FDD Talk 2017: What You Need to Know About the Figaro’s Pizza 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 Figaro’s Pizza franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Figaro’s Pizza 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 Figaro’s Pizza franchise, based on Items 5 and 6 of the company’s 2017 FDD

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

• 2016 average gross revenues for the top 10% (based on annual gross revenues), top 25%, second 25%, third 25%, bottom 25%, and all 47 franchised Figaro’s Pizza stores that have been open for at least one year as of December 31, 2016

Section I – Background Information

10 Things You Need to Know About the Figaro’s Pizza Franchise

Names New Agency of Record

1.  In early February, Figaro’s Pizza, Inc. announced that the company had chosen Asbury Design – a relationship-focused agency in Eugene, Oregon with an extensive background working with similar clients – as its Agency of Record. Asbury will lead the brand’s advertising, digital and social media, public relations, and design strategies.

2.  Holly Earle-Schultze, Director of Marketing for Figaro’s Pizza, said, “We are excited to start this long-term relationship with Asbury and are confident their experienced team will be able to take our stores to the next level. I feel they are a perfect fit for our brand and am excited to work with knowledgeable staff.”

Giving Back Through H.E.L.P. Organization

3.  Figaro’s Pizza franchisees give back to their local communities through H.E.L.P. (Helping Education with Love and Pizza), the company’s charitable organization that gives grants to teachers, church youth groups, bands, and athletic teams. The funds used for the grants are raised by franchisees at their Figaro’s Pizza locations. H.E.L.P. chooses the recipients of the grants based on need and creativity, with priority given to innovative projects that are designed to improve student learning.

4.  Educators and volunteers associated with the school may apply for grants with school approval and people involved with nonprofit organizations such as church youth groups, bands, and athletic teams are also encouraged to apply for the grants. Figaro’s Pizza says that grants start at about $100, but will often be more depending on the availability of funds.

5.  In early May, the Figaro’s Pizza location in John Day, Oregon gave out a total of $725 in grants to four teachers at Humboldt Elementary School. The owner of that location, Pete Teague, says that the grants are available twice a year and that the program is a “win-win” for his community because “people get to buy pizza and eat it, and a portion goes back to the schools.”

One of Brand’s Oldest Locations to Stay Open with New Owners

6.  In October, Dan and Shaye Branson purchased the Figaro’s Pizza in Madras, Oregon from Tom Hansen, who retired after selling the store. The Madras location is one of the oldest in the Figaro’s Pizza system as Hansen had spent 20 years running the restaurant and making it a staple of the local community.

7.  Dan Branson, who spent the past 20 years working as a global sourcing and new product development executive for consumer goods, said that he has always dreamed of owning his own business. The Bransons will be offering a new lunch service starting at 11 a.m., with $3 to $7 specials, personal-sized pizzas, side salads, and pizza by the slice. They are also offering free lunch deliveries to the local business community on orders over $20.

Company History

8.  Figaro’s Pizza was founded in 1981 by Corkey Gorley and Al DeBacker in Salem, Oregon. Gorley and DeBacker wanted Figaro’s Pizza to meet the needs of the busy families of the 1980s, an era when both parents often worked outside of the home. By the mid-1980s, there were four Figaro’s Pizza locations in the area and in 1986, Ken Robertson bought the company and directed its steady growth, with franchising starting that same year.

9.  The company was sold again in 2001 to Ron Berger, a 35-year franchise veteran. Berger created an infrastructure to support new stores and franchisees, positioning the company for growth. After hitting a high of over 120 units in 2008, Figaro’s has closed a significant number of stores. Today, there are only about 42 U.S. locations and seven locations in the Middle East.

Entrepreneur’s Franchise 500

10.  Figaro’s Pizza has not appeared on Entrepreneur’s annual Franchise 500 list since 2013. In the past 10 years, the brand’s highest rank was No. 292 in 2010, while its lowest rank was No. 491 in 2013.

Section II – Estimated Costs

• Please click here for detailed estimates of Figaro’s Pizza 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 Figaro’s Pizza’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 provides average Store gross revenues for individual unit Figaro’s Stores that have been open for at least one year as of December 31, 2016. The average revenues are for the 12 months ended December 31, 2016.

• The table does not include any financial performance information for any other types of franchises and does not include any Stores of any type that had not been open for at least one year on December 31, 2016.

• The table provides the average revenues for the top 10% revenue producing Stores; the top 25% revenue producing Stores (which includes the Stores that are in the top 10%); and the second, third, and bottom 25% revenue producing Stores.

• As of December 31, 2016, there were 50 Unit Franchised Stores and no company-owned Stores. Of the 50 Franchised Stores, 47 were Figaro’s Stores that had been open for at least 12 months as of December 31, 2016.

• Of these 47 Stores, all reported sufficient financial performance information to be included in this financial performance representation.

• Of the 47 Stores whose financial performance information was used in this table, the following attained or surpassed the stated results:

• Top 10%:  2 or 40% attained or surpassed the stated results
• Top 25%:  3 or 25% attained or surpassed the stated results
• Second 25%:  6 or 50% attained or surpassed the stated results
• Third 25%:  3 or 25% attained or surpassed the stated results
• Bottom 25%:  6 or 55% attained or surpassed the stated results

• Characteristics of the included Franchised Stores may differ substantially from your Store depending on your previous business and management experience, competition in your area, length of time that the included Stores have operated as compared to your Store, and the services and goods sold at your Store as compared to the included Stores.

• The sales, profits, and earnings of an individual franchisee may vary greatly depending on these and a wide variety of other factors, including the location of the designated territory, population demographics, economic and market conditions, labor and product costs, etc.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance you will earn as much.

Average Gross Revenues for the 12 Months Ended December 31, 2016