FDD Talk: What You Need to Know About the Pinot’s Palette Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

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

• Section I – Background information on the Pinot’s Palette franchise opportunity, including relevant news updates

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

• Section IV – Presentation and analysis of Pinot’s Palette’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 40 franchisee-owned Pinot’s Palette Studios, grouped according to number of rooms, that met the franchisor’s minimum marketing and operations requirements for studio performance during the reported period ended December 31, 2016

• 2016 average, high, and low gross sales for the top 25%, top 50%, top 75%, and all 40 franchisee-owned Pinot’s Palette Studios that met the franchisor’s minimum marketing and operations requirements for studio performance during the reported period ended December 31, 2016

• 2016 average, high, and low gross sales for the 17 franchisee-owned Pinot’s Palette Studios whose owners own two or more locations, grouped according to number of rooms, that met the franchisor’s minimum marketing and operations requirements for studio performance during the reported period ended December 31, 2016

• 2016 average, high, and low gross sales for the 4 affiliated-owned Pinot’s Palette Studios, grouped according to number of rooms, open the entire year ended December 31, 2016

• projected labor cost and cost of goods sold for a 2-hour and a 3-hour painting class, with 20, 35, and 50 painters

Section I – Background Information

17 Things You Need to Know About the Pinot’s Palette Franchise

Started 2017 by Celebrating a Milestone Year of Development in 2016

1.  Pinot’s Palette started 2017 on a high note after experiencing another year of franchise expansion in 2016. One of the brand’s major milestones was opening its 100th location in Chicago and having studios opened in all of the top 20 DMAs (Designated Marketing Areas) in the United States.

2.  Pinot’s Palette had its largest growth in California, with a total of eight new locations, followed by continued expansion in New Jersey, New York, and Texas. The brand also opened its first international location in Toronto.

3.  CEO and co-founder Craig Ceccanti said, “It was another year of exciting growth for Pinot’s Palette. We reached new milestones with our national and international presence. We continue to push the boundaries of the premium paint and sip experience with a fantastic team of amazing franchisees and the most dedicated corporate staff.”

4.  Pinot’s Palette also updated its logo to fit the artistic elements of the company’s values, expanded office space at its corporate headquarters, and added eight new staff positions to the corporate team to further support franchisees and customers. It also launched the Pinot Perks Rewards Program, which allows customers to earn corks to receive free classes, special offers, and merchandise. Additionally, Pinot’s Palette introduced the Customer Service Center (CSC) to assist customers with booking private parties and public painting events.

5.  In addition to all of the milestones and new features, Pinot’s Palette received numerous honors and awards throughout 2016. The franchise was named to the Inc. 5000 list for the first time in the company’s history and was the only paint and sip franchise to make the list. Co-founders Craig Ceccanti, Charles Willis, and Beth Willis were also named to the LSU 100, honoring top businesses founded or run by graduates of Louisiana State University, for the second year. Pinot’s Palette was also named Best in Category by Franchise Business Review in its 2017 Top Franchises Report.

Organizes Hurricane Harvey Relief Efforts

6.  Not long after Hurricane Harvey devastated several areas in the Gulf Coast of the United States, several companies, including Pinot’s Palette (which is based in Houston, one of the areas hit hardest by the storm), launched fundraising events.

7.  In early September 2017, independently-owned Pinot’s Palette studios quickly organized to raise funds for the Hurricane Harvey relief effort. Numerous studios held special painting and drinking events and donated the proceeds to a nonprofit Hurricane Harvey relief fund, such as Global Giving and the American Red Cross. Some studios even collected food, diapers, and other essential supplies to send to relief organizations in the Gulf Coast.

8.  Charles Willis, co-founder and president of Pinot’s Palette, said, “The support we’ve seen from our franchise owners, studio managers and artists nationwide has been indescribable. While our Gulf Coast team members were still dealing with floodwaters, our franchisee network had organized relief efforts overnight. We are so proud to be part of a system of people across the country who are so giving, so enterprising, so kind-hearted and so passionate.”

9.  Each of the fundraising events featured a custom painting, United We Stand, which was created during the hurricane by a Pinot’s Palette studio manager in Bricktown, Oklahoma. The painting features a sunset that is reminiscent of the American flag. Customers were able to find donation details on their local studio’s Painting It Forward event page.

10.  In addition to Painting It Forward events, customers could donate directly to Harvey relief when signing up online for any Pinot’s Palette painting event in September. There was a voluntary donation box at checkout that sent a $5 donation directly to Global Giving’s Hurricane Harvey Relief Fund.

Launches Scholarship Program

11.  At the beginning of June 2017, Pinot’s Palette announced the launch of the Pinot’s Palette Scholarship for Artistic Excellence. According to the company, it is one of the largest employers of professional artists in America, so it made sense for the brand to help future artists.

12.  The scholarship program is open to all graduating high school students in the U.S. who plan to pursue any arts or arts education related degree at an accredited U.S. post-secondary institution. The chosen applicant will receive $1,000 to be used towards tuition expenses and any other verified school expenses in an arts program. Candidates will be evaluated based upon GPA, participation in non-school related clubs and organizations, and honors and awards received.

13.  Last year’s scholarship contest ended on October 31. Co-founder and president of Pinot’s Palette Charles Willis said, “The success of Pinot’s Palette is largely based on the expertise and passion of the artists that teach our classes every day. We are thrilled to be launching this scholarship program and helping students achieve their goal of pursuing an education in the arts.”

Company History

14.  Pinot’s Palette was founded in 2009 by Craig Ceccanti, Charles Willis, and Beth Willis in the Montrose neighborhood of Houston, Texas. Ceccanti was inspired to open his own wine and painting class business after attending a painting class with his family in Louisiana. They originally called the business Pinot and Picasso, but changed its name to Pinot’s Palette in 2010.

15.  The founders opened two additional locations in the Houston area before they started franchising the Pinot’s Palette concept in 2010. The first franchised location opened in Katy, Texas and today, there are about 137 Pinot’s Palette studios across the United States and one location in Canada.

16.  In 2016, Pinot’s Palette launched a rebranding effort and debuted a new logo and other updates. It also updated the company’s website and released new décor for its studios.

Entrepreneur’s Franchise 500

17.  Pinot’s Palette has appeared on Entrepreneur’s annual Franchise 500 list every year since 2014. The brand’s highest rank was No. 178 in 2018, while its lowest rank was No. 460 in 2015.

Section II – Estimated Costs

• Please click here for detailed estimates of Pinot’s Palette 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 Pinot’s Palette’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

• Pinot’s Palette had 84 franchisee-owned Pinot’s Palette Studios and 4 affiliate-owned Pinot’s Palette Studios open the entire year ending December 31, 2016.

• The tables below include Gross Sales figures for the 4 affiliate-owned Pinot’s Palette Studios (Part 4) and for 40 franchisee-owned Pinot’s Palette Studios that met the franchisor’s minimum marketing and operations requirements for studio performance during the reported period, which minimum requirements are as follows:

• posted at least 5 blogs,
• acquired at least 175 verified Pinot Perks members, and
• earned a Net Promoter Score based upon customer surveys of greater than 85 (Parts 1 to 3).

• There were 44 franchisee-owned Pinot’s Palette Studios not included in the figures below because they did not meet one or more of Pinot’s Palette’s minimum marketing and operations requirements.

Part 1 – One Room and Two Room Franchised Studios (40 Studios)

One Room Franchised Studios