In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Wag N’ Wash franchise opportunity, including relevant news updates

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

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

• 2020 average gross revenues, year-over-year comps, and transaction value for the 9 franchised Wag N’ Wash locations that (a) were in operation for at least 12 months, and (b) were not in the process of selling their business to new ownership as of the end of the Reporting Period (“Franchise Reporting Group”)

• 2020 average, median, highest, and lowest gross revenues; average year-over-year comps; and average and median transaction value for the 9 franchised Wag N’ Wash locations in the Franchise Reporting Group, grouped by number of years in operation (open 1-3 years, open 3-5 years, open 5+ years)

• 2020 average pet food sales, retail sales, grooming revenues, self-wash revenues, bakery sales, total gross revenues, discounts and promotions, and total net sales for the 9 franchised Wag N’ Wash locations in the Franchise Reporting Group, grouped by number of years in operation (open 1-3 years, open 3-5 years, open 5+ years)

• 2020 gross sales, discounts and promotions, net sales, cost of goods sold, gross profit, operating expenses (occupancy, payroll and labor, etc.), franchise fees (royalty, brand fund contributions, etc.), and net income for the affiliate-owned Wag N’ Wash location that operates from a building that is most similar to the size of building franchised Wag N’ Wash businesses will operate from and therefore may also have similar costs to franchised Wag N’ Wash businesses

Section I – Background Information

24 Things You Need to Know About the Wag N’ Wash Natural Pet Food & Grooming Franchise

Reflects on Strong 2020 and Continues Harnessing Expansion Effort with Aggressive Growth Goals

1.  In mid-March 2021, Wag N’ Wash Natural Pet Food & Grooming announced that it had come off a successful 2020 and was looking towards large-scale franchise growth. During a time when the pet industry is thriving with 62% of owners making their pet’s needs a top priority, Wag N’ Wash is aiming to open 50 franchise locations by 2025. After a prosperous year for Wag N’ Wash, with 8 of its independently-owned locations being up in year-over-year sales in 2020, its eye is on the future with exciting plans for innovation.

2.  Continuing its tradition to put companion pet’s holistic health first, Wag N’ Wash will eventually have a digital pet profile for customers to access their pet’s health history to highlight the products that will best fit their needs. This new aspect is part of Wag N’ Wash’s desire to give customers easy access to its products with new and improved technology.

3.  Continuing this trend, Wag N’ Wash is utilizing its online ordering system which creates an additional point of sale for stores, an e-commerce platform for online ordering and in some cases delivery, and an automated marketing system. All implemented amid the pandemic, the brand is riding this wave of refreshed store marketing and streamlined product sales into its efforts for 2021.

4.  Rob Flanagan, then-president of Wag N’ Wash, said, “The past year has truly emphasized the importance of providing your pets with the best quality care to keep them happy and healthy, just like you would all members of your family. Having these values at the forefront of our brand since day one, we are delighted to be sharing Wag N’ Wash’s outstanding growth trends during 2020. With 8 out of 13 locations rising year-over-year in December, a 50% sales increase at our Broomfield store, 35% in Lakeville, and our Phoenix location ending the year at million-dollar status – we couldn’t be prouder of the strides the brand is making throughout the country.”

5.  Adding to these impressive numbers, Wag N’ Wash recently signed an agreement in St. Louis, making it the brand’s first location to enter the Midwest, and ranked on Franchise Gator’s Top 100 Franchises List for 2020, with a 10% increase from its 2019 spot on the list.

6.  The consistent triumphs that Wag N’ Wash has seen in 2020 continue as Haley Sternberg has joined the brand as a marketing specialist. Following Haley are new owners John and Jen Park who were recently welcomed as new owners of the Highlands Ranch location.

7.  Since Wag N’ Wash’s inception in 1999, the Colorado-based company has been a leading place for pet guardians to find quality goods and services for their pet companions, and simply be pet people. Among the stores’ offerings are various brands of all-natural pet foods for dogs and cats, supplements, collars and leads, toys, supplies, and unique goods. In addition, Wag N’ Wash’s do-it-yourself dog wash facility is designed to put convenience and fun into the “chore” of washing your dog.

8.  With nearly 20 stores open throughout the country, Wag N’ Wash is focused on growing the brand in new markets including Charlotte, Atlanta, St. Louis, Portland, Seattle, Austin, Raleigh, Chapel Hill, and Northern Virginia, with qualified franchisees who have the passion and skillset to succeed with the company.

