In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:
Section I – Estimated initial investment (franchise costs) for a redbox+ franchise, based on Item 7 of the company’s 2022 FDD
Section II – Initial franchise fee, royalty fee, and marketing fee for a redbox+ franchise, based on Items 5 and 6 of the company’s 2022 FDD
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Section IV – News updates on the redbox+ franchise opportunity
Section V – Presentation and analysis of redbox+’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 monthly containers owned, monthly turns by utilized container, rental rate, total revenue per rental, tipping fee per job, and monthly turns by owned container for the 30 redbox+ franchisees that were open and operating 12 months or more by the end of the calendar year, and the 3 single-territory redbox+ operators, separately stated
- total container count as of January 1, 2021 and December 31, 2021, and percent growth, for the 30 redbox+ franchisees that were open and operating 12 months or more by the end of the calendar year, and the 3 single-territory redbox+ operators, separately stated
- 2021 average variable expenses (landfill/tipping fees, production expenses, fuel expense, equipment and vehicles, bank and merchant fees, administrative/office expenses, professional fees) and fixed expenses (marketing spend, rent expense, payroll expense, insurance expense) for the 30 redbox+ franchisees that were open and operating 12 months or more by the end of the calendar year, and the 3 single-territory redbox+ operators, separately stated
Section VI – Key ratios, comparables, computations, and analyses for the redbox+ franchise opportunity (exclusive content for Platinum subscribers)
Section I – redbox+ Franchise Costs
- redbox+ franchise costs, based on Item 7 of the company’s 2022 FDD:
- Initial Franchise Fee: $59,500
- Truck, Equipment, and Initial Containers: $516,919 to $557,405
- Transportation: $10,000 to $40,000
- Container Assembly/Set-Up Fee: $4,000
- Proprietary GPS Tracking System and Point of Sale/CRM Software Package: $1,209
- Technology Fee: $1,500
- Computer Equipment and Software: $3,000 to $5,000
- Rent and Utility Deposits: $0 to $5,000
- Insurance Deposits and Premiums: $10,200 to $17,850
- Pre-Opening Travel Expense: $1,000 to $3,000
- Quick Start Marketing Program: $6,400
- Professional Fees: $2,250 to $5,750
- Business Permits and Licenses: $250 to $1,000
- Office and Small Equipment: $750 to $1,500
- Promotional Package: $4,199
- Additional Funds – 3 Months: $25,000 to $35,000
- Total Estimated redbox+ Franchise Costs: $646,177 to $748,313
Section II – redbox+’s Initial Franchise Fee, Royalty Fee, and Marketing Fee
- redbox+’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:
- Initial Franchise Fee: $59,500
- Royalty Fee: 1 to 47 containers owned: $19.50 per container per week; 48 to 71 containers owned: $18.00 per container per week; 72 to 95 containers owned: $16.00 per container per week; 96 to 130 containers owned: $14.00 per container per week; > 131 containers owned: $12.00 per container per week
- Brand Fund Contribution: $2 per redbox+ container per week
- Local Advertising: 5% of Gross Revenue
Section III – Number of Franchised and Company-Owned redbox+ Outlets
Franchised
2019
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When I owned a UPS Store, I learned firsthand how much your ZIP code shapes your outcome. I sold my store at a premium because my territory was in a high-value area. The best areas go first, and once they're gone, they're gone. Enter your ZIP code to see which franchises are still available near you, saving you months of wasted research.🔴Free Webinar: 6 Under-the-Radar Franchise Concepts That Serious Buyers Should Know
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- Outlets at the End of the Year: 107
- Net Change: +102
2020
- Outlets at the Start of the Year: 107
- Outlets at the End of the Year: 163
- Net Change: +56
2021
- Outlets at the Start of the Year: 163
- Outlets at the End of the Year: 247
- Net Change: +83
Company-Owned
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
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When I owned a UPS Store, I learned firsthand how much your ZIP code shapes your outcome. I sold my store at a premium because my territory was in a high-value area. The best areas go first, and once they're gone, they're gone. Enter your ZIP code to see which franchises are still available near you, saving you months of wasted research.📈Dreaming of Multi‑Unit Success? Lock In Prime Territories Before They're Gone.
