In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Nothing Bundt Cakes franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Nothing Bundt Cakes 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 Nothing Bundt Cakes franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Nothing Bundt Cakes 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 Nothing Bundt Cakes’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average net revenues for 146 franchised Bakeries (“Included Franchisee Bakeries”), all of which have been operating for at least 24 months as of December 31, 2017
- 2017 average net revenues, cost of goods sold, gross profit, payroll costs, occupancy expenses, marketing and advertising, other expenses, interest expense, depreciation and amortization, taxes, net income, EBITDA, and total franchisee principal’s benefit achieved by 141 Included Franchisee Bakeries that provided Nothing Bundt Cakes with complete 2017 financial statements prior to the issuance of the 2018 Disclosure Document
- average net revenues achieved during the first and second full 12 months of business by all 38 franchised Bakeries that opened during the 2015 calendar year and have been open a minimum of 24 months as of December 31, 2017
Section I – Background Information
11 Things You Need to Know About the Nothing Bundt Cakes Franchise
Celebrates 20 Years In Business
1. In early November 2017, Nothing Bundt Cakes celebrated its 20th anniversary on National Bundt Day. Dena Tripp, co-founder and chairman of Nothing Bundt Cakes, said, “We’re celebrating 20 years of making life sweeter with our delectable cakes across the country. We are particularly proud to have supported female entrepreneurs over the years, with 95 percent of our franchised bakeries owned by women.”
2. In the same press release, Nothing Bundt Cakes said that it was planning to focus on the company’s growth in 2018 and that there were plans to open 40 new bakeries by the end of 2018.
Added to SPM Communications’ Client Roster
3. In early May 2018, SPM Communications – a public relations, crisis management, and social media marketing agency – was named as PR agency of record for Nothing Bundt Cakes. As PR agency of record, SPM will help Nothing Bundt Cakes drive brand awareness and connect bakeries with guests through ongoing media relations, executive positioning, and influencer programming. SPM will also support the rollout of several new brand initiatives in 2018.
3. Kyle Smith, CEO of Nothing Bundt Cakes, said, “I’ve worked with SPM over the years and have been impressed with their creative campaigns that not only resonate with the consumer, but also tie to specific business outcomes. I have deep confidence in their ability to build and protect the Nothing Bundt Cakes brand.”
4. Suzanne Miller, founder and president of SPM, added, “Our relationship with Nothing Bundt Cakes goes back years, and now, as agency of record, we can really dive into this brand as an ongoing, strategic partner alongside the marketing team. This is a well-loved, iconic brand that is continuing to grow, and we are ready to jump in, roll up our sleeves and help support their success.”
5. Nothing Bundt Cakes has been focusing on its growth and one of its newest bakeries opened in late March 2018 in Algonquin Commons in a suburb of Chicago, Illinois. The location is owned and operated by Danny Sorensen, who fell in love with Nothing Bundt Cakes after seeing how excited people were over the cakes while visiting other locations. Sorensen’s location is the second Nothing Bundt Cakes bakery to open in the area since late 2017.
6. According to Sorensen, locals were excited to see another Nothing Bundt Cakes location in the area. He said, “People have just been going crazy about it. They love our samples and our flavors. It’s been great so far, and the community has been amazing. The community has really embraced us.”
7. Like all Nothing Bundt Cake locations, Soresen’s store offers 10 different flavors of bundt cakes in four different sizes each day. There are nine core flavors with the tenth flavor rotating each month. The store also carries any accessories you might need for a party, including balloons, greeting cards, decorations, and more. Sorensen said, “We’re basically a one-stop-shop for a party.”
8. Nothing Bundt Cakes was started in 1997 by two friends, Debra Shwetz and Dena Tripp, in Las Vegas, Nevada. Shwetz and Tripp started making baked goods together for their family and friends. They made their bundt cakes using high-quality ingredients and unique decorations, and demand for their cakes grew.
9. Eventually Shwetz and Tripp decided to turn their side hobby into a legitimate business that would retain their scratch-made recipes and welcoming atmosphere. Shwetz and Tripp slowly grew the business and started franchising the Nothing Bundt Cakes concept in 2006. Even after franchising started, the company made sure that all of its locations maintained a “mom and pop shop” feel.
