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

• Section I – Background information on the Fresh Coat Painters franchise opportunity, including relevant news updates

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

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

• 2020 average, median, highest, and lowest gross revenue and gross profit percentage for the 75 single-unit and multi-unit Fresh Coat Painters franchisees (combined) that were open for at least one year before December 31, 2020

• 2020 average, median, highest, and lowest gross revenue and gross profit percentage for the 52 single-unit Fresh Coat Painters franchisees that were open for at least one year before December 31, 2020

• 2020 average, median, highest, and lowest gross revenue and gross profit percentage for the 31 Fresh Coat Painters franchisees that were open for at least 12 months and not more than 36 months before December 31, 2020

• 2020 average, median, highest, and lowest gross revenue and gross profit percentage for the 18 Fresh Coat Painters franchisees that were open for at least 37 months and not more than 72 months before December 31, 2020

• 2020 average, median, highest, and lowest gross revenue and gross profit percentage for the 26 Fresh Coat Painters franchisees that were open for at least 73 months before December 31, 2020

Section I – Background Information

16 Things You Need to Know About the Fresh Coat Painters Franchise

Expands Executive Team in Response to Strong Growth in 2020

1.  In early February 2021, Fresh Coat Painters announced that it has expanded its executive team in response to fast-paced franchise growth, significant increases in revenue, and national commercial account expansion in 2020. Executives in marketing, franchise sales, and national accounts hit the ground running in January. Tara Riley, president of Fresh Coat Painters, said, “As we enter 2021 with even stronger projections, we knew it was time to add new talent and leadership to our corporate team to handle the demands.”

2.  Patrick Moriarty joined the Fresh Coat Painters team as vice president of franchise development. Moriarty has a long history in franchise sales and service, with experience working with franchisees for over 17 years. His career focused on real estate franchising in the Midwest and he led efforts for top brands including Prudential, Century 21, and Better Homes and Gardens. Riley said, “Patrick understands what it takes to not only identify strong franchise candidates but to serve their needs to assist in the overall growth of the brand. We are excited to have him join our team.”

3.  Jim Farinacci joined the Fresh Coat Painters team as vice president of marketing. Most recently VP of marketing with Primax Studio, Farinacci is also an Emmy Award-winning producer who began his career dodging Indycars and foul balls for ESPN, ABC Sports, and Major League Baseball. He has a passion for compelling content and strategic use of analytics. “Jim is both creative and data-driven in his approach to marketing, all of which we know will be an asset to our franchisees,” said Riley. “As we continue on this growth trajectory, we know he’ll help our brand gain vital brand recognition around the country.”

4.  Sheryl Whetstone joined the Fresh Coat Painters team in late 2020 as National Accounts Coordinator. Whetstone has been both a franchise business consultant and franchise owner and has worked with industry leaders including Servpro, Auntie Anne’s, and Comfort Keepers. She most recently owned Minimize 2 Organize, providing organizational consulting to residential and commercial clients for five years. “Sheryl has a passion for the franchise model and a passion for our national clients,” said Riley. “It’s a key area of growth that is delivering significant revenue for our franchisees.”

5.  Riley added, “In franchising, our greatest strength lies in the expertise of our people. As we continue to onboard more entrepreneurs, we are dedicated to ensuring that each and every franchisee gets the best guidance for their business and can make the most of their investment.”

Set Records in 2020 and Is Poised to Take Advantage of Home Improvement Trends in 2021

6.  At the end of February 2021, Fresh Coat Painters celebrated a breakthrough year and looked forward to exciting new growth in 2021. Despite the COVID-19 pandemic, Fresh Coat added 36 locations in 2020. The company also enjoyed four straight months of record-breaking revenue.

7.  Fresh Coat quickly responded to the increased demands for healthy homes and workspaces during the pandemic, adding disinfect and protect services. These services provide an additional revenue stream for franchise owners, while serving the community.

8.  The year solidified the painting industry’s spot as an essential business, showing why Fresh Coat is a sound investment that can weather economic downturns and other unpredictable events. Tara Riley, president of Fresh Coat Painters, said, “When the pandemic started, we had a lot of questions about how the marketplace would react. The year definitely showed us how valuable our services are to home and business owners.”

9.  Home improvement is booming as the pandemic’s lockdowns and stay-at-home orders caused more people than ever to pay attention to the appearance of homes and office spaces. On top of that, the painting industry, which is growing at a rate of more than five percent per year, is expected to improve even more as the economy regains strength, and construction projects across the country resume.

10.  Riley added, “We think 2021 could be a huge year for us because so many people are looking for a new start and something to smile about. There are few things that can renew space quicker than a fresh coat of paint. We are excited to provide services people need right now.”

