FDD Talk 2021: GarageExperts 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 GarageExperts franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a GarageExperts 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 GarageExperts franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned GarageExperts 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 GarageExperts’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, median, highest, and lowest gross sales, and average gross profit after labor and cost of goods sold for the 62 single-unit GarageExperts franchise owners who operated a single territory for the entirety of 2020

• 2020 annual gross sales and gross profit after labor and cost of goods sold for each of the top 5 and bottom 5 (by annual gross sales) single-unit GarageExperts franchise owners who operated a single territory for the entirety of 2020

• 2020 average, median, highest, and lowest gross sales, and average gross profit after labor and cost of goods sold for the 7 multi-territory GarageExperts franchise owners who operated two or more territories for the entirety of 2020

• 2020 annual gross sales and gross profit after labor and cost of goods sold for each of the 7 multi-territory GarageExperts franchise owners who operated two or more territories for the entirety of 2020

Section I – Background Information

16 Things You Need to Know About the GarageExperts Franchise

Signs Three-Year Exclusive Agreement with PopStops Garage Stops

1.  At the end of January 2020, PopStops Marketing, Inc. announced that it had recently entered into a three-year exclusive agreement with Garage Experts International, LLC, the leading, lifetime warranty, epoxy floor coating, cabinet, and organization company. Local GarageExperts professionals will transform any garage into a long-lasting and usable space. GEI is distributing the patented PopStops Garage Stops products over the next three years into the North American market through its franchisee network.

2.  PopStops Marketing and GarageExperts immediately began to introduce the various-sized, patented PopStops Garage Stops to GarageExperts’ accounts throughout the country. GarageExperts initially focused on the 18″ width Garage Stop, although PopStops are available in 12″, 18″, 36″, and 48″ widths.

3.  GarageExperts offers the largest variety of epoxy flooring colors and styles that are attractive, durable, and easy to clean. The brand also offers an industrial Epoxy & Polyaspartic Floor Coating that is bright, durable, and easy to maintain and is compliant with all worker safety regulations.

4.  GarageExperts’ Garage Storage Solutions are designed for strength and generous storage capacity and are custom built for any space. GarageExperts realizes that when a customer invests major money into their home garage, there is no better way to say “thank you” to customers than by providing them with a patented PopStops Garage Stop with a customized set of graphics inserts created uniquely for GarageExperts.

5.  Plus, GarageExprets franchisees have the marketing option to even customize the PopStops “end caps” that come with the unit to have each franchisee’s phone number, e-mail. or web address so that as their customers show off their newly-remodeled garages, their friends and family know just who did the work, and who to call right away for their own new project.

6.  Since many garages hold two or more vehicles, this also provides an additional revenue opportunity for all GarageExperts franchisees to match their customers with the wide range of PopStops “licensed” and “customized” graphic inserts. Personalizing a graphic insert with someone’s name has a huge impact and can be done with any of the PopStops licensed or customized graphics.

7.  Particularly with the military licensed graphics, such as the Army, Navy, Air Force, Marines, or Coast Guard, these men, women, and family members can have their rank and names customized on the parking side of their PopStops Garage Stop creating a huge impact.

8.  Scott Fenimore, president of PopStops Marketing, said, “The distribution agreement with GarageExperts allows for PopStops products to penetrate the North American market, facilitating broader accessibility to our patented solutions and exciting new products. GEI’s distribution now fully ensures that their customers benefit from PopStops’ uniquely patented products. Every consumer has a passion about something, be it an affiliation, a school, a favorite sports team, something! GarageExperts is allowing these consumers to enhance their experience even more while protecting their major investment in their new garage remodel!”

Named a Top Growth Franchise by Entrepreneur Magazine

9.  In early September 2020, GarageExperts ranked on Entrepreneur Magazine’s first Top Growth Franchises list. This list recognizes the 150 companies with the greatest positive franchise unit growth in North America over a three-year period, based on data submitted for Entrepreneur’s Franchise 500 ranking. GarageExperts ranked No. 119 on the list.

10.  To determine the 2020 Top Growth Franchises ranking, Entrepreneur looked at each company’s U.S. and Canadian franchise numbers over a three-year period (from July 2016 to July 2019; given the rapid changes, COVID-19 impacts weren’t taken into account). In order to qualify, companies had to have positive growth of at least five units each year. They were ranked based on a formula that considers their total positive U.S. and Canadian franchise growth over the three years, as well as factors that negatively affect growth, such as terminations, non-renewals, and other closures.

11.  Jason Feifer, Entrepreneur’s editor-in-chief, said, “By maintaining steady, sustained growth over several years, these franchises have demonstrated that they have the systems in place to support their franchisees and help them become successful. Now as these and other companies around the country face unprecedented challenges, they may see their growth slow, but that record of success could prove more important than ever.”

