FDD Talk 2021: Wild Birds Unlimited 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 Wild Birds Unlimited franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Wild Birds Unlimited franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Wild Birds Unlimited franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Wild Birds Unlimited outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Wild Birds Unlimited’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• fiscal years 2018, 2019, and 2020 average gross sales for those Wild Birds Unlimited franchises open and operational for at least 24 consecutive months as of December 31, 2018, December 31, 2019, and December 31, 2020, respectively

• actual number of stores, which were open and operational for at least 24 months as of the end of the applicable fiscal year, that achieved certain gross sales levels for fiscal years 2018, 2019, and 2020

• summary of gross sales for the first full 12 months of operation for stores that opened between January 1, 2015 and December 31, 2019 and that had completed at least 12 full months of operation as of December 31, 2020

• summary of gross sales for the second full 12 months of operation for stores that opened between January 1, 2015 and December 31, 2018 and that had completed at least their second 12 full months of operation as of December 31, 2020

• average monthly sales volume percentage that contributed to the 2020 gross sales for those Wild Birds Unlimited franchises open and operational for all of 2020 and opened prior to January 1, 2020

• average cost of goods sold for products offered by the stores open for at least 24 months as of the end of each fiscal year 2017, 2018, and 2019, as well as the average of advertising and wage expenses incurred by first year stores that completed their first full year of operation in 2015, 2016, 2017, 2018, or 2019

• fiscal years 2017, 2018, and 2019 average owner’s discretionary cash flow achieved by stores as reported by franchisees that were operating the previous full 24 months

Section I – Background Information

22 Things You Need to Know About the Wild Birds Unlimited Franchise

Thrives During COVID-19 Pandemic

1.  2020 was a challenging year for businesses in virtually every industry. But there were some brands that managed to adapt to those challenges in a way that allowed their businesses to not only survive but thrive in a quickly changing landscape. Backyard bird feeding franchise Wild Birds Unlimited was one of those brands, opening new stores in new markets and recording increased sales across its system.

2.  Wild Birds Unlimited started off 2020 with more than 300 locations across North America, but the ever-growing franchise brand didn’t pump the brakes when the COVID-19 crisis all but shut down large swaths of the economy. Instead, the brand’s corporate team instituted a number of savvy pivots to ensure that Wild Birds Unlimited remained a lucrative opportunity for existing and aspiring franchisees.

3.  Among those pivots was a shift to online ordering and curbside delivery, which Paul Pickett, Wild Birds Unlimited’s chief development officer, said allowed the brand to take advantage of a marked increase in bird watching in 2020. “Right away when the pandemic hit, we saw a huge surge in interest,” Pickett said. “People are spending more time at home than ever before, and they want a safe and socially distanced way to enjoy nature.”

4.  In the first half of 2020, Wild Birds Unlimited saw an average 8% jump in same-store sales across its system, and that’s with the majority of the brand’s in-store showrooms closed to the public. Those gains did not slow down as the pandemic stretched through the summer. As the year progressed, Wild Birds Unlimited owners saw double-digit sales increases as customers continued to look for opportunities to make the most of their backyards and outdoor spaces, ending the year with a system-wide same-store sales increase of over 20%.

5.  “There’s been a real shift in perspective from our customers,” said Manuel Pena, who owns a Wild Birds Unlimited store with his wife Anna in Dripping Springs, Texas. “While they’ve been stuck at home, they’ve really gotten into backyard bird feeding. They’re looking at it as a type of escape mechanism. Being at home has been really difficult for some people, but the response that we’ve received from customers is that they have a new appreciation for the joy this hobby brings.”

6.  As Wild Birds franchisees continued to find success throughout 2020, the brand continued to expand, onboarding eight brand new franchise partners, transferring 14 existing stores to new owners, and opening seven new stores in markets across North America. Multi-unit Wild Birds owners Phillip and Shelly Edge opened their third store in 2020, and Phillip said the pandemic ultimately proved only a minor setback for their grand opening in the summer.

7.  When the pandemic hit, Phillip said he and Shelly “had basically just signed on the dotted line for the real estate. It was scary at first, but the biggest issue was getting the permits because everything was on lockdown. Although we weren’t able to start with construction until mid-May, we were able to open only a little behind schedule on June 10.”

8.  Much of Wild Birds Unlimited’s success in 2020 can be attributed to its continued prioritization of franchisee support. In the spring, the brand’s corporate team rolled out a suite of resources for franchisees to leverage as they navigated the early stages of the COVID-19 crisis.

9.  “My store was one of the few stores in the Wild Birds Unlimited system that was forced to do a 100% workforce stoppage due to mandated closures here in New Jersey,” said Scott Gunther, a 14-year Wild Birds owner in Paramus. “I ended up being the only person working the store, and I was only able to package online shipping. Since I couldn’t do it all by myself, the leadership team reached out to my suppliers and had them help me fulfill those orders.”

10.  Wild Birds’ corporate team also helped Gunther and other franchisees secure Paycheck Protection Program loans and other valuable but potentially confusing resources offered to small business owners as part of the spring’s federal stimulus package. “I don’t know how some small businesses that are on their own are ever going to come back from this,” Gunther said. “I would not have survived this shutdown without the support of the home office. Just being able to call the leadership team at all hours of the day and night has been hugely beneficial, not just for my store but also for moral support.”

11.  As a difficult year came to a close, Wild Birds Unlimited prepared to build on its momentum in 2020 for an even stronger 2021. Pickett said, “We recognize that we’re one of the few businesses fortunate to see success in such a challenging year, and we’re not taking that for granted. We’re going to remain focused on supporting our franchisees and making it easier for our customers to connect with nature. We see a lot of opportunity for growth in 2021, and we’re excited to make the most of it.”