Two-in-One Business Model Propels Fresh Coat Franchisees to Record-Setting Summer

11.  In late August 2021, Fresh Coat Painters reported that it had shattered systemwide sales records for the fourth consecutive month and posted back-to-back months of record-setting revenue in June and July. These milestones can be traced to the combination of increased demand in the home improvement industry and the recent expansion of Fresh Coat’s commercial painting division, which has allowed franchise owners to quickly grow and scale their businesses in an unprecedented manner.

12.  Tara Riley, president of Fresh Coat Painters, said, “This is an exciting breakthrough for Fresh Coat. I’m even more thrilled about what it means for our franchise owners who are increasing their businesses’ profitability through strong growth. Fresh Coat Painters is one of a handful of painting franchises that have expanded into the commercial space.”

13.  The brand’s expanded commercial painting division also provides franchise owners with critical training on bidding for these lucrative projects. In addition to the commercial leads, Fresh Coat franchise owners are also provided with projects through the company’s national accounts. On the residential side, Fresh Coat owners have access to experts like “The Wall Wizard” Brian Santos, Fresh Coat’s director of education, who helps keep the team informed on the latest trends and techniques.

Company History

14.  Fresh Coat Painters was founded in 2004 as part of Strategic Franchising Systems and is based out of Cincinnati, Ohio. The brand provides high quality and professional painting services to both residential and commercial clients. Some of Fresh Coat’s services include whole house painting, cabinet painting, popcorn ceiling removal, garage painting, office painting, apartment complex painting, and more.

15.  To help ensure the quality of its services, Fresh Coat’s painters are vetted, bonded and insured, and hired as employees (not contractors). Today, there are Fresh Coat locations around the United States.

Entrepreneur’s Franchise 500

16.  Fresh Coat Painters ranked No. 397 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Fresh Coat Painters franchise costs, based on Item 7 of the company’s 2021 FDD.

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

• Detailed information on Fresh Coat Painters’ 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:  131
• Outlets at the End of the Year:  132
• Net Change:  +1

2019

• Outlets at the Start of the Year:  132
• Outlets at the End of the Year:  154
• Net Change:  +22

2020

• Outlets at the Start of the Year:  154
• Outlets at the End of the Year:  165
• Net Change:  +11

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

• Presented below are historic Gross Revenue and Gross Profit figures for franchised Fresh Coat business owners for the one-year period from January 1, 2020 through December 31, 2020.

• Only data from franchisees who were already open for at least one year before December 31, 2020, who operated their business on a full-time basis in the United States during the entire period, who reported Gross Revenue for all 12 months of the period, and who submitted income statements by March 30, 2021 were included in the table.

• The information has been extracted from royalty reports and income statements submitted to Fresh Coat by its franchisees. The income statements submitted to Fresh Coat were prepared by the franchisee in most cases, not reviewed or audited by an independent accountant. Fresh Coat has not audited or independently verified any of this information.

Part 1 – Average Revenue and Gross Profit for Single-Unit and Multi-Unit Franchisees

• There were 165 Fresh Coat franchises (each franchise consists of a single franchise territory) in operation as of December 31, 2020, which were owned by 141 franchisees. Of those, 75 franchisees were open for at least one year before that date, operated their business on a full-time basis in the U.S., reported Gross Revenue for all 12 months between January 1, 2020 and December 31, 2020, and submitted income statements by March 30, 2021.

• The below table combines data from 52 Fresh Coat franchisees that owned single units and from 23 Fresh Coat franchisees that owned multiple units.

• Number of Franchisees:  75

• Highest Gross Revenue:  $1,748,903
• Average Gross Revenue:  $535,388
• Median Gross Revenue:  $414,323
• Lowest Gross Revenue:  $153,179
• Number of Franchisees Who Attained or Surpassed the Average Gross Revenue:  25
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Revenue:  36%

• Highest Gross Profit Percentage:  70.49%
• Average Gross Profit Percentage:  44.07%
• Median Gross Profit Percentage:  42.10%
• Lowest Gross Profit Percentage:  31.12%
• Number of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  32
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  43%

• Average Time in Operation:  4 years, 11 months

Part 2 – Average Revenue and Gross Profit for Single-Unit Franchisees

• The below table presents data only for the 52 Fresh Coat franchisees that owned single units and excludes the data from the 23 Fresh Coat franchisees that owned multiple units. These 52 franchisees were in operation for at least one year before December 31, 2020, operated their business on a full-time basis in the U.S., reported Gross Revenue for all 12 months between January 1, 2020 and December 31, 2020, and submitted income statements by March 30, 2021.