Appoints New President

9.  At the beginning of June 2021, Wag N’ Wash Natural Pet Food & Grooming announced that Kristen Risby, the brand’s former VP of marketing, will take over as the new president. The announcement came in tandem with a thriving pet industry as the pet product industry surpassed $100 billion for the first time ever, according to the American Pet Products Association. This industry momentum has propelled growth at Wag N’ Wash too, as the brand experienced a 10.6% increase in sales systemwide during the first four months of 2021 compared to last year.

10.  Risby has been a key player in supporting Wag N’ Wash to reach these impressive sales heights in recent years. Making a profound impact on the franchise since her start in 2019, she transitioned from VP of marketing and took over as president in June. Risby began this new role with goals to catapult national franchise development and maintain systemwide excellence.

11.  According to Risby, “The incredible Wag N’ Wash network has welcomed me into my new role with open arms, and paws. Looking back, it’s inspiring, yet humbling, to see how far we have come as a brand to further cement ourselves as leaders in the prosperous pet industry. We would not be in this spot today without the resilience of our franchisees and their dedication to maintaining customer and employee satisfaction this past year – they’re a major contributor to our recent soaring sales numbers. As we continue to ride this new wave of growth, I’m confident this upward sales trend will create even more development opportunities for Wag N’ Wash systemwide. I’m honored to ‘lead the pack’ during this monumental time and look forward to this next era with a brand I know and love.”

12.  During her time as VP of marketing, Risby spearheaded a marketing refresh and helped establish a refined e-commerce platform to accommodate online ordering. This added online presence allowed Risby’s marketing team to take over all local digital marketing efforts for each store during the pandemic.

13.  Risby also streamlined notable initiatives that reinforced Wag N’ Wash’s standing as a community-focused, culture first brand. From brand partnerships with national non-profits such as Freedom Service Dogs and The Trevor Project, to store level grassroots events including annual adoption weekends and round up campaigns, Risby prioritized franchisee engagement with the communities they serve. Her latest store-level marketing push entailed a Love & Kindness event in line with June’s Pride Month to reinforce the value Wag N’ Wash has for its customers and the brand’s inclusive environment.

14.  Jef Strauss, co-founder of Wag N’ Wash, said, “Kristen has been a fantastic addition to Wag N’ Wash, and we could not be more excited for her to embrace this new role. This transition comes at an exciting time for the brand as our systemwide sales and excitement for the future are at an all-time high. As we gear up to open our first store in Missouri, we anticipate entering additional new markets that are primed to house a Wag N’ Wash location soon. Kristen’s leadership will no doubt play a major role as we welcome new franchise partners and continue to uphold our impeccable brand reputation in existing markets.”

Mid-Year Sales Reach New Heights

15.  In mid-July 2021, Wag N’ Wash Natural Pet Food & Grooming announced that the brand continues to experience soaring sales – systemwide and at its individual locations – in the first half of 2021. The pet industry as a whole is experiencing growing numbers. The American Pet Products Association estimates 70% of U.S. households own at least one pet, which has helped catapult the animal health market size globally, as it’s now projected to be worth $38.37 billion by 2027.

16.  As a specialty retail destination for cats and dogs, Wag N’ Wash is riding this industry momentum and most recently documented a 19.7% increase in year-to-date systemwide sales for just the month of May. Equally as noteworthy, the brand’s Queen Anne location experienced a 97.5% rise in year-to-date numbers, marking that store’s highest sales month ever.

17.  Driving this substantial growth for Wag N’ Wash is an experienced and innovative executive team, led now by a new pack leader. Earlier this year, the brand appointed its newest president, Kristen Risby. Formerly the vice president of marketing for Wag N’ Wash, Risby seamlessly transitioned into her new role and helped propel June year-to-date sales as the system was up 11.5%.

18.  Risby said, “It’s amazing to see the rate the industry is growing and we’re so grateful to be a part of this upward demand for pet products and services. Our franchisees have really been the drivers for our continued brand success which is evident when looking at our sales reports as they continue to show local sales at an upward trajectory. The need for companion pet services almost never waivers and it’s incredible how loyal our customers have remained to our local stores rather than shifting to large online retailers, which definitely shows the value in shopping local for your pet. We’re looking forward to seeing this continue to positively impact our locations in the second half of 2021.”

19.  In addition to Risby’s promotion, existing team members Abe Dunaway and Amanda Moore welcomed new roles at Wag N’ Wash. Dunaway is the new vice president of franchise operations and Moore accepted the position of vice president of brand marketing.

