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

Section I – Estimated initial investment (franchise costs) for a Costa Oil franchise, based on Item 7 of the company’s 2022 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Costa Oil franchise, based on Items 5 and 6 of the company’s 2022 FDD

Section III – Number of franchised and company-owned Costa Oil outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

Section IV – News updates on the Costa Oil franchise opportunity

Section V – Presentation and analysis of Costa Oil’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average, median, highest, and lowest gross revenues for the 6 affiliate-owned Costa Oil outlets that were open throughout 2021 and have been open for more than 2 years as of December 31, 2021

• 2021 average, median, highest, and lowest gross revenues for the 5 affiliate-owned Costa Oil outlets that were open throughout 2021 and have been open for less than 2 years as of December 31, 2021

• 2021 combined gross revenues, costs of goods sold, gross profit, advertising and marketing costs, rent and lease costs, payroll, general and administrative expenses, imputed royalty fees, and profit before excluded expenses for the 14 affiliate-owned Costa Oil outlets that were opened at any point during 2021

Section VI – Key ratios, comparables, computations, and analyses for the Costa Oil franchise opportunity (exclusive content for Platinum subscribers)

Section I – Costa Oil Franchise Costs

• Costa Oil franchise costs, based on Item 7 of the company’s 2022 FDD:

• Franchise Fee:  $54,900
• Grand Opening Onsite Support Fee:  $5,000 to $10,000
• Real Estate Commission Fee:  $0 to $8,000
• Kiosk Lease:  $6,000 to $8,500
• Ground Lease:  $1,500 to $5,500
• Training Expenses for Travel, Food, and Lodging:  $2,500 to $5,000
• Leasehold Improvements:  $5,000 to $8,500
• Computer Hardware and Software:  $1,000 to $2,500
• Office Supplies:  $250 to $500
• Signage:  $7,500 to $10,000
• Furniture and Equipment:  $7,500 to $15,000
• Utilities:  $500 to $2,000
• Tools:  $1,000 to $2,000
• Inventory and Supplies:  $5,000 to $5,500
• Grand Opening Advertising:  $7,500 to $9,000
• Insurance:  $1,000 to $3,000
• Licenses and Permits:  $1,000 to $2,000
• Legal and Accounting:  $1,500 to $3,000
• Real Estate Due Diligence:  $100 to $30,000
• Additional Funds – First 3 Months:  $23,000 to $28,000
• Total Costa Oil Franchise Costs:  $131,750 to $212,900

Section II – Costa Oil’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Costa Oil’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $54,900
• Royalty Fee:  6.5% of Gross Revenue; $150 per week minimum royalty
• Brand Fund Contribution:  2% of Gross Revenue
• Local Marketing Requirement:  2.5% of Gross Revenue
• Market Cooperative Contribution:  as determined by the cooperative; currently, none

Section III – Number of Franchised and Company-Owned Costa Oil Outlets

Franchised

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

2021

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

Company-Owned

2019

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  9
• Net Change:  +2

2020

• Outlets at the Start of the Year:  9
• Outlets at the End of the Year:  12
• Net Change:  +3

2021

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

Section IV – News Updates on the Costa Oil Franchise

• Costa Oil Announces New Location

• Costa Oil Announces New Oklahoma Location

• Costa Oil Announces Franchise, Corporate Store Openings

• Costa Oil Did Not Rank on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Costa Oil Franchise (Item 19, 2022 FDD)

• The following charts contain selected 2021 financial performance information for the 11 Costa Oil outlets, each of which is owned by Costa Oil’s affiliate, Costa Oils, Inc., which were open throughout 2021 (“Designated Outlets”) (although some of these may have been temporarily closed at some point during 2021).

• Of the other 3 locations, 2 were opened less than 12 months as of December 31, 2021, and one permanently closed during 2021. There were no franchised outlets opened during 2021.

Part 1 – 2021 Gross Revenues from Designated Outlets (Opened for More Than 2 Years)

• Part 1 below reflects the gross revenues for the 6 Designated Outlets that have been open for more than 2 years as of December 31, 2021.

• Median:  $402,832.17
• Average:  $452,740.07
• Number and Percent of Sample That Achieved or Surpassed Average:  2 / 33.3%
• Highest:  $653,721.42
• Lowest:  $299,783.50

Part 2 – 2021 Gross Revenues from Designated Outlets (Opened for Less Than 2 Years)

• Part 2 below reflects the gross revenues for the other 5 Designated Outlets; these were opened for more than one year, but less than 2 years as of December 31, 2021.

• Median:  $185,294.03
• Average:  $188,529.68
• Number and Percent of Sample That Achieved or Surpassed Average:  2 / 33.3%
• Highest:  $250,140.01
• Lowest:  $135,390.62

Part 3 – Summary 2021 Combined Income Statement

• The following is a summary combined income statement for the 14 affiliate-owned outlets that were opened at any point during 2021, including the 11 Designated Outlets, as well as the other 3 outlets which Costa Oil’s affiliate operated at any point during 2021.

• While the outlets had different footprints, the outlets maintained common expense accounts, so it is not possible to segregate expenses for the Designated Outlets. These are based on an accrual basis.

• Gross Revenues:  $4,079,274.69 (100.0%)
• Cost of Goods Sold:  $1,147,538.41 (28.1%)
• Gross Profit:  $2,931,736.28 (71.9%)
• Advertising and Marketing Costs:  $213,410.37 (5.2%)
• Rent and Lease Costs:  $172,871.42 (4.2%)
• Payroll:  $751,699.81 (18.4%)
• General and Administrative:  $573,084.69 (14.0%)
• Imputed Royalties Fees:  $264,024.87 (6.5%)
• Profit Before Excluded Expenses:  $956,645.12 (23.5%)

• “Gross Revenues” means total of all revenue in a period, not including discounts, taxes, voids, or refunds for each location. It does not include other sources of income including PPP income that was received during 2021.

• “Cost of Goods Sold” means the cost of all oil, oil filters and additives, and supplies and materials used in operating the franchised business.

• “Gross Profit” means Gross Revenues less Cost of Goods Sold.

• “Payroll” means costs of salaries and wages for employees and officers involved in direct management and operations, as well as payroll taxes.

• “General and Administrative” means the cost of automobile expenses, bank fees, insurance, utilities, contractors, dues, office supplies, retirement accounts, insurance, bank charges, and other expenses associated with these businesses. These expenses will vary per location and in how you choose to operate the franchised business.

• “Imputed Royalty Fees” reflect the 6.5% royalty that these outlets would have paid if they were franchised. As Costa Oil didn’t have a Marketing Fund during 2021 and as advertising expenditures are already included in these figures, Costa Oil didn’t include a Marketing Fund estimate in this row.

• “Profits Before Excluded Expenses” means the Gross Profit less Advertising and Marketing Costs, Rent and Lease Costs, Payroll, General and Administrative, and Imputed Royalty Fees. Among the “excluded expenses” are interest; federal, state, and local taxes, including property taxes; depreciation; amortization costs; legal and professional services; these items will reduce profits. Essentially this item reflects the profits generated by the operation before the impact of taxes, capital, interest expense, and non-cash items. This is not the same as “net income” or “net profit” of the business.

• The foregoing information shows historical financial performance and is not a projection of future performance.

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

Section VI – Costa Oil Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️