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

• Section I – Background information on the Happy Joe’s Pizza & Ice Cream franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Happy Joe’s Pizza & Ice Cream 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 Happy Joe’s Pizza & Ice Cream franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Happy Joe’s Pizza & Ice Cream 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 Happy Joe’s Pizza & Ice Cream’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• fiscal year 2020 average, median, highest, and lowest gross sales for the 22 Happy Joe’s Full-Size Restaurants that were open for the full 12 months ended September 30, 2020, by quartile

• fiscal year 2021 average, median, highest, and lowest gross sales for the 20 Happy Joe’s Full-Size Restaurants that were open for the full 12 months ended September 30, 2021, by quartile

• fiscal year 2020 average, median, highest, and lowest gross sales for the 8 Happy Joe’s DELCO (Delivery & Carryout) Facilities that were open for the full 12 months ended September 30, 2020, by quartile

• fiscal year 2021 average, median, highest, and lowest gross sales for the 9 Happy Joe’s DELCO Facilities that were open for the full 12 months ended September 30, 2021, by quartile

Section I – Background Information

18 Things You Need to Know About the Happy Joe’s Pizza & Ice Cream Franchise

New CEO Driving National Expansion

1.  Driven by the passion of its new CEO, Happy Joe’s Pizza & Ice Cream has embarked on an aggressive expansion across the Midwest – and beyond. The popular family-centric concept that counts multiple generations of families among its most loyal guests, announced in late April 2021, that it was taking its signature menu and unique business model to new markets with attractive incentives for new and existing franchisees.

2.  In late 2020, Happy Joe’s welcomed 30-year industry veteran Tom Sacco as its new CEO, president, and “chief happiness officer”. Under Sacco’s direction, the brand has already opened two new franchise units in Urbandale and Cascade, Iowa. An existing franchisee in St. Louis signed on to expand his Happy Joe’s portfolio, with a new location that was set to open in St. Peters, Missouri in June. Additionally, Happy Joe’s was slated to open a company location in Fond du Lac, Wisconsin in July. The four total new openings are more than Happy Joe’s has opened over the last five years combined.

3.  According to Sacco, “When you mention Happy Joe’s to people in the Midwest, it stirs up a lot of emotion and always brings a smile. We want more communities in this great country to be able to experience the spirit that is Happy Joe’s. Our brand has so much to offer, from the high-quality, gourmet pizza we serve to the lasting memories created in our restaurants. I’m thrilled to be at the helm of such an inspiring company at such a transformational moment in time. I can’t wait to see the progress we will continue to make.”

4.  For the young and young at heart, there’s nothing like a birthday celebration at Happy Joe’s – complete with sirens, horns, hand-scooped ice cream, and a special song from the team. Adults can enjoy their meals with beer or wine. And pizza lovers marvel at the abundant toppings on Happy Joe’s specialty pies – such as 80 pepperonis stacked on a large pepperoni pizza!

5.  Since Sacco joined the Happy Joe’s team, the brand has streamlined royalties to create a more mutually beneficial business practice and recently introduced new, limited-time development incentives for new franchisees. The originators of the Taco Pizza are encouraging new beginnings for restaurant-curious entrepreneurs looking for a successful, proven brand by waiving their initial Happy Joe’s franchise fee, reducing royalties to 2% during the first year of operation and 4% during the second year of operation. Full royalty does not kick in until the 25th month of operation.

6.  Sacco added, “Happy Joe’s is different from other franchisors in that we’re functionally and financially sound, our franchisees are coming off a record year – in spite of the pandemic – and our brand nurtures an emotional connection with our guests that others simply can’t replicate. With the addition of franchise veteran Kat Davidson leading our franchise development efforts, we’re looking forward to expanding more of our happy places to hundreds and hundreds of areas.”

Prepares for Expansion with Strategic Redesign by Harrison

7.  In early August 2021, Happy Joe’s Pizza & Ice Cream announced that it has partnered with global design consultant firm Harrison to utilize its award-winning strategic branding, interior design, and architectural expertise to create a new image and brand design for the family-centric concept, in preparation for expansion.

8.  Through its strategic storytelling approach, Harrison is tasked to create a look and feel that connects Happy Joe’s nostalgic 49-year-long past with elements of today’s dining and “eatertainment” venues. With plans to expand across the U.S. and beyond, Harrison will also keep growth top-of-mind in order to create a brand design that can easily go anywhere.

9.  Tom Sacco, Happy Joe’s CEO, president, and chief happiness officer, said, “Happy Joe’s is an iconic brand based in the Midwest that will be celebrating its 50th anniversary next year. I see the new design as the launching pad to the next 50 years of Happy Joe’s growth, across the U.S. and globally. After all, being ‘happy’ isn’t just an American characteristic. We plan on bringing Happy Joe’s to cities around the world starting in Cairo, Egypt, and there’s no one we’d rather have supporting us on this journey than Harrison.”

