In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Batteries Plus Bulbs franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Batteries Plus Bulbs franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Batteries Plus Bulbs franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Batteries Plus Bulbs outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Batteries Plus Bulbs’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average net revenue and merchandise margin for the 637 franchised Batteries Plus Bulbs Stores that were in operation for the entire 12-month period ended December 31, 2017
- 2017 average annual net revenue percentage increase for the 637 franchised Stores that were in operation for the entire 12-month period ended December 31, 2017
- 2017 average annual net revenue percentage increase for the 660 franchised Stores in operation as of December 31, 2017
- 2017 average merchandise margin for retail and commercial customers for the 660 franchised Stores in operation as of December 31, 2017
- 2017 average retail and commercial revenue as a percentage of total revenue for the 660 franchised Stores in operation as of December 31, 2017
- average net revenue, average retail percentage and average commercial percentage of net revenue for the 637 franchised Stores that were in operation for at least 12 full months as of December 31, 2017 (Year 1 to Years 10+ franchised Stores)
- 2017 average net revenue, expenses, and EBITDA for the 27 company-owned Stores that were opened on or before December 31, 2009 and that remained in operation as of December 31, 2017; and the 47 company-owned Stores that were operating as of December 31, 2017
Section I – Background Information
15 Things You Need to Know About the Batteries Plus Bulbs Franchise
Surging Demand Results in Ongoing Expansion
1. Starting off 2018 on a high note, Batteries Plus Bulbs reported that its continued focus on product and service innovation to satisfy emerging demand and to stay on-trend has resulted in consecutive years of same-store and system-wide sales growth. The company highlighted some of its achievements in recent years, including a 3.7 percent increase in same-store sales and a 5.3 percent increase in system-wide sales from 2016 to 2017. Also, over the last three years, system-wide sales have grown 22.6 percent.
2. According to the company, Batteries Plus Bulbs is the uncontested leader in the $32 billion battery industry and the $22 billion light bulb industry in the U.S. It is also the top phone repair franchise in terms of number of retail locations domestically. A significant category investment from 2016 to 2017 resulted in a 42 percent increase in total phone repair sales.
3. Russ Reynolds, CEO of Batteries Plus Bulbs, said, “Batteries Plus Bulbs is a franchise business that continues to experience skyrocketing demand in the industries we serve. U.S. households have approximately 3.2 billion devices requiring batteries and 7 billion light bulb sockets requiring light bulbs. At some point, these batteries and light bulbs will need to be replaced, and many of those devices repaired. We specialize in providing solutions to people’s problems, especially in a dynamic and evolving retail environment where immediacy and convenience are in high demand.”
4. Batteries Plus Bulbs plans to continue expanding across the country in 2018, with the addition of at least 33 more franchise locations and 14 corporate stores. Franchises are available throughout the U.S., with key markets identified in parts of the Mid-Atlantic and New England regions of the Northeast, and in Southern California on the West Coast.
New Additions to Leadership Team
5. In early December 2017, Batteries Plus Bulbs announced the appointment of five individuals to franchise development, stores, and real estate positions. The expansion of Batteries Plus Bulbs’ leadership team coincides with a banner year of growth and recognitions for the company.
6. The new appointments include Brian Murphy as the new senior vice president, stores; John Tramburg as vice president, supply chain and logistics; Derek Siddons as vice president, company stores; John Kollm as director of services; and Dana Polonsky as director of real estate. The new members of the leadership team have decades of experience in various companies including PetSmart, CompUSA, Cabela’s, Target, DICK’S Sporting Goods, Five Guys, and MOD Superfast Pizza.
7. Russ Reynolds, CEO of Batteries Plus Bulbs, said, “We’re thrilled to close out a successful year with the additions of these incredibly talented and passionate individuals to our management team. Since the company’s inception in 1988, Batteries Plus Bulbs has consistently demonstrated tremendous growth by fulfilling the evolving needs of the replacement battery and light bulb markets and phone repair markets. We look forward to working with these leaders to sustain and build upon this strong trajectory in 2018.”
Boasts Successful Omni-Channel Strategy
8. Batteries Plus Bulbs is one of the few older franchises that has successfully adapted to the changing retail landscape. As more customers choose to shop only through e-commerce websites, Batteries Plus Bulbs still manages to draw in a lot of foot traffic.