Colin started as a team member at 21 and now owns 6 locations in Tampa Bay. Lisa came from marketing and built 21 in San Diego. The most successful multi-unit owners move early and secure markets with room to grow. Use our free tool to search multiple ZIP codes and find franchises where you can still stack locations, before someone else does.- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
Section IV – News Updates on the redbox+ Franchise
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the redbox+ Franchise (Item 19, 2022 FDD)
- This Item sets forth historical financial information experienced by redbox+ franchisees for the period from January 1, 2021 to December 31, 2021 (the “Measurement Period”), which was provided to the Franchisor by the Reporting Franchisees, as defined below.
- As of December 31, 2021, there were 72 franchisees operating substantially similar businesses as those being offered under the disclosure document. Of the 72 franchisees operating by the end of the 2021 fiscal year, 43 had been open and operating the entire Measurement Period. Of the 43 franchisees that had been open and operating for the entire Measurement Period, 13 did not report the required data to the Franchisor by the time the disclosure document was prepared.
- Therefore, the “Reporting Franchisees” are 30 of the 43 franchisees that were open and operating 12 months or more by the end of the Measurement Period. The Reporting Franchisees operate in territories with populations that range from 224,287 to 1,086,760.
- Franchisees operate either in single territories or multiple territories collectively as one business, however, each territory is subject to its own franchise agreement and obligations. Franchisees who operate multiple territories do not operate, account, or report each territory individually and the historical data reflected in this Item 19 is based on the totals for all territories owned in conjunction with their redbox+ Businesses.
- Therefore, in each Part of this Item, redbox+ included two presentations of the data: data from all Reporting Franchisees and data from single-territory operators only. Of the Reporting Franchisees, 3 are single-territory operators.
- redbox+ has not audited or independently verified the data submitted by the Reporting Franchisees.
Part 1 – Fiscal 2021 KPI Reporting
- Part 1 of this Item sets forth certain key performance indicators (“KPIs”) achieved by the Reporting Franchisees during the Measurement Period, including average Monthly Containers Owned, average Monthly Turns by Utilized Container, average Monthly Turns per Container, average Rental Rate, average Total Revenue per Rental Rate, and average Tipping Fee per Job.
A. Average KPIs for 2021 – All Reporting Franchisees
- Average Monthly Containers Owned: 49
- Monthly Turns by Utilized Container: 2.47x
- Rental Rate: $428.53
- Total Revenue per Rental: $475.07
- Tipping Fee per Job: $147.23
- Monthly Turns by Owned Container: 1.66x
B. Average KPIs for 2021 – Single-Territory Franchisees
- Average Monthly Containers Owned: 45
- Monthly Turns by Utilized Container: 2.02x
- Rental Rate: $578.15
- Total Revenue per Rental: $622.82
- Tipping Fee per Job: $99.24
- Monthly Turns by Owned Container: 1.20x
- “Average Monthly Containers Owned” is defined as the sum of containers owned at the beginning of each month in the Measurement Period divided by 12 months.
- “Monthly Turns by Utilized Containers” represents the rental activity in a month for the average number of containers in use at any point in time during the month. It is defined as the Total Rentals in a month divided by the number of “Utilized Containers”.
- “Utilized Containers” is defined as the actual number of containers owned at the beginning of the measurement period multiplied by the “Utilization Rate”.
- “Utilization Rate” is defined as the Monthly Turns per Container multiplied by 12 and then multiplied by the Average Rental Period divided by 365.
- “Monthly Turns by Owned Container” is defined as the total number of rentals in a month divided by the total number of containers operated by the Franchisee.
- “Average Rental Period” is defined as the number of days a container is on a job site measured from the date of container drop-off until the date of container pick-up. redbox+ calculated “Average Rental Period” by taking the sum of the Reporting Franchisees’ Average Rental Period for each month in the reporting period and dividing by the number of months in the reporting period.
- “Rental Rate” is defined as the total cost to a customer to rent a single redbox+ container, based on a maximum amount of tonnage. redbox+ calculated “Average Rental Rate” by taking the sum of the Reporting Franchisees’ Average Rental Rate per rental for each month reported and dividing by the number of reporting periods.
