FDD Talk 2020: Annex Brands (PostalAnnex+, Pak Mail, AIM Mail, Etc.) 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 Annex Brands franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an Annex Brands franchise, based on Item 7 of the company’s 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Annex Brands franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned Annex Brands outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Annex Brands’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• fiscal year 2019 average, median, highest, and lowest gross sales for the upper 50%, lower 50%, and all 262 franchised PostalAnnex/PostalAnnex+ centers that had been in operation for 12 months or more as of September 30, 2019

• fiscal year 2019 average, median, highest, and lowest gross sales for the upper 50%, lower 50%, and all 525 franchised Annex Brands centers (PostalAnnex/PostalAnnex+, Pak Mail, AIM Mail, Parcel Plus, Handle With Care Packaging Store, and Sunshine Pack & Ship) that had been in operation for 12 months or more as of September 30, 2019 and that had represented the principal operating activity at their business locations

• fiscal year 2019 gross sales for the 1 company-owned Annex Brands center (Pak Mail) that had been in operation for 12 months or more as of September 30, 2019

Section I – Background Information

9 Things You Need to Know About the Annex Brands Franchise

Releases Statement Regarding COVID-19

1.  Not long after much of the world went into lockdown in March of this year because of the ongoing COVID-19 pandemic, Annex Brands released a statement on its website. Annex Brands started off by saying that the brand’s highest priority is the safety of its employees, customers, and the communities it serves. Because Annex Brands provides services that are critical to its customers, Annex Brands has been designated as an “essential business” that is to stay open during stay-at-home or shelter-in-place orders.

2.  Annex Brands has closely monitored the federal, state, and local regulations regarding the coronavirus. Annex Brands has used the recommendations and guidelines from the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) to educate its staff and customers on the best ways to stay safe and healthy.

3.  Annex Brands then addressed the following FAQs regarding COVID-19:

• Regarding normal business hours, Annex Brands said that some locations have modified store hours to advocate for the safety of employees and customers. Annex Brands said customers should use its location finder to find the most current hours of their local shipping center.

• Annex Brands addressed the safety of handling packages at this time by citing the WHO, which stated that the “likelihood of an infected person contaminating personal goods is low and the risk of catching the virus that causes COVID-19 from a package that has been moved, traveled, and exposed to different conditions and temperature is also low.” Annex Brands advised customers to thoroughly wash their hands for at least 20 seconds after handling any mail or packages.

• Next Annex Brands offered tips on avoiding unnecessary contact with its clerks by paying with a debit or credit card if possible. After using the keypad, customers should not touch their face and wash their hands as soon as possible. To avoid handing over cash or credit/debit card, customers can use a digital wallet app on their phone like Apple Pay, Samsung Pay, or Google Pay, when possible.

• Annex Brands assured customers that at this time they do not need to sign for packages from FedEx, UPS, and USPS, but still may need to make contact with delivery drivers. Annex Brands then assured customers that FedEx, UPS, and the USPS are all following the guidelines set forth by the WHO and CDC to ensure they are taking every measure against the spread of COVID-19.

• Annex Brands said that freight carriers are still making deliveries and have also adjusted signature requirements.

Reasons to Own a PostalAnnex Franchise

4.  Although Annex Brands has several mail and shipping brands under its umbrella, PostalAnnex was its first and still is its largest brand today. According to PostalAnnex, the following reasons are why someone should invest in a PostalAnnex franchise:

• Big Enough to Know, Small Enough to Care™ – With over 30 years in business and nearly 300 locations nationwide, PostalAnnex knows the business services industry. Yet, it’s the right size to still offer personal attention and care to all. With former franchisees among the staff at the Home Office, PostalAnnex “walked the talk,” knowing what can be achieved within the system.

• Normal Business Hours – No late nights, no long weekends, just normal business hours.

• Manageable-Sized Staff – From 2-12 employees, depending on sales.

• Lower Initial Investment – Because PostalAnnex is primarily a service-based business, the initial investment is lower than many other concepts.

• A Tested System – From the beginning, franchisees are coached through the onboarding process: site selection, lease negotiation, financing guidance, training, buildout…all the way to opening day.

• Award-Winning Marketing Materials – From Emmys for the brand’s television commercials to Silver Microphone awards for its radio spots, PostalAnnex has a team of expert marketing professionals providing customized support to help franchisees grow their business.