• Number of Franchisees:  52

• Highest Gross Revenue:  $1,500,745
• Average Gross Revenue:  $474,313
• Median Gross Revenue:  $381,161
• Lowest Gross Revenue:  $153,170
• Number of Franchisees Who Attained or Surpassed the Average Gross Revenue:  20
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Revenue:  38%

• Highest Gross Profit Percentage:  70.49%
• Average Gross Profit Percentage:  43.65%
• Median Gross Profit Percentage:  41.77%
• Lowest Gross Profit Percentage:  31.12%
• Number of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  24
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  46%

• Average Time in Operation:  5 years, 1 month

Part 3 – Average Revenue and Gross Profit for Franchisees in Operation for 12 to 36 Months

• There were 31 franchisees open for at least 12 months and not more than 36 months before December 31, 2020, operated their business on a full-time basis in the U.S., reported Gross Revenue for all 12 months between January 1, 2020 and December 31, 2020, and submitted income statements by March 30, 2021.

• Number of Franchisees:  31

• Highest Gross Revenue:  $1,040,860
• Average Gross Revenue:  $370,746
• Median Gross Revenue:  $381,342
• Lowest Gross Revenue:  $153,170
• Number of Franchisees Who Attained or Surpassed the Average Gross Revenue:  10
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Revenue:  32%

• Highest Gross Profit Percentage:  70.49%
• Average Gross Profit Percentage:  43.13%
• Median Gross Profit Percentage:  42.48%
• Lowest Gross Profit Percentage:  31.12%
• Number of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  14
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  45%

• Average Time in Operation:  2 years, 1 month

Part 4 – Average Revenue and Gross Profit for Franchisees in Operation for 37 to 72 Months

• There were 18 franchisees open for at least 37 months and not more than 72 months before December 31, 2020, operated their business on a full-time basis in the U.S., reported Gross Revenue for all 12 months between January 1, 2020 and December 31, 2020, and submitted income statements by March 30, 2021.

• Number of Franchisees:  18

• Highest Gross Revenue:  $1,040,860
• Average Gross Revenue:  $512,152
• Median Gross Revenue:  $382,417
• Lowest Gross Revenue:  $155,297
• Number of Franchisees Who Attained or Surpassed the Average Gross Revenue:  6
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Revenue:  33%

• Highest Gross Profit Percentage:  54.60%
• Average Gross Profit Percentage:  43.48%
• Median Gross Profit Percentage:  39.84%
• Lowest Gross Profit Percentage:  36.98%
• Number of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  8
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  44%

• Average Time in Operation:  4 years, 7 months

Part 5 – Average Revenue and Gross Profit for Franchisees in Operation for 73 Months or More

• There were 26 franchisees open for at least 73 months before December 31, 2020, operated their business on a full-time basis in the U.S., reported Gross Revenue for all 12 months between January 1, 2020 and December 31, 2020, and submitted income statements by March 30, 2021.

• Number of Franchisees:  26

• Highest Gross Revenue:  $1,748,903
• Average Gross Revenue:  $727,887
• Median Gross Revenue:  $647,184
• Lowest Gross Revenue:  $171,469
• Number of Franchisees Who Attained or Surpassed the Average Gross Revenue:  10
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Revenue:  38%

• Highest Gross Profit Percentage:  60.66%
• Average Gross Profit Percentage:  44.84%
• Median Gross Profit Percentage:  42.97%
• Lowest Gross Profit Percentage:  34.00%
• Number of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  11
• Percentage of Franchisees Who Attained or Surpassed the Average Gross Profit Percentage:  42%

• Average Time in Operation:  8 years, 2 months

• For purposes of this Item 19, “Gross Revenue” means the total of all income arising from the operation of the franchised business, whether cash or credit. It is recognized on an accrual basis and regardless of collection, which means that a franchisee’s Gross Revenue for any period represents how much a franchisee billed its clients during the period, not how much the franchisee received.

• Gross Revenue does not include the amount of refunds and discounts made to clients, or the amount of sales or excise taxes that are separately stated and that the franchisee is required to and does collect from clients and pays to the appropriate taxing authority.

• “Gross Profit” means Gross Revenue minus the cost of direct labor and paint.

• Neither the Gross Revenue figures nor the Gross Profit figures reflect the costs of sales, other operating expenses, or other costs or expenses that must be deducted from Gross Revenue to obtain your net income or profit.

• Those expenses include fees you are required to pay Fresh Coat under the terms of your Franchise Agreement, such as royalties and national branding fees.

• Your sales and operating expenses will vary depending on many factors, such as:

• the geographic location of your territory,
• competition from other providers in your market,
• the effectiveness of your advertising,
• whether you manage your franchise yourself or hire a general manager,
• your pricing,
• the prices you pay for paint and other supplies,
• employee salaries and benefits (health insurance, retirement plan, etc.),
• other employment conditions in your market,
• insurance costs,
• weather conditions,
• ability to generate clients, and
• the necessity, cost, and difficulty of obtaining a license to perform all of the services a Fresh Coat franchise offers.

• You should conduct an independent investigation of the costs and expenses you will incur in operating a Fresh Coat franchise. Franchisees and former franchisees listed in the disclosure document may be one source of this information.

• Some outlets have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.

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