article I have read since purchasing my subscription. I like the breakdowns and the ease of understanding which you seem to provide. I am seriously interested in a uBreakiFix franchise. However, I am not sure about a stores potential for long-term continued growth both in the area of revenue and in the net profit. Also, you mention at the end of the article an Advertising fee 2%, National Account Administration Fee 5%, and an Internet Referral Source Administration Fee 5%. Am I to understand these fees could add up to another 12% of total revenue? If so that would potentially take that 14.2% net profit down to around 2%. Any input would be surely appreciated.
Franchise Chatter says
Thank you for subscribing and welcome to Franchise Chatter.
I edited the article to make it clearer that the National Administration Fee of up to 5% of gross sales and the Internet Referral Source Administration Fee of up to 5% of gross sales are currently NOT charged. And take note that the franchisor says the fees could be up to 5% of gross sales (i.e the percentage could be less than 5%, if they eventually decide to charge these). As for the Advertising Fee of up to 2% of gross sales, the current charge is $150 per month for the first store and $100 per month for the second and subsequent stores.
So currently, the average net income percentage we cited in the article is already the bottom line amount.
Best of luck with your due diligence.
Thank you very much for your explanation. I have been reading and gathering more information since I asked my previous question. I am pleased with the depth of the information provided. You have done a nice job of opening the doors or files of the inner workings of many potential opportunities while remaining seemingly neutral in your assessments of the businesses.
Franchise Chatter says
Thank you so much, Michael. Please check back regularly. We post a new analysis every weekday. There are a lot of interesting franchises to come! Good luck with your research.