10.  The new design is slated to debut in Happy Joe’s home state of Iowa in 2022. It will also be executed in several upcoming openings and will be available for new franchisees to implement moving forward.

11.  Keith Anderson, COO of Harrison, added, “We’re excited to have been chosen to be part of the repositioning of such an iconic brand. Happy Joe’s is full of history and spirit, which is going to make the creation of this new prototype a lot of fun. We see a lot of potential to expand Happy Joe’s throughout the U.S. and globally, and we’re honored to get to help them achieve this growth.”

Creates Special Business Opportunity with New Operator to Owner Program

12.  In mid-October 2021, Happy Joe’s Pizza & Ice Cream announced that it was creating a pipeline for career opportunities by providing longtime management with a path to entrepreneurship. Happy Joe’s CEO Tom Sacco announced that to kick off the new fiscal year with great news, the company has developed a program that incentivizes long-term general managers’ success by rewarding them with a franchise location. On Sept. 30, Happy Joe’s awarded general manager Jeannie Radtke and her fiancée Adam Clark with the corporate-owned Maquoketa location through the new Operator to Owner Program.

13.  Sacco said, “Jeannie and Adam have been with the brand for many years and have done an excellent job in Maquoketa and earned the right to become franchise owners. Jeannie has had unbelievable success growing her restaurant’s sales and presence in her community, so we’re proud to award her with a Happy Joe’s Pizza & Ice Cream Parlor to call her own. We hope this initiative acts as an added incentive for our restaurant managers – and restaurant managers in our industry as a whole – to see that their hard work will be rewarded by employers that truly want long-term success for their managers and franchisees like we do at Happy Joe’s.”

14.  To qualify for the program, Happy Joe’s evaluates the quality of the location’s operation, including how it’s being run, the general manager’s level of involvement in the community, the leadership impact on the restaurant, sales growth, and profitability improvement over at least a three-year period.

15.  After moving to Maquoketa in 2011, Radtke began creating special moments for Happy Joe’s guests as a server a year later. She moved up the management ranks, being promoted to general manager of the restaurant in 2019 before recently joining the brand’s family of business-minded franchise owners. Radtke and Clark – who’s a longtime kitchen manager at the Maquoketa location – have been a couple for the longevity of her career at Happy Joe’s.

16.  Radtke said, “It has always been a dream of ours to open our own restaurant. When Tom proposed the idea of me becoming a franchise owner, I left the conversation in tears. I am still in shock at the incredible opportunity and am the upmost grateful that this was something Tom would make happen for me. I am thankful for the opportunity and for the support from our corporate office and my peers at Happy Joe’s.”

Company History

17.  Happy Joe’s Pizza & Ice Cream was founded in 1972 by Joe Whitty in Davenport, Iowa. Whitty had always been an entrepreneur as well as a baker. In the 1960s, Whitty worked as a manager at Shakey’s Pizza and began thinking about combining pizza with ice cream. Whitty was determined to start a fun and family-oriented restaurant and developed the idea for Happy Joe’s.

18.  The first Happy Joe’s was a hit and Whitty began opening more locations around the Midwestern United States. From the start, Happy Joe’s made unique pizzas such as the Happy Joe’s Special, a pizza with Canadian bacon and sauerkraut. After a franchisee suggested that Happy Joe’s add tacos to its menu, Whitty created a taco pizza. Whitty claimed that Happy Joe’s was the first restaurant to ever serve a taco pizza. In addition to its fun menu items, Happy Joe’s is also known for throwing outlandish birthday parties.

19.  In 2017, Happy Joe’s sold a majority stake to Dynamic Restaurant Holdings group, which remains as the brand’s parent company. Today, Happy Joe’s Pizza & Ice Cream is still primarily a Midwestern chain, but the brand has been pushing for national expansion in recent years.

Entrepreneur’s Franchise 500

20.  Happy Joe’s Pizza & Ice Cream did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Happy Joe’s Pizza & Ice Cream 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 Happy Joe’s Pizza & Ice Cream’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:  35
• Outlets at the End of the Year:  34
• Net Change:  -1

2019

• Outlets at the Start of the Year:  34
• Outlets at the End of the Year:  32
• Net Change:  -2

2020

• Outlets at the Start of the Year:  32
• Outlets at the End of the Year:  33
• Net Change:  +1

Company-Owned

2018

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  10
• Net Change:  0

2019

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  9
• Net Change:  -1

2020

• Outlets at the Start of the Year:  9
• Outlets at the End of the Year:  9
• Net Change:  0

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

• In this Item 19, Happy Joe’s is presenting average Gross Sales and range of Gross Sales information for the fiscal years ended September 30, 2020, and September 30, 2021 for two different types of Happy Joe’s Restaurants – Full-Size Restaurant and DELCO (Delivery & Carryout) Facility by Quartile.