20.  With a keen eye on the future, Wag N’ Wash is expanding its location count with a new store in St. Louis. The brand is also testing new grooming options with services available to customers in-between full-service grooming appointments. These options are only available at Wag N’ Wash’s corporate stores with plans to expand the offerings to all stores in the coming months.

Company History

21.  Wag N’ Wash Natural Pet Food & Grooming was founded in 1999 by life partners Jef Strauss and Dan Remus in Colorado. Strauss and Remus decided to leave their corporate jobs to start a business of their own that would allow them to spend more time with their beloved dog, Geni.

22.  They opened a small pet store that had a dog bakery and self-wash station. The concept was a success and not long after, Strauss and Remus added professional pet grooming to Wag N’ Wash’s services. Franchising began in 2006 and Wag N’ Wash has grown carefully since then.

23.  Today, there are Wag N’ Wash Natural Pet Food & Grooming locations around Colorado, Arizona, Maryland, Minnesota, Missouri, New Jersey, and Washington.

Entrepreneur’s Franchise 500

24.  Wag N’ Wash did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Wag N’ Wash 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 Wag N’ Wash’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:  11
• Outlets at the End of the Year:  14
• Net Change:  +3

2019

• Outlets at the Start of the Year:  14
• Outlets at the End of the Year:  13
• Net Change:  -1

2020

• Outlets at the Start of the Year:  13
• Outlets at the End of the Year:  12
• Net Change:  -1

Company-Owned

2018

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  5
• Net Change:  0

2019

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  5
• Net Change:  0

2020

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  5
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• As of December 31, 2020, there were 12 franchised Wag N’ Wash Businesses (“Franchised Locations”) and 5 affiliate-owned Wag N’ Wash Businesses (“Affiliate Locations”) in operation.

• The information in Part 1 through Part 3 below is a historical financial performance representation for the period from January 1, 2020 to December 31, 2020 (“Reporting Period”) for the 9 Franchised Locations that (a) were in operation for at least 12 months, and (b) were not in the process of selling their business to new ownership as of the end of the Reporting Period (“Franchise Reporting Group”).

• The Franchise Reporting Group excludes (a) one Franchised Location that began the sales process in 2020 and has been excluded because this process diverted a significant amount of time and resources from normal business operations, (b) one Franchised Location that transferred ownership in 2020, and (c) one Franchised Location that experienced a death in primary owner, and management of the business switched to the secondary owner.

• The figures in Part 1 through Part 3 below are based on data that was reported to Wag N’ Wash by its Franchised Locations in the Franchise Reporting Group. These numbers have not been audited but Wag N’ Wash has no reason to doubt their accuracy.

Part 1 – Average Gross Revenues, Year-to-Year Comps, and Transaction Data for the Franchise Reporting Group During the Reporting Period

• Average Gross Revenues:  $1,177,862
• Average Year-to-Year Comps:  +14.6%
• Average Transaction:  $43.50

• The Franchise Reporting Group consists of 9 Franchised Locations: Phoenix, Scottsdale, Eagan, Cherry Hill, Queen Anne, Aurora, Monument, Broomfield, and Lakeville.

• For purposes of this Item 19, “Gross Revenues” means the revenues received from the sale of all items and services sold at, from, or through the Wag N’ Wash Business, whether or not sold or performed at or from the Center, and all other income and consideration of every kind and nature related to the Wag N’ Wash Business or Center operations, whether for cash or credit, and regardless of collection in the case of credit, and including all proceeds of any business interruption insurance, but not including: (a) any sales taxes or other taxes collected from customers for, and thereafter paid directly to, the appropriate taxing authority; or (b) any bona fide refunds made to customers.

• “YTY Comps” is a calculation of the percentage change in Gross Revenues from fiscal year 2019 (January 1, 2019 to December 31, 2019) to the Reporting Period. It is calculated by dividing the Gross Revenues for the Reporting Period by the fiscal year 2019’s Gross Revenues and is presented in percentage form.

• “Transaction” is a calculation of the dollar amount charged per customer order. Transaction amounts do not include sales taxes.

• The financial performance representations in Part 1 do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit.

