In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Express Employment Professionals franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for an Express Employment Professionals franchise, based on Item 7 of the company’s 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Express Employment Professionals franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Express Employment Professionals’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- average sales, gross margin, gross receipts, franchisee’s portion of gross margin and gross receipts, and hours for domestic Express Employment Professionals units opened in FY 2014, 2015, or 2016 during their first 12 months of operation, second 12 months of operation, and first 24 months of operation
- 2016 average combined sales (flexible staffing sales and career placement sales) and average gross margin for domestic Express Employment Professionals units open more than 24 months, 24-60 months, and more than 60 months
- 2016 average franchisee share of gross margin and gross receipts (AAGM) for domestic Express Employment Professionals units open more than 24 months, 24-60 months, and more than 60 months (excluding founder-owned units)
- number and percent of domestic and international Express Employment Professionals units that achieved at least $900,000 in gross margin and gross receipts in 2016
- 2016 average annual sales per owner, gross margin per owner, gross receipts per owner, and commission per owner (including bonus commissions) for 77 domestic Express Employment Professionals multi-unit owners (with an average of 2.3 offices each)
Section I – Background Information
10 Things You Need to Know About the Express Employment Professionals Franchise
Breaks Record With 4 Million Hours Worked in One Week
1. In early November, Express Employment Professionals reported that during the week ending October 22, its associates for client companies had set a record with 4 million hours worked. The company also reported that the record week produced the highest week for sales in the company’s history.
2. Bob Funk, Express CEO and chairman of the board, said, “When Express was first formed, I dreamed that through building a business with a strong culture of caring, it would shatter records and give people hope through employment. As we approach our 35th anniversary, recording 4 million hours worked in one week puts us that much closer to putting a million people to work annually. I expect that we will surpass our 2017 projection of putting 530,000 people to work, and that means putting food on the table for that many more families.”
On Track for All-Time High in Annual Sales
3. At the end of July, Express Employment Professionals said that it hit $1.86 billion in sales, 8% ahead of the same period in 2016. At the time of the announcement, the company projected that it would end the year with an all-time high of $3.3 billion in sales.
4. Also at this point in the year, Express Employment Professionals had awarded 40 new franchises, bringing it closer to reaching its 2017 goal of 800 locations by the end of the year.
5. Express employed 510,000 people in 2016 and, as of the date of a 2017 press release, had put 356,978 people to work year-to-date, which included 203,578 new people. The company added that it was on target toward putting 530,000 people to work by the end of 2017.
6. According to Bob Funk, CEO and chairman of the board for Express Employment Professionals, “The credit for our growth goes to our franchisees, who are the best in the business. It’s their willingness to build relationships and maintain face-to-face contact with customers and job seekers that creates success. You can’t judge a person’s character just by looking at an online resume or application. You have to talk to people to learn who they are.”
Launches Podcast Series
7. In mid-June, Express Employment Professionals launched a new podcast series titled On the Job: From Hired to Retired. It’s a seven-episode series that features inspiring stories from real people in different stages of employment. Topics range from how technical high schools prepare students for professions to how one person balances two very different jobs, and everything in between.
8. Express Employment Professionals was founded in 1983 by Robert (Bob) A. Funk, William (Bill) H. Stoller, and James Gray in Oklahoma City. They started the company after their previous workplace, Acme Personnel, dissolved. Later that year, Funk, Stoller, and Gray began working on franchising Express Employment Professionals, which they officially started doing in 1985.
9. The following year, the company acquired the franchise rights to 30 Acme offices. In 1990, Stoller and Funk purchased Gray’s shares of the company. By the end of the 1990s, Express Employment Professionals had reached $1 billion in sales. The company has continued to grow and today, there are over 790 locations in the U.S., Canada, and South Africa.
Entrepreneur’s Franchise 500
10. Express Employment Professionals has appeared on Entrepreneur’s annual Franchise 500 list
every year for the past 10 years. The company’s highest rank was No. 31 in 2017, while its lowest rank was No. 115 in 2011. Express Employment Professionals also ranked No. 1 in the staffing franchise category in 2018, marking the brand’s seventh consecutive year as No. 1 in its category.
Section II – Estimated Costs
- Please click here for detailed estimates of Express Employment Professionals 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 Express Employment Professionals’ 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
- Set forth below is information showing historic Gross Margins of certain Express Employment Professionals Businesses during Express Employment Professionals’ fiscal year 2016.
- A new franchisee’s individual financial results may differ from the results stated below.
Part 1 – Monthly Averages for Units Opened During Fiscal Years 2014, 2015, or 2016
Discussion of Terms and Deductions
- “Gross Margin” means adjusted billings, less:
- wages earned by associates based upon the work hours reported;
- all credits and taxes measured by sales or gross receipts;
- the employer’s share of federal Social Security taxes, federal and state unemployment tax contributions, workers’ compensation insurance premiums, disability insurance premiums where required by local law, taxes on union health and welfare payments;
- premiums on comprehensive liability, fidelity bonding insurance, errors and omissions insurance, and professional liability insurance premiums, if applicable;
- any other direct payroll taxes and insurance premiums based on sales or payrolls that may be levied; and
- any other county, municipal, or other local tax (all of which are collectively referred to as direct payroll costs).
- “Gross Receipts” means the total of all money and other things of value received on your career placement business conducted in accordance with the franchise agreement at the location specified. The term “Gross Receipts” shall not include bona fide discounts for promotional programs recommended by the franchisor, or refunds. You are responsible for and must pay all taxes applicable to the Gross Receipts.
- Gross Margin and Gross Receipts do not reflect your profits or net income, because the franchisor will take deductions from both Gross Margin and Gross Receipts before sending monies to you. Your portion of the Gross Margin will be 60%, and is subject to further deductions and adjustments authorized by the franchise agreement and manual. Your portion of the Gross Receipts will be 90%.
- In addition to deductions and adjustments made by the franchisor as described above, you will incur other expenses that will reduce your profits or net income, such as land, building, and/or equipment rent; labor; debt service; depreciation and amortization; advertising; administrative expenses such as accounting or legal expenses; taxes; licenses; insurance; and others. These expenses vary from unit to unit.
Total Months 1 to 12