• As of September 30, 2020, Happy Joe’s had 31 franchised Happy Joe’s Restaurants in operation. Of these 31, 22 were Full-Size Restaurants, 1 Restaurant operated under Happy Joe’s “PIZZAGRILLE” model, which features full table service, a different store design, and extended menu, and 8 were DELCO Restaurants. No Restaurants were excluded in the data presented for 2020.

• As of September 30, 2021, Happy Joe’s had 32 franchised Happy Joe’s Restaurants in operation. Of these 32, 22 were Full-Size Restaurants, 1 Restaurant operated under Happy Joe’s “PIZZAGRILLE” model, and 9 were DELCO Restaurants.

• Two Full-Size Restaurants were not included in the data presented for 2021 because the Restaurants had not opened as of October 1, 2020, and therefore, were not in operation for the full 12 months in 2021. In addition, one Full-Size Restaurant was not included in the data presented for 2021 because the Restaurant had permanently closed prior to September 30, 2021.

• The information was compiled from royalty reports and/or financial statements submitted to Happy Joe’s by the franchisee. This information has not been audited and Happy Joe’s has not taken any steps to independently verify the accuracy of the information submitted for each of these Restaurants.

• Gross Sales as used in this financial performance representation means the total gross sales derived from the operation of the Restaurant including all sales of menu items, proprietary products, other food products, beverages, and other related products and services to customers of the franchisee (including but not limited to any game and coin machine income), or any other source (including, but not limited to, insurance proceeds for loss of revenue), whether or not sold or performed at or from the Happy Joe’s Franchised Restaurant, less the amount of all sales tax receipts or similar tax receipts which, by law, are chargeable to customers, if such taxes are separately stated when the customer is charged and if such taxes are paid to the appropriate taxing authority.

• The average Gross Sales and range of Gross Sales information for the Full-Size Restaurants and for the DELCO Facilities in this Item 19 is presented by Quartile. Quartile refers to the relative performance of the franchised Restaurants. Therefore, the first Quartile refers to the top 25% performing Restaurants, the second Quartile refers to the next highest 25% performing Restaurants, the third Quartile refers to the next highest 25% performing Restaurants, and the fourth Quartile refers to the lowest 25% performing Restaurants, all based on Gross Sales.

Part 1 – Gross Sales of Franchised Full-Size Restaurants by Quartile for Year Ending September 30, 2020 and September 30, 2021

• The following is a statement of the average Gross Sales and range of Gross Sales of franchised Happy Joe’s Pizza Full-Size Restaurants for the year ending on September 30, 2020, and September 30, 2021, by Quartile. You should only rely on this section of the financial performance representation if you intend to establish a Full-Size Restaurant.

A.  Year Ending September 30, 2020

Top Quartile

• Number of Restaurants:  6
• Lowest Gross Sales:  $1,064,772
• Highest Gross Sales:  $1,503,892
• Average Gross Sales:  $1,199,325
• Number and Percent in Quartile Exceeding Average Gross Sales:  2 (33%)
• Median Gross Sales:  $1,160,044

Second Quartile

• Number of Restaurants:  6
• Lowest Gross Sales:  $786,294
• Highest Gross Sales:  $975,768
• Average Gross Sales:  $889,017
• Number and Percent in Quartile Exceeding Average Gross Sales:  4 (67%)
• Median Gross Sales:  $914,838

Third Quartile

• Number of Restaurants:  5
• Lowest Gross Sales:  $510,089
• Highest Gross Sales:  $674,642
• Average Gross Sales:  $630,806
• Number and Percent in Quartile Exceeding Average Gross Sales:  3 (60%)
• Median Gross Sales:  $669,096

Bottom Quartile

• Number of Restaurants:  5
• Lowest Gross Sales:  $314,846
• Highest Gross Sales:  $466,776
• Average Gross Sales:  $411,322
• Number and Percent in Quartile Exceeding Average Gross Sales:  4 (80%)
• Median Gross Sales:  $426,692

All

• Number of Restaurants:  22
• Average Gross Sales:  $806,395

B.  Year Ending September 30, 2021

Top Quartile

• Number of Restaurants:  8
• Lowest Gross Sales:  $1,019,778
• Highest Gross Sales:  $1,669,388
• Average Gross Sales:  $1,191,160
• Number and Percent in Quartile Exceeding Average Gross Sales:  4 (50%)
• Median Gross Sales:  $1,161,877