Part 2 – Franchise Reporting Group Average and Median Gross Revenues by Maturity During the Reporting Period

Open 5+ Years (3 Wag N’ Wash Businesses)

• Average Gross Revenues (“AUV”):  $1,519,199
• AUV YTY Comps:  7.47%
• Median Gross Revenues:  $1,645,594
• Median YTY Comps:  14.48%
• Highest Gross Revenues:  $2,268,041
• Lowest Gross Revenues:  $643,961
• Average Transaction:  $45.95
• Median Transaction:  $32.00

Open 3 to 5 Years (3 Wag N’ Wash Businesses)

• Average Gross Revenues (“AUV”):  $1,167,504
• AUV YTY Comps:  3.93%
• Median Gross Revenues:  $919,887
• Median YTY Comps:  3.34%
• Highest Gross Revenues:  $1,688,054
• Lowest Gross Revenues:  $894,573
• Average Transaction:  $41.01
• Median Transaction:  $27.99

Open 1 to 3 Years (3 Wag N’ Wash Businesses)

• Average Gross Revenues (“AUV”):  $846,881
• AUV YTY Comps:  31.11%
• Median Gross Revenues:  $906,348
• Median YTY Comps:  37.05%
• Highest Gross Revenues:  $909,894
• Lowest Gross Revenues:  $724,402
• Average Transaction:  $43.60
• Median Transaction:  $28.35

Part 3A – Franchised Locations Open 5+ Years Revenue by Category and Net Sales in the Franchise Reporting Group During the Reporting Period

• Average Pet Food Sales:  $607,433 (40.0% of total gross revenue)
• Average Retail Sales:  $369,143 (24.3% of total gross revenue)
• Average Grooming Revenues:  $365,322 (24.0% of total gross revenue)
• Average Self-Wash Revenues:  $143,133 (9.4% of total gross revenue)
• Average Bakery Sales:  $34,168 (2.2% of total gross revenue)
• Average Total Gross Revenues:  $1,519,199 (100.0% of total gross revenue)
• Average Discounts and Promotions:  $6,421 (0.4% of total gross revenue)
• Average Total Net Sales:  $1,512,778 (99.6% of total gross revenue)

Part 3B – Franchised Locations Open 3 to 5 Years Revenue by Category and Net Sales in the Franchise Reporting Group During the Reporting Period

• Average Pet Food Sales:  $332,867 (28.5% of total gross revenue)
• Average Retail Sales:  $312,078 (26.7% of total gross revenue)
• Average Grooming Revenues:  $399,145 (34.2% of total gross revenue)
• Average Self-Wash Revenues:  $98,119 (8.4% of total gross revenue)
• Average Bakery Sales:  $25,297 (2.2% of total gross revenue)
• Average Total Gross Revenues:  $1,167,504 (100.0% of total gross revenue)
• Average Discounts and Promotions:  $5,411 (0.5% of total gross revenue)
• Average Total Net Sales:  $1,162,093 (99.5% of total gross revenue)

Part 3C – Franchised Locations Open 1 to 3 Years Revenue by Category and Net Sales in the Franchise Reporting Group During the Reporting Period

• Average Pet Food Sales:  $305,958 (36.1% of total gross revenue)
• Average Retail Sales:  $193,020 (22.8% of total gross revenue)
• Average Grooming Revenues:  $233,683 (27.6% of total gross revenue)
• Average Self-Wash Revenues:  $87,811 (10.4% of total gross revenue)
• Average Bakery Sales:  $26,409 (3.1% of total gross revenue)
• Average Total Gross Revenues:  $846,881 (100.0% of total gross revenue)
• Average Discounts and Promotions:  $11,887 (1.4% of total gross revenue)
• Average Total Net Sales:  $834,994 (98.6% of total gross revenue)

• Revenue by Category is the breakdown of Gross Revenues into revenues from pet food sales, retail sales, grooming, self-wash, and bakery sales.

• “Discounts and Promotions” includes Wag N’ Wash’s free self-wash as part of its loyalty program, store coupons, free cat cans, employee discounts, and other promotions.

• “Net Sales” is determined by taking Gross Revenues and subtracting Discounts and Promotions.

Average for All 9 Franchised Locations in the Franchise Reporting Group

• Average Pet Food Sales:  $415,419 (35.3%)
• Average Retail Sales:  $291,414 (24.7%)
• Average Grooming Revenues:  $332,717 (28.2%)
• Average Self-Wash Revenues:  $109,688 (9.3%)
• Average Bakery Sales:  $28,625 (2.4%)
• Average Total Gross Revenues:  $1,177,863 (100.0%)
• Average Discounts and Promotions:  $7,906 (0.7%)
• Average Total Net Sales:  $1,169,957 (99.3%)

Part 4 – Profit & Loss for Affiliate Location 1001 During the Reporting Period

• The information in Part 4 below is a historical financial performance representation for the Reporting Period for the Affiliate Location that operates from a building that is most similar to the size of building franchised Wag N’ Wash Businesses will operate from and therefore may also have similar costs to franchised Wag N’ Wash Businesses.

