FDD Talk: Wine & Design Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

Section I – Background information on the Wine & Design franchise opportunity, including relevant news updates

Section II – Estimated initial investment for a Wine & Design 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 Wine & Design franchise, based on Items 5 and 6 of the company’s 2018 FDD

Section IV – Number of franchised and company-owned Wine & Design 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 Wine & Design’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

2017 average, median, highest, and lowest gross sales for the franchised Wine & Design studios that have been open for at least 6 months at the time the franchisor captured the Gross Sales information, divided into 3 groups (studios that have been open for less than 12 months, greater than 12 months but less than 24 months, and more than 24 months)

projected labor cost and cost of goods sold for a 2-hour painting class, with 15, 35, and 50 painter customers per class

Section I – Background Information

11 Things You Need to Know About the Wine & Design Franchise

Appearance on ABC’s Shark Tank

1. In May 2017, Wine & Design founder Harriet Mills and her husband Patrick appeared on ABC’s entrepreneurial pitch contest Shark Tank. To help their business pitch stand out, the Mills brought along a nude model who completely disrobed before the Shark Tank judges. The Mills’ bold move worked and investor Kevin O’Leary extended an offer to the Mills. The terms of the exact deal with O’Leary are confidential, but Mills said the deal they agreed to on air was not the final deal.

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2. Mills added, “I’m happy that Kevin is part of the team and he brings lots of good partnerships to Wine & Design. I think (the deal) has great potential for expansion and for us being more all over the nation. We’ve already gotten almost 400 leads from Friday night. And hopefully it’ll bring awareness to existing franchisees.”

3. Mills also hopes that Wine & Design’s appearance on the show will bring more attention to the company’s fundraising for ALS research in honor of her friend Chris Combs, a former N.C. State University baseball standout. Additionally, Mills said that her Shark Tank experience was positive and that she’s excited to see what happens next for Wine & Design.

Raises Money for Finding a Cure for ALS

4. In early May 2017, Wine & Design announced its month-long partnership with Team Chris Combs, an ALS community, and Project ALS, a non-profit organization with the mission to identify and support leading scientific research toward treatments and a cure for ALS. Wine & Design encouraged fans, family, and friends to sign up, sip up, and paint up for a cause in May, ALS Awareness Month.

5. Harriet Mills, founder and CEO of Wine & Design, was faced with the news in late 2016 that a close friend, Chris Combs, was diagnosed with ALS. Discovering the devastating effects of the disease, she has been inspired to not only help her friend, but also help people battling ALS like Combs.

6. Mills said, “Knowing that there is a critical need for more treatment options for people battling ALS like Chris, it only seemed fit to team up to paint for a cure. By joining Team Chris Combs and Project ALS, we hope to meet our $50,000 donation goal and secure a long standing relationship with the organization, so that we can continue to support the cause.”

7. Throughout the month, all Wine & Design locations across the country were accepting donations and also held a special event on May 18. The May 18 event was a nationwide fundraising day with fun activities, music, food, drinks, and a public painting class featuring fan-favorite artwork. One hundred percent of the donations collected during the month, in addition to the proceeds from the one-day event, were donated directly to Project ALS.

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8. With the money raised, Project ALS will help fund a critical aspect of screening of FDA-approved drugs for illnesses like cancer and diabetes that will help potential efficacy in ALS.

Company History

9. Wine & Design was founded in 2010 by Harriet Mills in Raleigh, North Carolina. Mills had first attended a class at a paint and sip studio during a weekend beach trip with her girlfriends. The group ended up having so much fun during the class that Mills was inspired to start her own paint and sip studio. The timing was also right for Mills to launch her own business as she had just been laid off from her job as a sales representative for Vietri. Mills had also previously worked in finance and special events.

10. Mills came up with the Wine & Design concept and operated a single studio in Raleigh for two years before she decided to start franchising the concept. Today, there are over 70 Wine & Design studios across the country.

Entrepreneur’s Franchise 500

11. Wine & Design ranked No. 471 on Entrepreneur’s 2019 Franchise 500 list.

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Section II – Estimated Costs

Please click here for detailed estimates of Wine & Design 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 Wine & Design’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

Franchised

2015

Outlets at the Start of the Year: 45
Outlets at the End of the Year: 60
Net Change: +15

2016

Outlets at the Start of the Year: 60
Outlets at the End of the Year: 70
Net Change: +10

2017

Outlets at the Start of the Year: 70
Outlets at the End of the Year: 73
Net Change: +3

Company-Owned

2015

Outlets at the Start of the Year: 1
Outlets at the End of the Year: 1
Net Change: 0

2016

Outlets at the Start of the Year: 1
Outlets at the End of the Year: 1
Net Change: 0

2017

Outlets at the Start of the Year: 1
Outlets at the End of the Year: 1
Net Change: 0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

Part 1 – Statement of Gross Sales for Studios Open Less Than 12 Months, Studios Open More Than 12 Months But Less Than 24 Months, and Studios Open More Than 24 Months

The tables below summarize the Gross Sales of 65 Wine & Design franchised locations. Wine & Design has not included 4 franchisee-owned Studios, because they have not been open for at least 6 months at the time that it captured the Gross Sales information.

The tables below reflect Gross Sales reported for the year ending December 31, 2017. The tables are divided into Gross Sales generated at Studios that have been open for less than 12 months, greater than 12 months but less than 24 months, and more than 24 months.

The Gross Sales are measured on a per-year basis. Gross Sales include all revenue related to a Wine & Design Studio upon which royalties are paid, which would exclude sales taxes collected on each Studio sale. Gross Sales do not include costs and expenses you will incur in operating your Wine & Design Studio.

The average sales shown on each of the tables have been calculated by taking the total Gross Sales of all Studios shown on the individual table divided by the number of Studios in each table. The median Gross Sales number means that half of the Studios listed in the chart achieved more than the median amount while the other half achieved less than the median amount.

Franchised Wine & Design Studios Open Less Than 12 Months

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