Second Quartile

• Number of Restaurants:  3
• Lowest Gross Sales:  $857,109
• Highest Gross Sales:  $955,897
• Average Gross Sales:  $884,322
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (33%)
• Median Gross Sales:  $839,961

Third Quartile

• Number of Restaurants:  4
• Lowest Gross Sales:  $730,764
• Highest Gross Sales:  $795,410
• Average Gross Sales:  $752,096
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (25%)
• Median Gross Sales:  $741,105

Bottom Quartile

• Number of Restaurants:  5
• Lowest Gross Sales:  $364,979
• Highest Gross Sales:  $552,292
• Average Gross Sales:  $446,785
• Number and Percent in Quartile Exceeding Average Gross Sales:  3 (60%)
• Median Gross Sales:  $495,708

All

• Number of Restaurants:  20
• Average Gross Sales:  $871,228

• As of September 30, 2021, the time the Full-Size Restaurants included in the above table have been in operation range from 17 years to 48 years. As of September 30, 2020, the time the Full-Size Restaurants included in the above table have been in operation range from 20 months to 47 years.

Part 2 – Gross Sales of Franchised DELCO Facilities by Quartile for Year Ending September 30, 2020 and September 30, 2021

• The following is a statement of the average Gross Sales and range of Gross Sales of franchised Happy Joe’s Pizza DELCO Facilities for the years ending September 30, 2020, and September 30, 2021, by Quartile. You should only rely on this section of the financial performance representation if you intend to establish a DELCO Facility.

A.  Year Ending September 30, 2020

Top Quartile

• Number of Restaurants:  2
• Lowest Gross Sales:  $691,265
• Highest Gross Sales:  $2,338,146
• Average Gross Sales:  $1,514,706
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (50%)
• Median Gross Sales:  $1,514,706

Second Quartile

• Number of Restaurants:  2
• Lowest Gross Sales:  $489,427
• Highest Gross Sales:  $627,167
• Average Gross Sales:  $558,297
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (50%)
• Median Gross Sales:  $558,297

Third Quartile

• Number of Restaurants:  2
• Lowest Gross Sales:  $434,948
• Highest Gross Sales:  $472,993
• Average Gross Sales:  $453,971
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (50%)
• Median Gross Sales:  $453,971

Bottom Quartile

• Number of Restaurants:  2
• Lowest Gross Sales:  $337,685
• Highest Gross Sales:  $424,006
• Average Gross Sales:  $380,845
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (50%)
• Median Gross Sales:  $380,845

All

• Number of Restaurants:  8
• Average Gross Sales:  $726,955

B.  Year Ending September 30, 2021

Top Quartile

• Number of Restaurants:  2
• Lowest Gross Sales:  $691,295
• Highest Gross Sales:  $2,368,085
• Average Gross Sales:  $1,529,690
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (50%)
• Median Gross Sales:  $1,529,690

Second Quartile

• Number of Restaurants:  2
• Lowest Gross Sales:  $560,227
• Highest Gross Sales:  $671,492
• Average Gross Sales:  $615,859
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (50%)
• Median Gross Sales:  $615,859

Third Quartile

• Number of Restaurants:  4
• Lowest Gross Sales:  $454,231
• Highest Gross Sales:  $497,296
• Average Gross Sales:  $475,299
• Number and Percent in Quartile Exceeding Average Gross Sales:  2 (50%)
• Median Gross Sales:  $474,833

Bottom Quartile

• Number of Restaurants:  1
• Lowest Gross Sales:  $340,814
• Highest Gross Sales:  $340,814
• Average Gross Sales:  $340,814
• Number and Percent in Quartile Exceeding Average Gross Sales:  1 (100%)
• Median Gross Sales:  $340,814

All

• Number of Restaurants:  9
• Average Gross Sales:  $725,901

• As of September 30, 2021, the time the DELCO Restaurants included in the above table have been in operation range from 32 months to 38 years. As of September 30, 2020, the time the DELCO Restaurants included in the above table have been in operation range from 20 months to 37 years.

• A newly-established Restaurant without brand recognition in the local market or a customer base cannot expect to initially experience the same level of Gross Sales as the Gross Sales of established businesses.

• The Happy Joe’s Restaurants included in the above tables are substantially similar to the Full-Size Restaurants and DELCO Facilities franchises being offered under the current disclosure document.

• “Gross Sales,” for purposes of this financial performance representation, means total revenue derived from the sale of products and services, prepared on a cash accounting basis. “Gross Sales” does not include any deduction for costs of goods sold, capital expenditures, operating expenses, or any royalty fees or other fees or payment that you must make under the Franchise Agreement.

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

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