Company History

5.  Annex Brands started out in 1985 as PostalAnnex+, which was founded by Jack Lentz near San Diego, California. At the time, Lentz felt that there was no other mail and parcel center offering a complete line of small office and home-based office services under one roof. Lentz’s concept was a success from the beginning and he opened three PostalAnnex+ locations within the company’s first year.

6.  Just a year later, in 1986, Lentz started franchising PostalAnnex+ and the first franchised store opened in the Rancho Penasquitos community of San Diego, California. Over the next few decades, PostalAnnex+ continued to grow around the U.S.

7.  In 2006, PostalAnnex+ decided that the best way to expand further would be through acquisition. Later that year, PostalAnnex+ acquired Florida-based Sunshine Pack & Ship retail and commercial shipping centers. The following year, PostalAnnex+ bought the Handle With Care Packaging Store brand. As a result of the growing number of brands beyond the flagship brand PostalAnnex+, the company renamed itself Annex Brands, Inc. in late 2007.

8.  Since then, Annex Brands has acquired several more brands, including Navis Pack & Ship, AIM Mail Center, and Parcel Plus. In 2012, Annex Brands established the Annex Copy Center brand as a full-service copy and print center. Today, there are Annex Brands locations all across the United States.

Entrepreneur’s Franchise 500

9.  Annex Brands ranked No. 216 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Annex Brands franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Annex Brands’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  265
• Outlets at the End of the Year:  272
• Net Change:  +7

2018

• Outlets at the Start of the Year:  272
• Outlets at the End of the Year:  276
• Net Change:  +4

2019

• Outlets at the Start of the Year:  276
• Outlets at the End of the Year:  279
• Net Change:  +3

Company-Owned

2017

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

2018

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

2019

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

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

• “Gross Sales” include all revenue for products and services sold to customers, including products and services with higher margins such as shipping services (including ground, next day, freight, and custom packaging), faxes, copies and metered postage, and products and services with lower margins such as postage stamps, but exclude:

• (i) sales, use, or service taxes collected and paid to appropriate taxing authorities;
• (ii) customer refunds and adjustments;
• (iii) the cost of electronic funds transfers for resale;
• (iv) the cost of money orders for resale;
• (v) utility funds collected;
• (vi) the cost of lottery tickets for resale and phone cards for resale;
• (vii) the cost of 3rd party truck rental sales;
• (viii) the cost of eBay sales;
• (ix) the cost of metered postage and postage stamps for resale; and
• (x) the cost of ancillary fees paid to the appropriate government agencies to process fingerprinting, LiveScan, and passports.

• Annex Brands franchisees pay royalty fees and marketing fees based on Gross Receipts (defined in Item 6), which are calculated by excluding the cost of metered postage and postage stamps from Gross Sales.

• Both Gross Sales and Gross Receipts include fees and commissions generated from electronic funds transfers, money order sales, utility collections, lottery ticket sales, phone card sales, 3rd party truck rental sales, fingerprinting, LiveScan, passport services, and eBay sales.

• Annex Brands reserves the right periodically, in its sole discretion, to add additional exclusions to the list above as new programs, products, or services are established, or as changes to existing programs, products, or services are established, as specified in the Manuals or otherwise in writing.

• The mix of postal, printing and copying, packaging and shipping, and business support services offered to the public by each individual center varies at the discretion of each franchisee.

• The Gross Sales attainable by a franchisee are largely dependent on the type and quality of service offered to the public, and individual sales and marketing efforts.

• An “average” is calculated by adding the numerical values of all data points in a set, and dividing by the number of data points in the set.

• A “median” is the numerical value of the data point in the middle of all data points in a set. If a set contains an even number of data points, the median is calculated by identifying the 2 data points in the middle of the set, adding their numerical values, and dividing by 2.

Part 1 – Annual Gross Sales for the Fiscal Year Ended September 30, 2019 of PostalAnnex/PostalAnnex+ in Operation 12 Months or More as of September 30, 2019

• As of September 30, 2019, there were 279 PostalAnnex/PostalAnnex+ centers in operation, for a total of 279 PostalAnnex/PostalAnnex+ franchised centers.

• The averages, ranges, and medians below are based on the actual Gross Sales, for the fiscal year ended September 30, 2019, of the 262 franchised centers that had been in operation for 12 months or more as of September 30, 2019 (11 franchised centers were excluded for this reason), and that had represented the principal operating activity at their business locations (6 express centers were excluded for this reason).

All Franchised