12.  Additionally, back in August 2020, GarageExperts ranked No. 124 on Entrepreneur’s Fastest-Growing Franchises list. Mike Meursing, CEO of GarageExperts, said, “We started GarageExperts over 10 years ago and we believe this award is the result of our team building a franchise system that rewards our community of driven Entrepreneurs.”

13.  Feifer added, “Growth is what franchising is all about. And this ranking of the fastest-growing franchises offers insight into what industries are trending, which specific businesses are thriving, and what strategies are translating into success in the current franchise market.”

Company History

14.  GarageExperts was founded in 2008 by Mike Meursing in Orange County, California. Although 2008 wasn’t necessarily a great time to start a new business because of the financial crisis, Meursing wanted to help put people back to work. Meursing wanted GarageExperts to be a low-cost franchise that specialized in the installation of garage floor coatings, garage storage cabinets, garage ceiling racks, and garage slatwall.

15.  Over the years, GarageExperts’ growth has been slow and steady. Around 2018, Meursing felt comfortable enough with the success of GarageExperts that he ramped up the company’s growth. Today, there are GarageExperts locations across 32 U.S. states.

Entrepreneur’s Franchise 500

16.  GarageExperts ranked No. 367 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of GarageExperts 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 GarageExperts’ 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:  50
• Outlets at the End of the Year:  80
• Net Change:  +30

2019

• Outlets at the Start of the Year:  80
• Outlets at the End of the Year:  94
• Net Change:  +14

2020

• Outlets at the Start of the Year:  94
• Outlets at the End of the Year:  96
• Net Change:  +2

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

Part 1 – 2020 Average Annual Gross Sales for Single-Territory Owners

• In Part 1, GarageExperts sets forth 2020 data for Annual Gross Sales for its 62 single-unit franchise owners who operated a single territory for the entirety of 2020. As of December 31, 2020, GarageExperts had 62 single-territory owners of which 62 met the criteria for inclusion in the data below:

• Average Annual Gross Sales:  $457,051
• Average Gross Profit After Labor and Cost of Goods Sold:  $191,203
• Median Annual Gross Sales:  $411,924
• Highest Annual Gross Sales:  $1,218,450
• Lowest Annual Gross Sales:  $129,078
• Number of Outlets That Attained or Surpassed the Average Annual Gross Sales:  26
• Percent of Outlets That Attained or Surpassed the Average Annual Gross Sales:.  42%

Top 5 Outlets (Annual Gross Sales)

Outlet 1

• Annual Gross Sales:  $1,218,450
• Gross Profit After Labor and COGS:  $304,262
• Gross Profit as a Percent of Gross Sales:  25%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  1
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  1.6%

Outlet 2

• Annual Gross Sales:  $926,522
• Gross Profit After Labor and COGS:  $338,049
• Gross Profit as a Percent of Gross Sales:  36%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  2
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  3.2%

Outlet 3

• Annual Gross Sales:  $920,000
• Gross Profit After Labor and COGS:  $490,000
• Gross Profit as a Percent of Gross Sales:  53%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  3
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  4.8%

Outlet 4

• Annual Gross Sales:  $891,684
• Gross Profit After Labor and COGS:  $390,209
• Gross Profit as a Percent of Gross Sales:  44%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  4
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  6.5%

Outlet 5

• Annual Gross Sales:  $840,000
• Gross Profit After Labor and COGS:  $340,000
• Gross Profit as a Percent of Gross Sales:  40%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  5
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  8.1%

Bottom 5 Outlets (Annual Gross Sales)

Outlet 62

• Annual Gross Sales:  $129,078
• Gross Profit After Labor and COGS:  $37,724
• Gross Profit as a Percent of Gross Sales:  29%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  62
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  100%

Outlet 61

• Annual Gross Sales:  $129,199
• Gross Profit After Labor and COGS:  $53,378
• Gross Profit as a Percent of Gross Sales:  41%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  61
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  98.4%

Outlet 60

• Annual Gross Sales:  $163,599
• Gross Profit After Labor and COGS:  $49,772
• Gross Profit as a Percent of Gross Sales:  30%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  60
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  96.8%

Outlet 59

• Annual Gross Sales:  $175,024
• Gross Profit After Labor and COGS:  $81,125
• Gross Profit as a Percent of Gross Sales:  46%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  59
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  95.2%

Outlet 58

• Annual Gross Sales:  $187,918
• Gross Profit After Labor and COGS:  $108,986
• Gross Profit as a Percent of Gross Sales:  58%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  58
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  93.5%

Part 2 – 2020 Average Annual Gross Sales for Multi-Territory Owners

• In Part 2, GarageExperts sets forth 2020 data for Annual Gross Sales for its 7 multi-territory franchise owners who operated two or more territories for the entirety of 2020. As of December 31, 2020, GarageExperts had 7 multi-territory owners of which 7 met the criteria for inclusion in the data below:

