In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the uBreakiFix franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a uBreakiFix 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 uBreakiFix franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned uBreakiFix 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 uBreakiFix’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average total revenue, cost of goods sold, gross profit, continuing royalty, miscellaneous expenses, occupancy expense, payroll expenses, promotions and advertising, sales tax, technology fee, and net income for the first, second, and third year of operation of the top quartile and bottom quartile franchisee-operated uBreakiFix stores that were 2 years or older as of December 31, 2017 and submitted their financial information to uBreakiFix
Section I – Background Information
21 Things You Need to Know About the uBreakiFix Franchise
Significant Growth in Second Quarter of 2018
1. At the beginning of July 2018, uBreakiFix announced that the company had experienced significant growth during the second quarter of 2018, boasting a total of 38 new stores, marking a 58 percent increase over last year’s second quarter growth. At the time of the announcement, these second quarter additions brought the brand’s total to 408 stores across North America.
2. Fastest-growing markets included Kansas City, with nine new locations, as well as Florida, with four new locations. uBreakiFix also expanded its footprint in Omaha, Nebraska; Toronto, Ontario; and other existing markets. During the third quarter of the year, uBreakiFix plans to open 35 new stores, including expansion in Salt Lake City and Midwest markets such as Iowa, Wisconsin, and Oklahoma.
3. In May, uBreakiFix announced a partnership with Kansas City’s largest tech repair company, Phone Medic, to convert all eight existing Phone Medic locations to uBreakiFix stores and add three new stores in the coming months. Since January 1, uBreakiFix has converted 11 independent tech repair stores to uBreakiFix franchises in markets such as Greenville, South Carolina and Virginia Beach, Virginia, with plans to announce several more conversions throughout the year.
4. Also in May, uBreakiFix partnered with Nebraska Furniture Mart, North America’s largest home furnishing and appliance retailer. Under the partnership, uBreakiFix opened three store-within-a-store service locations in Kansas City, Kansas; Omaha, Nebraska; and Dallas-Fort Worth, Texas.
5. Justin Wetherhill, co-founder and president of uBreakiFix, said, “At uBreakiFix, we identify and evaluate every growth opportunity based on what will provide the most value for our customers. This quarter, we were pleased to announce mutually beneficial conversion opportunities, as well as store-within-a-store concepts to better serve our customers’ tech repair needs.”
Establishes Partnership With Phone Medic to Fuel Both Companies’ Growth
6. In early May 2018, uBreakiFix announced that it had partnered with Phone Medic, Kansas City’s largest and fastest-growing technology repair company. Under the partnership, Phone Medic will operate as a franchisee of uBreakiFix at all eight existing locations throughout Kansas City and the surrounding areas, as well as three new locations set to open over the coming months.
7. Stores in Blue Springs, Independence, Kansas City North Oak, Kansas City Zona Rosa, Lawrence, Lenexa, Olathe, and Overland Park will retain local ownership and management while operating under the uBreakiFix brand. Under the uBreakiFix brand, Phone Medic will also open three new brick-and-mortar locations in Raymore, Liberty, and Kansas City at 85th Ward Parkway.
8. The partnership will provide the stores access to uBreakiFix’s state-of-the-art infrastructure, parts inventory systems, staff training, and strategic partnerships with leading technology companies, including Samsung and Google. According to uBreakiFix, the brand’s customer-centric business model closely aligns with Phone Medic’s commitment to creating value for its growing customer base.
9. Justin Wetherhill, president and co-founder of uBreakiFix, added, “We were impressed with Phone Medic’s commitment to continual growth, innovation, and improvement and found that their team’s culture and core values aligned closely with our own. This partnership offers our team the opportunity to serve new communities across Kansas City and the surrounding areas, knowing the local store teams share our dedication to quality and exceptional service. We are excited for continued growth alongside this incredible partner.”
