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 2019 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 2019 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 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Batteries Plus Bulbs’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average net revenue and merchandise margin for the 633 franchised Batteries Plus Bulbs Stores that were in operation for the entire 12-month period ended December 31, 2018
- 2018 average annual net revenue percentage increase for the 633 franchised Stores that were in operation for the entire 12-month period ended December 31, 2018
- 2018 average merchandise margin for retail and commercial customers for the 657 franchised Stores in operation as of December 31, 2018
- 2018 average retail and commercial revenue as a percentage of total revenue for the 657 franchised Stores in operation as of December 31, 2018
- average net revenue, average retail percentage and average commercial percentage of net revenue for the 633 franchised Stores that were in operation for at least 12 full months as of December 31, 2018 (Year 1 to Years 10+ franchised Stores)
- 2018 average net revenue, expenses, and EBITDA for the 29 company-owned Stores that were opened on or before December 31, 2009 and that remained in operation as of December 31, 2018; and the 53 company-owned Stores that were operating as of December 31, 2018
Section I – Background Information
22 Things You Need to Know About the Batteries Plus Bulbs Franchise
Appoints New Vice President of Franchise Development & Project Management and Chief Strategy Officer
1. In early April 2019, Batteries Plus Bulbs announced the appointment of Jon Sica as its new vice president of franchise development & project management and chief strategy officer. Sica will report directly to Batteries Plus Bulbs CEO Scott Williams.
2. In his new role, Sica will be responsible for franchise development and administration. Rod Tremelling, director of franchise development for Batteries Plus Bulbs, and Linda Grota, director of franchise administration, will report directly to Sica.
3. According to Williams, “We are thrilled to welcome Jon Sica into the Batteries Plus Bulbs family. With his extensive experience in strategy, operations and franchising, he is well-positioned to help lead Batteries Plus Bulbs as we aggressively pursue our expansion goals. We have major franchise development plans in store for 2019, and having Jon at the helm of franchise development will be fundamental to our success.”
4. Sica joins Batteries Plus Bulbs at a crucial time in the company’s history. With more than 725 stores across the U.S. (at the time of the press release), Batteries Plus Bulbs was set for major growth in 2019. The brand opened 34 new retail locations in 2018 and planned to open between 25 and 30 additional units in 2019.
5. In addition to its franchise expansion plans, Batteries Plus Bulbs is also focusing on developing its project management expertise and ensuring technology projects are aligned with the company’s strategy.
6. Sica most recently served as group director, business operations for Whataburger, an iconic Texas brand with deep roots as a franchisor. Sica was charged with the integration of strategy, people, process, and technology across restaurant and franchise operations, real estate, corporate services, CPG, and merchandising businesses. He led advancements across many areas, including franchise communications, to align corporate leaders and franchise owners around the implementation of key investments and improvements to business operations.
7. Before Whataburger, Sica worked for nine years at Cabela’s, a leading omni-channel retail brand, where he last served in the position of director of strategy and enterprise portfolio. At Cabela’s, he generated strong shareholder value through leading profitability improvement and increasing the performance of key strategic initiatives, like the opening of new commerce channels and improved digital experiences.
8. Sica said, “Batteries Plus Bulbs has been a retail leader for more than 30 years, and now is an exciting time for the brand. I look forward to working with Scott Williams, the executive team and our franchise system as we usher the brand into a new phase of growth.”
Launches New Smart Home Collection
9. Near the end of October 2019, Batteries Plus Bulbs launched Smart Home, a collection of those connected products, like lights, plugs, and cameras, controlled by an app on homeowners’ phones or other smart devices.
10. At the time of the initial launch, the Smart Home Collection was available online and at select stores. The line rolled out to all Batteries Plus Bulbs locations by the end of 2019.
11. Batteries Plus Bulbs’ new Smart Home collection, with over 30 products, has three major benefits:
- Safety: Security-minded homeowners can set up potential threat alerts, security cameras, door sensors, and video doorbells to keep their homes safe;
- Convenience: On-the-go users can be at ease knowing a forgotten garage door can be closed or an appliance can be shut off from miles away with the push of a button;
- Entertainment: With customizable light settings like color-changing lights, smart dimmers, switches, and more, users can also amp up their entertainment skills.
12. Scott Williams, CEO of Batteries Plus Bulbs, said, “The Smart Home collection can make life easier for our customers, whether they’re looking for more security or want to streamline their daily tasks. With Smart Home, we’ve formulated a total home solution, curated and inspired by specific requests from our customers.”