9. According to chief marketing and technology officer Jayson Serrault, 96% of the brand’s online orders are picked up in-store. Serrault said that the company can’t point to any one reason why the percentage is so high. He added, “I’d like to say it was brilliance, but it was a lot of dumb luck. When we started the website, it wasn’t a very robust feature for us. The basic functionality was there but we didn’t spend all our time trying to figure out how it was going to work.”
10. In a presentation at the Internet Retailer Conference & Exhibition in Chicago, Serrault encouraged retailers to focus on the human element as much as the technology element when launching a new e-commerce platform. For example, at Batteries Plus Bulbs, online orders are usually routed directly to a store associate. Rather than rely on technology to sort out any potential issues, such as the item being out of stock, a store associate will call the shopper if there is a problem.
11. Batteries Plus Bulbs was ranked No. 749 on the 2017 Internet Retailer U.S. Top 1000 list. According to Internet Retailer, Batteries Plus Bulbs did an estimated $15.9 million in online sales in 2016.
12. Batteries Plus Bulbs was founded in 1988 by Ron Rezetko in Green Bay, Wisconsin. Around this time, personal technology devices were on the rise and Batteries Plus Bulbs was the first company to respond to the evolving needs of the replacement battery market. Rezetko started franchising the brand in 1992 and the first franchised store opened in Fort Wayne, Indiana.
13. Over the next decade, the demand for specialty and replacement batteries grew and Batteries Plus Bulbs continued to expand across the United States. In 2010, the brand added light bulbs to its product lineup. A few years later, Batteries Plus Bulbs expanded its services again with the addition of smartphone and tablet repair services, providing in-store repairs for cracked screens, battery replacements, and more.
14. The demand for Batteries Plus Bulbs’ services continues to grow and today, there are over 700 locations across the country.
Entrepreneur’s Franchise 500
15. Batteries Plus Bulbs ranked at No. 118 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Batteries Plus Bulbs franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Batteries Plus Bulbs’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 598
- Outlets at the End of the Year: 626
- Net Change: +28
- Outlets at the Start of the Year: 626
- Outlets at the End of the Year: 648
- Net Change: +22
- Outlets at the Start of the Year: 648
- Outlets at the End of the Year: 663
- Net Change: +15
- Outlets at the Start of the Year: 45
- Outlets at the End of the Year: 48
- Net Change: +3
- Outlets at the Start of the Year: 48
- Outlets at the End of the Year: 48
- Net Change: 0
- Outlets at the Start of the Year: 48
- Outlets at the End of the Year: 57
- Net Change: +9
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- Under Part 1, the franchisor has provided an unaudited statement of average net revenue, merchandise margin, net revenue percentage increase, and percentage of net revenue in total and by customer type based on franchised Stores operating as of December 31, 2017.
- Under Part 2, the franchisor has provided unaudited statements of net revenue, expenses, and EBITDA for company-owned Stores.
- Information for franchised Stores has been taken from their respective Retail Store Management systems. The franchisor has not audited or verified these reports.
Part 1 – Unaudited Statement of Average Net Revenue, Merchandise Margin, Net Revenue Percentage Increase, and Percentage of Net Revenue by Customer Type of Franchised Stores
- Except for where otherwise specifically noted, the following statements are based on information reported by all franchised Stores in operation as of December 31, 2017.
- There were 663 total Stores open as of December 31, 2017. Of these Stores, 3 Stores were closed for relocations in 2017 and that were open for less than 7 months in 2017. The remaining 660 Stores are referred to as “All Stores”. Of All Stores, there were 637 Stores that were in operation for the entire 12-month period ended December 31, 2017 (referred to as “Same Stores”), and 23 Stores opened during 2017.
- As noted, each category included in this statement specifies whether Same Stores or All Stores are included.
A. Statement of Average Annual Net Revenue and Merchandise Margin
- This statement includes average Net Revenue and Merchandise Margin for Same Stores for the 12-month period ended December 31, 2017.
- In addition, each group of Stores is divided into quartiles, with the range of and average Net Revenue in each quartile identified.
- This statement includes information from Same Stores only.
- For purposes of this statement, the term “Net Revenue” means all revenues received from the sale of goods and services, whether for cash or by check, credit card, or trade, in connection with the Store, less sales tax, discounts, and customer refunds and returns.
- For purposes of this statement, the term “Merchandise Margin” is Net Revenue less product cost. Product cost is the cost of the product only and does not include other cost of goods sold such as freight, warranty expense, or inventory shrinkage.
- “Merchandise Margin Percentage” is Merchandise Margin divided by Net Revenue multiplied by 100.
2017 Same Store Net Revenue and Margin Performance