10. Phone Medic’s founders, Paul and Mike Kushnir, built a similar high-growth business, Wireless Lifestyle, which currently operates over 200 Sprint stores in the United States and Puerto Rico. Under the leadership of CEO Christine Ricci, Phone Medic is expected to respond nimbly to meet market demand and grow exponentially under the umbrella of uBreakiFix.
11. Ricci said, “uBreakiFix is one of the industry’s most trusted brands and strives to offer the highest quality service at an affordable price. Our top priority is keeping people connected. Partnering with uBreakiFix best positions us to support consumers and businesses with the very best, while fueling both organizations for tremendous future growth.”
Partners With Samsung to Offer Same-Day Repairs for Samsung Galaxy Phones
12. In early March 2018, Samsung announced its new partnership with uBreakiFix to offer same-day, in-person authorized service for Galaxy S9 and S9 Plus smartphones as well as older Galaxy devices including Galaxy S6, S7, S8 models, the Note8, and the Note5.
13. Samsung’s partnership with uBreakiFix is just the latest in a series of new services meant to improve overall user experience. Last year, the company introduced the Samsung Premium Care program, offering in-home support and repair options. Now, with the addition of uBreakiFix in-store repair options, users have even more flexibility when choosing a repair option.
14. Michael Lawder, senior vice president of customer care at Samsung Electronics America, said, “This announcement marks a fundamental shift in our care offerings to consumers and underscores our commitment to provide Samsung customers with support anywhere, anytime our customers need it.”
15. Service appointments can be made online, or customers can simply walk into any authorized uBreakiFix location. While in-warranty repairs will be covered for free, pricing for any out-of-warranty repair is readily available on the uBreakiFix website. uBreakiFix will offer front and back screen replacements, battery replacements, port and camera repairs, and other in- and out-of-warranty services for phones. All on-site repairs are done by Samsung-certified pros using genuine parts, and Samsung promises that most repairs will be done in two hours.
16. The idea for uBreakiFix emerged in early 2009 after co-founder Justin Wetherhill dropped his brand new iPhone 3G. Instead of taking the phone to get repaired, Wetherhill, who is an avid tech geek, ordered new parts and decided he would learn how to fix the phone himself. Although Wetherhill figured out how to partially repair his phone, he asked for help from his college buddy, David Reiff. It was at this time that the friends realized there was a real need for high-quality smartphone repairs.
17. To help further develop their repair skills, Wetherhill and Reiff bought a bunch of broken iPhones online and were eventually confident enough to start offering their services. They launched their new phone repair business out of Wetherhill’s bedroom in Orlando, Florida and started offering iPhone glass repairs at a flat rate of $79.99 through an eBay store.
18. Demand for Wetherhill and Reiff’s services grew and they teamed up with another friend, Eddie Trujillo, to open their first brick and mortar uBreakiFix store in Orlando during the summer of 2009. Within three years, uBreakiFix had grown to 47 stores and $27 million in revenue.
19. Wetherhill wanted to further expand the business but they were unable to secure a loan for $2 million because the company had been founded without any credit history – they built the business without any loans or investors. Wetherhill and his business partners decided to start franchising in 2012 to help uBreakiFix grow.
20. Today, uBreakiFix is one of the largest phone repair franchises in the U.S. with international locations in Canada and Trinidad and Tobago.
Entrepreneur’s Franchise 500
21. uBreakiFix ranked No. 18 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of uBreakiFix 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 uBreakiFix’s 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: 79
- Outlets at the End of the Year: 142
- Net Change: +63
- Outlets at the Start of the Year: 142
- Outlets at the End of the Year: 256
- Net Change: +114
- Outlets at the Start of the Year: 256
- Outlets at the End of the Year: 326
- Net Change: +70
- Outlets at the Start of the Year: 20
- Outlets at the End of the Year: 20
- Net Change: 0
- Outlets at the Start of the Year: 20
- Outlets at the End of the Year: 19
- Net Change: -1
- Outlets at the Start of the Year: 19
- Outlets at the End of the Year: 28
- Net Change: +9
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- As of December 31, 2017, there were 326 franchisee-operated uBreakiFix stores in operation. To ensure there were enough months of operation to properly rank the stores included, only stores which were 2 years or older by that date (i.e., a total of 138 stores) were considered in preparing this financial performance representation (“FPR”).