• Average Annual Gross Sales:  $991,086
• Average Gross Profit After Labor and Cost of Goods Sold:  $393,259
• Median Annual Gross Sales:  $838,259
• Highest Annual Gross Sales:  $1,738,829
• Lowest Annual Gross Sales:  $349,492
• Number of Outlets That Attained or Surpassed the Average Annual Gross Sales:  3
• Percent of Outlets That Attained or Surpassed the Average Annual Gross Sales:  43%

Individual Results for Each of the 7 Multi-Territory Owners

Outlet 1

• Number of Territories Owned:  4
• Annual Gross Sales:  $1,738,829
• Gross Profit After Labor and COGS:  $705,553
• Gross Profit as a Percent of Gross Sales:  41%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  1
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  14%

Outlet 2

• Number of Territories Owned:  2
• Annual Gross Sales:  $1,683,100
• Gross Profit After Labor and COGS:  $927,980
• Gross Profit as a Percent of Gross Sales:  55%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  2
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  29%

Outlet 3

• Number of Territories Owned:  3
• Annual Gross Sales:  $1,404,670
• Gross Profit After Labor and COGS:  $225,076
• Gross Profit as a Percent of Gross Sales:  16%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  3
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  43%

Outlet 4

• Number of Territories Owned:  2
• Annual Gross Sales:  $838,259
• Gross Profit After Labor and COGS:  $397,622
• Gross Profit as a Percent of Gross Sales:  47%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  4
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  57%

Outlet 5

• Number of Territories Owned:  2
• Annual Gross Sales:  $465,212
• Gross Profit After Labor and COGS:  $225,637
• Gross Profit as a Percent of Gross Sales:  49%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  5
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  71%

Outlet 6

• Number of Territories Owned:  2
• Annual Gross Sales:  $458,039
• Gross Profit After Labor and COGS:  $136,576
• Gross Profit as a Percent of Gross Sales:  30%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  6
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  86%

Outlet 7

• Number of Territories Owned:  2
• Annual Gross Sales:  $349,492
• Gross Profit After Labor and COGS:  $134,368
• Gross Profit as a Percent of Gross Sales:  38%
• Number of Outlets That Attained or Surpassed the Annual Gross Sales:  7
• Percent of Outlets That Attained or Surpassed the Annual Gross Sales:  100%

• “Gross Sales” means the total of all revenues received or receivable by the franchisee as payment, whether in cash, by debit card, or for credit or barter or other means of exchange (and, if for credit or barter, whether or not payment is received therefor), on account of any and all goods, merchandise, services, and supplies sold by the Franchised Business, or which are promoted or sold by the franchisee under any of the Marks, whether or not GarageExperts offers such services or products in its other locations, including:

• (a) revenues from sales of any nature or kind whatsoever, derived by the franchisee or by any other person or Business Entity (including the franchisee’s affiliate(s)) from the Franchised Business;

• (b) sales of Authorized Products and Services in contravention of the Franchise Agreement from businesses other than the Franchised Business;

• (c) the proceeds of any business interruption insurance, after the satisfaction of any applicable deductible;

• (d) mail or telephone orders received or filled in or from the Franchised Business; and

• (e) orders taken in or from the Franchised Business although filled or performed elsewhere.

• Notwithstanding the foregoing, “Gross Sales” shall exclude the following:

• (i) sums representing sales taxes collected directly from customers by the franchisee in the operation of the Franchised Business, and any sales, value added or other tax, excise, or duty charged to customers which is levied or assessed against the franchisee by any Federal, state, municipal, or local authority, based on sales of specific goods, merchandise, services, and supplies sold at, from, or in connection with the Franchised Business, provided that such taxes are actually transmitted to the appropriate Governmental Authority;

• (ii) sums representing tips, gratuities, or service charges paid directly by customers to employees of the franchisee or paid to the franchisee and promptly and to the extent turned over to such employees by the franchisee in lieu of direct tips or gratuities; and

• (iii) proceeds from isolated sales of equipment and trade fixtures not constituting any part of the franchisee’s products and services offered in connection with the Franchised Business nor having any material effect upon the ongoing operation of the Franchised Business required under the Franchise Agreement.

• “Gross Profit After Labor and Cost of Goods Sold” means Annual Gross Sales less any labor costs and material costs such as liquid coatings, cabinets, storage products, and sundry items.

• “Gross Profit as a Percentage of Gross Sales” was calculated by dividing Annual Gross Sales into Gross Profit After Labor and Cost of Goods Sold.

• Please keep in mind that the information GarageExperts presents is based upon reports from franchisees and GarageExperts has not audited or in any way verified this information.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance you will earn as much.

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