Taps 919 Marketing to Lead Franchise Development Efforts

12.  In mid-March 2021, Wild Birds Unlimited entered into a new partnership with 919 Marketing, an award-winning national franchise marketing and public relations agency, to lead its franchise development marketing efforts. Wild Birds Unlimited selected 919 Marketing to build on its recent success and to continue to attract qualified franchisees excited about an opportunity to join the growing brand.

13. Paul Pickett, Wild Bird Unlimited’s chief development officer, said, “We believe there’s a real opportunity to capitalize on the success we’ve had in the past year. We’re thrilled to join with 919 Marketing to not only accelerate that expansion but to ensure we find and attract the best prospects. The combination of their franchise marketing and PR expertise along with their data analytics platform is sure to help us continue expanding our footprint into new territories.”

14.  Founded in 1981 and franchising since 1983, Wild Birds Unlimited has maintained steady development, now with roughly 350 locations across the country. After continuing that growth in both units and sales through the challenges of 2020, thanks to several new franchisee support efforts, WBU has set new goals for 2021, including an added presence in targeted markets across the nation.

15.  “Wild Birds Unlimited has a great story, and we’re excited to have the opportunity to tell it to the world,” said David Chapman, founder and CEO of 919 Marketing. “From the 919 Insights platform to our team of experts in marketing and digital PR, we believe we have the tools to help WBU reach their franchising goals in 2021 and beyond.”

Poised to Thrive in Future of Retail Business

16.  At the end of March 2021, Wild Birds Unlimited announced that it was set to enter the post-pandemic future of business on a steady incline. In addition to its growth through the challenges and successes of the past year, Wild Birds Unlimited has already begun implementing strategies for further progress when the “return to normalcy” occurs.

17.  Paul Pickett, Wild Birds Unlimited’s chief development officer, said, “Every business attacks the moment while keeping the future in mind. That is what so many businesses have had to do recently, as we navigate lingering uncertainties but prepare for the economic environment that’s to come. We’re proud of our brand and our franchisees for their efforts and accomplishments in the past year, and we are eager to capitalize on what we believe is a thorough plan for success in the near future.”

18.  Wild Birds Unlimited not only supported the increased demand for hobbyists but rolled out innovative product offerings and community engagement efforts, all of which it intends to build upon in the coming year. “The key going forward is to get more depth in our efforts to meet customer desires,” said Pickett. “We want to not only get more engagement with the customers on the franchisee level but to also bring that up to the franchisor level as well. We believe in the value our stores provide to their communities and we are focusing on making that consumer joy even more present and available.”

19.  That means continuing some of the efforts the pandemic thrust into the norm, such as curbside pickup and more convenient operating hours. It also means building upon several valuable consumer engagement efforts such as a successful podcast launch and other experiential opportunities. As consumers become more comfortable with personal interaction, Wild Birds Unlimited will continue its growth through a new program called FeederScaping, in which local franchisees visit a customer’s home and offer a consultation of which birds their yard could attract and where a bird feeding station and/or birdbath might yield the best results.

Company History

20.  Wild Birds Unlimited was founded in 1981 by Jim Carpenter in Indianapolis, Indiana. Carpenter had always enjoyed feeding birds and wanted to spread this joy to other people in his community. With Wild Birds Unlimited, Carpenter wanted to source the best bird feeding products he could find, while providing high quality customer service. Two years after opening his first store, Carpenter began franchising the concept.

21.  Although Wild Birds Unlimited was a success from the start, it took Carpenter about ten years to really take the business seriously and find the right people to help him push the company’s growth even further. In the mid-1990s, after Carpenter hired a strategic advisory group, the growth of Wild Birds Unlimited picked up significantly. Today, there are Wild Birds Unlimited locations all across the United States and Canada.

Entrepreneur’s Franchise 500

22.  Wild Birds Unlimited ranked No. 186 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Wild Birds Unlimited franchise costs, based on Item 7 of the company’s 2021 FDD.

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

• Please click here for detailed information on Wild Birds Unlimited’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  327
• Outlets at the End of the Year:  338
• Net Change:  +11

2019

• Outlets at the Start of the Year:  338
• Outlets at the End of the Year:  343
• Net Change:  +5

2020

• Outlets at the Start of the Year:  343
• Outlets at the End of the Year:  348
• Net Change:  +5

Company-Owned

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

2020

• 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, 2021 FDD) and Analysis

• The franchisor compiled the data in this financial performance representation from its U.S. franchisees’ monthly sales reports and annual financial statements submitted to the company (the “P&L Statements”). This information is not audited, and neither Wild Birds Unlimited nor its independent certified public accountants have verified the accuracy of the information or the methods used by its franchisees in their computation.

• The financial performance information provided for each 12-month period excludes all stores that were not operational during the entire 12-month period.

• The stores included in this financial performance representation range in age from 1 to over 35 years of operation and represent a variety of geographic and demographic circumstances. These variations in circumstances include: (a) the total population of the city in which the store is located ranges from over 700,000 to less than 1,000; (b) a number of the cities in which the stores are located are suburbs of larger metropolitan areas; and (c) some stores located in areas with small populations are in areas with a substantial amount of “tourist” traffic.

• All of the data is with respect to franchised stores, although two of the franchisor’s officers own and operate a Wild Birds Unlimited store under a franchise agreement with Wild Birds Unlimited.

• The stores listed in this financial performance representation are generally located in neighborhood or regional strip shopping centers or freestanding buildings. Several of the stores operate temporary seasonal kiosks; these sales are included in this Item 19 data.

• Gross Sales is the sales price of all merchandise and services sold, including cash and charge sales of every kind made at the store, and mail, internet, or telephone orders received or taken at the store.

Schedule 1 – Year-Over-Year Percent Change in Annual Gross Sales

2018