- In addition, not all stores submitted financial information for all of their months of operation to uBreakiFix. Of these 138 stores, 134 stores submitted information, with the average store submitting information for 77% of their first 36 months they were in operation (i.e., 4,233 months of information for all 134 stores). Four stores did not submit any data so they have been excluded.
- This FPR reflects the averages for each identified category of revenue and expense for the top and bottom quartile of these 134 reporting franchisee-operated stores during their respective first 3 years of operations, using the financial information they submitted for the four year period from January 1, 2014 through December 31, 2017 (the “Four Year Reporting Period”). Financial data used in preparing the FPR was limited to the Four Year Reporting Period.
- Total Revenue is the sum of all income received from the sale of repair services and the sale of accessories. This amount also includes any Sales Tax amount collected.
- Merchant Account Fees is the sum of processing charges and fees from credit card merchant processing services.
- Parts and Materials is the sum of all expenses associated with inventory, including the purchase of accessories, parts, and the cost of shipping inventory to the business. This value is the sum of all these costs less any credits given for merchandise returned for refurbishment, and damaged or defective merchandise returned for return merchandise authorization (“RMA”).
- Total Cost of Goods Sold is the sum of all Merchant Account Fees and Parts and Materials cost.
- Gross Profit is calculated as Total Revenue less the Total Cost of Goods Sold.
- Continuing Royalty is 7% of franchisee’s Gross Sales other than Recommerce Revenue during the accounting period. In some situations, uBreakiFix charges a National Account Administrative Fee for on-boarding and managing National Accounts.
- Miscellaneous Expenses are the sum of all general and administrative expenditures related to the day-to-day operations of a uBreakiFix Store not referenced in other expense categories, including: bank service charges, insurance expense, shipping cost, accounting/professional fees, security cost, and all other miscellaneous cost. This FPR does not reflect interest, income taxes, depreciation, or amortization.
- Occupancy Expense is the sum of all business occupancy cost including: rental space cost, common area maintenance (CAM), property taxes, real estate insurance, internet and telephone cost, general store supplies, electric, water, and gas utilities.
- Payroll Expenses is the sum of all business personnel cost, including: salaries and hourly pay for both full-time and part-time employees, employee and employer contributions for FICA taxes, federal unemployment taxes, state unemployment taxes, workers’ compensation insurance, group insurance (if any), and payroll processing fees. uBreakiFix Stores generally open with 2 to 4 employees.
- Promotions and Advertising is the sum of all advertising expenses, including: online advertising, social media costs, in-store artwork and brochures, giveaways, and job advertisements. Some uBreakiFix Stores were in close proximity to each other and may have combined advertising.
- Sales Tax is the sum of all state, city, and local tax collected and paid to the corresponding department.
- Technology and Customer Service Fee is 1% of franchisee’s Gross Sales during the accounting period to defray a portion of the costs and expenses incurred by the Company to support the Portal Store Operating System and the Customer Service Department.
- Total Expense is the sum of Continuing Royalty, Miscellaneous Expenses, Occupancy Expense, Payroll Expenses, Promotions and Advertising, Sales Tax, and Technology and Customer Service Fee Expense. The figures do not reflect the payment of the Advertising Fee or the Internet Referral Source Administrative Fee. (If, and when, the Advertising Fee and/or the Internet Referral Source Administrative Fee are established, you will have to pay those fees and they will therefore affect your Net Income.)
- Net Income is Total Gross Profit less Total Expense.
Part 1 – Statement of Average Revenues and Expenses for Top Revenue Quartile uBreakiFix Franchisee-Operated Stores (1st, 2nd, and 3rd Years of Operation)
Year 1 (17 Stores in Sample)