- “Total Revenue per Rental” is defined as the Rental Rate plus additional revenue, including Excess Tonnage Fees, Additional Day Fees, and Other Related Fees charged to a customer to rent a single redbox+ container for a defined length of time based on a maximum amount of tonnage. redbox+ calculated “Average Total Revenue per Rental” by taking the sum of the Reporting Franchisees’ Average Total Revenue per Rental for each month reported and dividing by the number of reporting periods.
- “Excess Tonnage Fees” is defined as the amount of revenue from fees charged for tonnage above the maximum amount of tonnage included in the Rental Rate when a customer rents a single redbox+ container. Excess Tonnage Fees is calculated as actual tonnage minus the maximum amount of tonnage multiplied by the Excess Tonnage Rate. This rate is included in the terms of the job contract.
- “Additional Day Fees” is defined as the amount of revenue from fees charged for using a container for period that exceeds the contract term. Additional Day Fees is calculated as total number of rental days minus the number of days included in the contract multiplied by the Additional Day Rate. This per day rate is included in the terms of the job contract.
- “Tipping Fee” is defined as a disposal fee charged by the local landfill or transfer station. Fees are typically set and charged based on cost per ton of debris disposed. redbox+ calculated “Average Tipping Fee per Rental” by taking the sum of the Reporting Franchisees’ Tipping Fees reported for the Measurement Period and dividing by the number of reported rentals during the Measurement Period.
Part 2 – Total Reporting Franchisee Container Count, Average Container Count During the Measurement Period, and Growth in Container Count
- Part 2 of this item sets forth the Average Monthly Containers Owned, and the Total Number of Containers Owned by the Reporting Franchisees between January 1, 2021 and December 31, 2021.
A. Container Count – All Reporting Franchisees
Total Container Count
- Beginning: 1,212
- End: 1,698
- % Growth: 40.1%
Average Container Count
- Beginning: 40
- End: 57
- % Growth: 40.1%
B. Container Count – Single-Territory Franchisees
Total Container Count
- Beginning: 109
- End: 160
- % Growth: 46.8%
Average Container Count
- Beginning: 36
- End: 53
- % Growth: 46.8%
Part 3 – Variable Expenses as a Percentage of Sales, and Amount of Fixed Expenses
- Part 3 of this Item sets forth the average variable operating expenses as a percentage of sales and average fixed expense spending incurred by the Reporting Franchisees during the Measurement Period.
A. 2021 Average Variable Expenses as % of Sales and 2021 Average Fixed Expenses in $ Volume – All Reporting Franchisees
Average Variable Expenses
- COS – Landfill/Tipping Fees: 26.6%
- COS – Production Expenses: 2.9%
- COS – Fuel Expense: 6.2%
- COS – Equipment and Vehicles: 3.5%
- Bank and Merchant Fees: 1.7%
- Administrative/Office Expenses: 3.0%
- Professional Fees: 1.6%
Average Fixed Expenses
- Marketing Spend: $13,433
- Rent Expense: $17,626
- Payroll Expense: $104,318 (Payroll Expense – Truck: $49,335)
- Insurance Expense: $26,676 (Insurance Expense – Truck: $13,242)
B. 2021 Average Variable Expenses as % of Sales and 2021 Average Fixed Expenses in $ Volume – Single-Territory Franchisees
Average Variable Expenses
- COS – Landfill/Tipping Fees: 15.3%
- COS – Production Expenses: 0.7%
- COS – Fuel Expense: 3.5%
- COS – Equipment and Vehicles: 1.1%
- Bank and Merchant Fees: 0.9%
- Administrative/Office Expenses: 3.2%
- Professional Fees: 0.8%
Average Fixed Expenses
- Marketing Spend: $13,215
- Rent Expense: $16,480
- Payroll Expense: $77,370 (Payroll Expense – Truck: $48,749)
- Insurance Expense: $32,368 (Insurance Expense – Truck: $20,034)
- “COS – Landfill/Tipping Fees” includes all costs charged for the disposal of construction and demolition debris placed in the redbox+ containers for transportation and disposal.