• Wag N’ Wash has excluded the four Affiliate Locations that operate from buildings that are significantly larger than the size of building from which franchised Wag N’ Wash Businesses will operate. These four Affiliate Locations also experienced higher net income than the Affiliate Location included in Part 4 below.

• Affiliate Location 1001 shares the same general characteristics as the Franchised Locations including size of building, operations, degree of competition, services or goods sold, and services supplied by Wag N’ Wash. Affiliate Location 1001 pays the same Royalty Fee, Brand Building Fund Contributions, Technology Fees, and Local Advertising Requirement.

• The figures in Part 4 below are based on internal data. These numbers have not been audited but Wag N’ Wash has no reason to doubt their accuracy.

Gross Sales

• Pet Food:  $857,637 (54.9%)
• Grooming:  $150,464 (9.6%)
• Self-Wash:  $154,836 (9.9%)
• Retail:  $363,790 (23.3%)
• Bakery:  $36,404 (2.3%)
• Total Gross Sales:  $1,563,131 (100.0%)

Less: Discounts and Promotions:  $23,447 (1.5%)

Net Sales:  $1,539,684 (98.5%)

Cost of Goods Sold

• Pet Food:  $574,637 (36.8%)
• Grooming:  $75,922 (4.9%)
• Self-Wash:  $17,108 (1.1%)
• Retail:  $174,797 (11.2%)
• Bakery:  $7,281 (0.5%)
• Total Cost of Goods Sold:  $849,746 (54.4%)

Gross Profit:  $689,938 (44.1%)

Operating Expenses

• Occupancy:  $78,000 (5.0%)
• Payroll and Labor:  $215,475 (13.8%)
• Credit Card Fees:  $29,413 (1.9%)
• Dues and Subscriptions:  $4,493 (0.3%)
• Insurance:  $1,565 (0.1%)
• License and Permits:  $697 (0.0%)
• Repairs:  $3,918 (0.3%)
• Professional Services:  $4,800 (0.3%)
• Store Supplies:  $12,491 (0.8%)
• Utilities:  $16,016 (1.0%)
• Total Operating Expenses:  $366,866 (23.5%)

Franchise Fees

• Royalty:  $78,157 (5.0%)
• Brand Fund Contributions:  $23,447 (1.5%)
• Technology Fee:  $4,800 (0.3%)
• Local Advertising Requirement:  $24,000 (1.5%)
• Total Franchise Fees:  $154,403 (9.9%)

Total Operating Expenses and Franchisee Fees:  $521,270 (33.3%)

Net Income:  $168,668 (10.8%)

• Due to COVID restrictions, this location did not open the full grooming salon from April 2020 to December 31, 2020. Thus, grooming sales were lower than in prior years.

• COGS – Grooming: Groomers are paid on a commission, which is treated as a cost of service under cost of goods sold. The commission rate can and will vary across the country and you should conduct an independent investigation of the commission rates in your area.

• “Gross Profit” equals Net Sales less total cost of goods sold.

• “Occupancy” includes base rent, common area maintenance, taxes, and insurance. Occupancy rates will vary greatly across the country and you should conduct an independent investigation of the occupancy rates in your area. Wag N’ Wash strives to achieve an occupancy rate between 8-12% of Gross Revenues.

• “Payroll and Labor” includes expenses attributable to the labor of a Wag N’ Wash Business including payroll, commission and bonuses, fees, and temporary labor. Wag N’ Wash has not included payroll taxes, which vary from state-to-state. Groomers are paid on a commission, which is treated as a cost of service under cost of goods sold. This number does not include any payroll and benefits attributable to an owner of a Wag N’ Wash Business. Labor rates can and will vary across the country.

• “Repairs” includes general maintenance on store equipment. This cost is largely driven by a franchise owner maintaining equipment to specifications from the manufacturer.

• “Professional Services” includes services such bookkeeping, legal fees, and tax preparation.

• “Store Supplies” includes uniforms, branding materials, office supplies, and other miscellaneous supplies.

• “Utilities” includes electric, internet, phone, gas, and similar expenses.

• Affiliate Locations pay the same franchise-related fees as Franchised Locations, including Royalty Fee, Brand Building Fund Contributions, Technology Fee, and Local Advertising Requirement. Wag N’ Wash has broken them out separately in Part 4 for purposes of illustration.

• “Net Income” equals Gross Profit less Total Operating Expenses and Total Franchise Fees.

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