Products and Services Keep Hospitals, Retailers, and Consumers Powered Up During Covid-19 Pandemic
13. At the beginning of April 2020, in the midst of the Covid-19 pandemic, Batteries Plus Bulbs highlighted how the company has been helping to ensure that businesses can serve their customers and healthcare providers can care for patients. Ways that the company has been able to assist its commercial customers include:
- Equipping hospitals with hundreds of specialized batteries for the computer carts they rely on to update electronic medical records, portability that’s especially necessary in makeshift clinics;
- Providing national retailers with batteries for pallet jacks, battery-powered shopping carts, and floor scrubbers – equipment used around the clock to fulfill the recent surge of online orders, enable handicapped customers to shop in-store, and ensure facilities are clean.
14. In addition to continuing to provide its commercial customers with the batteries they rely on, Batteries Plus Bulbs is keeping all of its stores across 47 states open to provide consumers with access to the batteries and device repair services they need. For example:
- Keeping up with increased demand for coin cell batteries for personal medical devices like thermometers and glucose meters;
- Supplying consumers with laptop chargers and cables – the demand for which has increased by double digits in recent weeks – as more people begin working from home;
- Repairing old laptops and tablets and replacing batteries in devices that kids need for learning and entertainment.
15. According to Scott Williams, CEO of Batteries Plus Bulbs, “Our customers have gone out of their way to thank us for remaining open to address their specific needs, whether that’s providing reliable batteries for first responders’ vehicles or helping thousands of remote employees stay connected. We’re taking every step possible to make sure that all of our customers, from hospitals and warehouses to delivery drivers and newly ordained homeschoolers, are able to get the batteries and services they need in a safe and timely manner.”
16. To help customers and staff practice social distancing, Batteries Plus Bulbs stores are offering curbside pickup. Customers can call their local store to place an order, drive to Batteries Plus Bulbs, and staff will deliver the orders to their cars.
17. Additionally, Batteries Plus Bulbs locations are adhering to recommendations from the Center for Disease Control (CDC) and World Health Organization (WHO) to increase cleaning and disinfecting efforts to ensure the safety of customers who prefer to shop in-store.
18. Batteries Plus Bulbs was founded in 1988 by Ron Rezetko in Green Bay, Wisconsin. Initially, the company was just called Batteries Plus and it was one of the first stores to respond to the evolving needs of the battery market. More specifically, Rezetko realized that there was a need for replacement batteries for personal technology devices, which were becoming more common.
19. After a few years of success, Batteries Plus began franchising in 1992. The first franchised store opened in Fort Wayne, Indiana. The increasing demand for specialty and replacement batteries fueled Batteries Plus’ growth over the next few decades. In 2007, Batteries Plus was acquired by Roark Capital Group.
20. In 2012, the company began the process of changing its name to Batteries Plus Bulbs, to reflect the addition of a selection of light bulbs to its inventory of product. Two years later, Batteries Plus Bulbs rolled out a nationwide cell phone and tablet repair service.
21. After over a decade of running the company, Roark Capital Group sold Batteries Plus Bulbs in 2016 to Freeman Spogli & Co., a Los Angeles based private equity firm. Today, there are Batteries Plus Bulbs locations all across the United States.
Entrepreneur’s Franchise 500
22. Batteries Plus Bulbs ranked No. 188 on Entrepreneur’s 2020 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 2019 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 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- 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: 663
- Outlets at the End of the Year: 662
- Net Change: -1
- 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
- Outlets at the Start of the Year: 57
- Outlets at the End of the Year: 78
- Net Change: +21
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- Under Part 1, the franchisor has provided an unaudited statement of average net revenue, merchandise margin, and percentage of net revenue in total and by customer type based on franchised Stores operating as of December 31, 2018.
- 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, and Percentage of Net Revenue by Customer Type of Franchised Stores
- Except for where specifically noted in Part 1D, the following statements are based on information reported by all franchised Stores in operation as of December 31, 2018.
- There were 662 total Stores open as of December 31, 2018. Of these Stores, 3 Stores were closed for relocations in 2017 and remained closed for all or part of 2018, and 2 are small market test stores that the franchisor currently does not offer under the current Disclosure Document.
- The remaining 657 Stores are referred to as “All Stores”. Of All Stores, there were 633 Stores that were in operation for the entire 12-month period ended December 31, 2018 (referred to as “Same Stores”), and 24 Stores opened during 2018.
- 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, 2018.
- 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.
2018 Same Store Net Revenue and Margin Performance