10. In 2016, Nothing Bundt Cakes was acquired by Levine Leichtman Capital Partners (LLCP), a Los Angeles-based private equity firm, for an undisclosed amount. As part of the sale, Tripp retained significant ownership in the company and serves as chairperson of the board of directors. Nothing Bundt Cakes joins LLCP’s other franchises, which include Beef ‘O’ Brady’s, Cici’s Pizza, and Wetzel’s Pretzels. Today, Nothing Bundt Cakes has locations across the United States and Canada.
Entrepreneur’s Franchise 500
11. Nothing Bundt Cakes did not rank on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Nothing Bundt Cakes 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 Nothing Bundt Cakes’ 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: 113
- Outlets at the End of the Year: 151
- Net Change: +38
- Outlets at the Start of the Year: 151
- Outlets at the End of the Year: 187
- Net Change: +36
- Outlets at the Start of the Year: 187
- Outlets at the End of the Year: 234
- Net Change: +47
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 2
- Net Change: 0
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 6
- Net Change: +4
- Outlets at the Start of the Year: 6
- Outlets at the End of the Year: 6
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- This Item sets forth historical net revenue and cost information for Nothing Bundt Cakes’ company-owned, founder-operated, and franchised Bakeries which was provided to the franchisor by its founder and franchisees.
- As of December 31, 2017, Nothing Bundt Cakes had 234 franchised Bakeries and 6 company-owned Bakeries open and operating in the United States.
- Part I of this Item sets forth the net revenues of 146 franchised Bakeries (“Included Franchisee Bakeries”). The Measurement Period in Part 1 is January 1, 2016 to December 31, 2017 for all 146 Included Franchisee Bakeries. All of these 146 Bakeries have been operating for at least 24 months as of December 31, 2017. Nothing Bundt Cakes has excluded from Part I net revenue information of the 88 remaining Franchisee Bakeries because these Bakeries were not open and operating for the entire Measurement Period.
- Part II of this Item sets forth Average Net Revenues, Average Cost of Goods Sold, Average Gross Profit, Average Payroll Costs, Average Occupancy Expenses, Average Advertising Expenses, Average Other Expenses, Average Interest Expenses, Average Depreciation and Amortization Expenses, Average Net Income, and Average EBITDA achieved by 141 of the Included Franchisee Bakeries from January 1, 2017 through December 31, 2017, which is the Measurement Period in Part II.
- The 141 Included Franchisee Bakeries provided Nothing Bundt Cakes with complete 2017 financial statements prior to the issuance of the 2018 Disclosure Document. 93 of the Franchisee Bakeries were excluded on the basis that they did not provide Nothing Bundt Cakes with complete 2017 financial statements before the issuance of the 2018 Disclosure Document.
- Part III of this Item sets forth the Average Net Revenues achieved during the first and second full 12 months of business by all 38 franchised Bakeries that opened during the 2015 calendar year and which have been open a minimum of 24 months as of December 31, 2017. The Measurement Period for these Bakeries in Part III is January 1, 2015 to December 31, 2017.
- Nothing Bundt Cakes has not audited or independently verified the data submitted by the included Bakeries and no assurance can be offered that the data does not contain inaccuracies that an audit might disclose. Nothing Bundt Cakes will provide you with written substantiation for the financial performance representation upon reasonable request.
Part I – Included Franchisee Bakeries’ Average Net Revenues and Growth in Average Net Revenues During the Measurement Period
- “Net Revenues” includes all revenues generated from all business conducted at or from a Bakery during the Measurement Period, including amounts received from the sale, shipping, and delivery of food items, amounts received through the E-Commerce program and from gift card sales, and other products and services, merchandise, and tangible property of any nature whatsoever, whether in cash or for credit, and whether collected or uncollected.
- “Net Revenues” does not include the amount of any applicable sales tax imposed by any federal, state, municipal, or other governmental authority if such taxes are stated separately when the Guest is charged and franchisee pays such amounts, as and when due, to the appropriate taxing authority.
- Also excluded from Net Revenues are the amount of any documented refunds, chargebacks, credits, and allowances given to Guests in good faith pursuant to Nothing Bundt Cakes’ standard procedures for issuing such refunds.
- The “Average Net Revenues” for the Included Franchisee Bakeries were calculated by taking the sum of the Included Franchisee Bakeries’ Net Revenues and dividing it by the total number of Included Franchisee Bakeries.
- The “Percentage Growth in Average Net Revenues” was calculated by taking the difference between the Average Net Revenues achieved by the Included Franchisee Bakeries in 2017 and 2016, and dividing it by the Average Net Revenues achieved by the Included Franchisee Bakeries in 2016.
Included Franchisee Bakeries