In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Dogtopia franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Dogtopia 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 Dogtopia franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Dogtopia 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 Dogtopia’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 and 2016 average, median, high, and low gross sales for all franchised Dogtopia outlets that were open and operating for the entire applicable period of operation (open 1 year or more, open 8 years or more, open 4 to 7 years, open 3 to 4 years, and open 2 to 3 years, respectively)
- 2017 average total sales, cost of goods sold, payroll expenses, operating expenses, property expenses, administrative expenses, insurance, royalty fees, marketing fund fees, rent, merchant fees, licenses and fees, sales taxes, and EBITDA for the 4 corporate-owned Dogtopia outlets that were open and operating for the entire 2017 year
Section I – Background Information
15 Things You Need to Know About the Dogtopia Franchise
Experiences Record Year of Growth
1. Dogtopia started 2019 on a high note after experiencing a year of accelerated growth and success. Over the course of 2018, the brand sold 100 units, successfully opened 25 Dogtopia locations, and now has over 200 units under development. The Phoenix-based brand has shown impeccable growth not only in store counts, but through charitable initiatives with the Dogtopia Foundation, raising more than $150,000 to sponsor training for service dogs for veterans.
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2. For 2019, Dogtopia plans to open at least 50 stores. The company stated in a press release that it had already sold over 30 new stores by the second week of January. Alex Samios, vice president of franchise development for Dogtopia, said, “Dogtopia is outpacing every pet franchise in North America and we were delighted about delivering another record year. Our unparalleled service, support and systems, combined with exceptional franchisees, has positioned us as the leading pet services brand.”
3. The past year brought many accomplishments for the Dogtopia brand, including its debut into nine new states. The company continues to seek franchise candidates looking to tap into the booming success of the pet industry and foster positive relationships of trust with pet parents in their local communities.
4. Additionally, Dogtopia was able to give back to the community in 2018 through the Dogtopia Foundation and the brand’s company-wide initiative seeking to enable dogs to positively change our world. Dogtopia raised funds to train 15 service dogs for veterans, as well as participated in programs focused on youth literacy and employment initiatives for adults with autism.
Aggressive Growth Plans for Seattle
5. At the end of May 2018, Dogtopia announced that it had signed two multi-unit franchise agreements to open 14 locations in Seattle, bringing more than 300 jobs to the area. These new centers are part of Dogtopia’s robust growth plans to reach more than 400 units by 2021. In the announcement, Dogtopia said the first Seattle location was expected to open down the street from the Microsoft campus by the end of 2018.
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6. Setting out to transform Seattle’s pet segment by offering a sophisticated experience focused on trust, safety, and transparency, a 12-unit deal was signed by entrepreneur and international investment banker Yarden Silber. With a background in global business development, Silber has built his portfolio to include prominent positions in hi-tech start-up companies.
7. As a graduate of Harvard University, Tel-Aviv University, and the first Israeli to graduate with an Executive MBA from China Europe International Business School in Shanghai, Silber joins Dogtopia with a proven track record of growing businesses, and plans to further develop Dogtopia’s presence throughout the region.
8. Silber said, “Seattle’s dog-loving community paired with its engaged pet parents make this market an ideal expansion hub for Dogtopia. The brand has cemented itself as the leading dog daycare choice, and I look forward to providing local pet parents with peace of mind knowing our teams will take every measure possible to guarantee their dog’s comfort and safety, while meeting all of their needs.”
9. In addition, Dogtopia signed another franchise agreement for two units with Michel and Allison Rau, long-time customers of Dogtopia in Virginia, who recently relocated back to Seattle.
10. Alex Samios, vice president of franchise development for Dogtopia, said, “We expect the 12-unit deal to act as a catalyst for larger multi-unit franchise deals across the US and Canada, inspiring savvy entrepreneurs and experienced franchisees to join the nation’s leading dog care brand. With our proven business model and extensive franchise experience, we have been able to build an exceptional support team that provides our franchisees the training and systems to deliver high operational standards that cultivates our brand loyalty and growth strategy.”
11. Dogtopia was founded in 2002 by Amy Nichols and her husband Mike in Virginia. Nichols was inspired to begin offering high-quality dog care services after her beloved dog Griffin passed away – Griffin was 15 years old.
12. As one of the first doggie day care concepts in the U.S., Nichols initially had a hard time securing a loan. It took Nichols 13 tries before a bank finally agreed to lend her the money, and after struggling for a bit to find a commercial space that would allow her to have a bunch of dogs running around, Nichols opened the first Dogtopia location.
13. Dogtopia was a hit from the start and by the end of the first year, the company earned $750,000. By the end of the second full year, the company earned over $1 million. Nichols began franchising the Dogtopia concept in 2005 and the franchise opened more locations across the U.S.
14. In 2015, Dogtopia was acquired by Thomas Franchise Solutions. Neil Gill was appointed as the new CEO and president, and Dogtopia relocated to Phoenix, Arizona in order to fuel the company’s growth. Also around this time, Dogtopia started rebranding in an effort to help the company expand. Today, there are Dogtopia locations across the U.S. and Canada.
Entrepreneur’s Franchise 500
15. Dogtopia ranked No. 204 on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Dogtopia 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 Dogtopia’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: 24
- Outlets at the End of the Year: 31
- Net Change: +7
- Outlets at the Start of the Year: 31
- Outlets at the End of the Year: 36
- Net Change: +5
- Outlets at the Start of the Year: 36
- Outlets at the End of the Year: 50
- Net Change: +14
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 4
- Net Change: -1
- Outlets at the Start of the Year: 4
- Outlets at the End of the Year: 4
- Net Change: 0
- Outlets at the Start of the Year: 4
- Outlets at the End of the Year: 5
- Net Change: +1
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- The following financial performance representation includes the following data: (i) Gross Sales data for the years 2016 and 2017 for both corporate and franchised outlets; (ii) EBITDA data for the corporate outlets for the year 2017.
- The financial performance figures are based on the historical results from the Dogtopia businesses described below.
Part 1 – Gross Sales – Franchised Outlets
- The following table represents the Gross Sales data for all “qualifying” franchised outlets. A “qualifying” franchised outlet is any franchised Dogtopia store that was open and operating for the entire applicable “period of operation.”
- The “period of operation” refers to the total period of time that the franchised outlet was open and operational prior to the end of the applicable measuring year. For example, the period of operations for 13-24 months for 2017 means that the franchised outlet was open for the entire 2017 calendar year and all or a portion of the 2016 calendar year.
- Dogtopia had a total of 50 franchised outlets as of December 31, 2017. Of this amount, the data for 32 franchised outlets was included since only 32 of these franchised outlets were open for all of 2017.
- Dogtopia had a total of 36 franchised outlets as of December 31, 2016. Of this amount, the data for 30 franchised outlets was included since only 30 of these franchised outlets were open for all of 2016.
- In making this financial performance representation, Dogtopia has relied upon information reports of Gross Sales submitted by franchisees. Neither Dogtopia nor any independent certified public accountant has independently audited or verified the information.
- For purposes of this financial performance representation, Gross Sales means the total of all revenue derived from operating the location, whether from sales for cash or credit, and irrespective of collection, including sales of merchandise, products, and services, but excluding sales tax, proceeds from the sale of equipment not in the ordinary course of business, and franchisor pre-approved promotional discounts (provided physical evidence of the promotion/coupon is retained).