- “COS – Production Expenses” contains all other costs related directly with production including contracted services, sales and franchise tax expense, work apparel and uniforms, field supplies, sewage and septic fees, and customer repairs.
- “COS – Fuel Expense” contains all fuel charges for the production vehicles involved in the delivery and pick-up of the redbox+ containers.
- “COS – Equipment & Vehicles” is defined as the other equipment and vehicle costs related to the delivery and pick-up of the redbox+ containers, including parking and tolls, repairs, GPS or other fleet management software, and license and registration on vehicles.
- “Bank and Merchant Fees” is defined as credit card (sales) processing fees and charges, as well as general bank related fees.
- “Administrative/Office Expense” includes expenses related to recruiting, computer supplies, computer and internet access, dues and subscriptions, education and training, business meals, general office supplies, postage, telephone, travel, and utilities.
- “Professional Fees” is defined as the costs for redbox+ required accounting/bookkeeping service, outside tax accounting services, and legal services.
- “Marketing Spend” includes all spending on advertising, commissions and referrals, website cost, and any expenditures related to an SEO program and related campaigns.
- “Rent Expense” is defined as rent for equipment facility and storage. “Rent Expense” measurement being presented excludes redbox+ franchisees in Orange County, California and Westchester County, New York because these locations’ results materially skewed the data due to the extremely high land cost in those specific markets. Including these locations’ rents increased the Average Rent Expense from $17,626 to $20,928.
- “Payroll Expense” is defined as employee compensation for work, computed and paid on either an hourly basis, including overtime, or on a salary basis. All owner-related compensation is excluded from this number.
- “Payroll Expense – Truck” is defined as the total amount of Payroll Expense divided by the average number of trucks operated in the Measurement Period.
- “Insurance Expense” is defined as general liability insurance, property insurance, umbrella insurance, workers’ compensation insurance, and any other insurance.
- “Insurance Expense – Truck” is defined as the total amount of Insurance Expense divided by the average number of trucks operated in the Measurement Period.
Part 4 – Rental Revenue and Non-Rental Revenue During the Measurement Period as a Percentage of Total Revenue
- Part 4 of this Item sets forth the breakdown of Revenues between Container Rental Revenue, Excess Tonnage Fees, and Other Revenue Sources as a percentage of Total Revenue, as well as a comparison of Non-Rental Revenue Sources to Rental Revenue for the Reporting Franchisees.
A. Average Revenue by Source – All Reporting Franchisees
Average Revenue Source
- Container Revenue: 88.2%
- Excess Tonnage Fees: 6.1%
- Other Charges: 5.7%
Average Non-Rental Revenue
- % of Total Revenue: 11.8%
- % of Rental Revenue: 14.4%
B. Average Revenue by Source – Single-Territory Franchisees
Average Revenue Source
- Container Revenue: 94.5%
- Excess Tonnage Fees: 4.2%
- Other Charges: 1.4%
Average Non-Rental Revenue
- % of Total Revenue: 5.5%
- % of Rental Revenue: 5.9%
- “Container Rental” includes all container rental fees, drop fees, and base tonnage fees charged to customers for the rental of redbox+ containers.
- “Excess Tonnage Fees” is defined as charges to customers for tonnage in excess of the base tonnage allowed under the rental agreement.
- “Other Charges” is defined as revenue generated from charges for rental days in excess of the base days allowed under the rental agreement, additional toilet rentals, toilet cleaning fees, fuel surcharges, long-distance charges, prohibited items fees, additional trip fees, unscheduled trip fees, and any other fees not related to the Container Rental or Excess Tonnage Fees.
- “Non-Rental Revenue” is the sum of Excess Tonnage Fees and Other Charges.
- Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn this much.
- The figures above do not include certain costs associated with the establishment and operation of a Franchised Business, including initial franchise fees and wages. The above figures also exclude finance charges. Interest expense, interest income, depreciation, amortization, and other income or expenses will vary substantially from business to business, depending on the amount and kind of financing you obtain to establish your Franchised Business, as well as your credit history.
Section VI – redbox+ Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️
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