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

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

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

Section III – Number of franchised and company-owned Hawaii Fluid Art 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 Hawaii Fluid Art franchise opportunity

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

• 2021 gross revenue, operating expenses, franchise expenses, and EBITDA (if franchised) for the one Hawaii Fluid Art company-owned affiliate which was open and operating during the entire 2021 calendar year

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

Section I – Hawaii Fluid Art Franchise Costs

• Hawaii Fluid Art franchise costs, based on Item 7 of the company’s 2022 FDD:

• Franchise Fee:  $49,500
• Travel Expenses to Training:  $3,500 to $5,500
• Security Deposits for Lease and/or Utilities:  $4,000 to $11,000
• Rent (Through 3 Months):  $12,000 to $22,000
• Design/Architecture/Engineering:  $1,000 to $3,800
• Net Leasehold Improvements:  $3,500 to $15,000
• Furniture, Fixtures, and Equipment:  $5,500 to $11,000
• Signage:  $1,800 to $6,000
• Office Supplies and Accessories:  $250 to $500
• Initial Product/Inventory Purchase:  $4,000 to $20,000
• Business Management and Technology System:  $1,000 to $2,500
• Business Licenses:  $250 to $500
• Technology Fee (Through First 3 Months):  $1,500
• Professional Fees:  $2,500 to $6,000
• Insurance Deposit and Initial Premiums:  $1,500 to $2,500
• Grand Opening Marketing Budget:  $2,500
• Additional Funds (3 Months):  $19,000 to $35,000
• Total Estimated Hawaii Fluid Art Franchise Costs:  $113,300 to $194,800

Section II – Hawaii Fluid Art’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

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

• Franchise Fee:  $49,500
• Royalty Fees:  the greater of (i) 8% of your Gross Revenue for the preceding month; or (ii) $500 per month (subject to increase annually based on a change to the CPI)
• Marketing Fee:  2% of Gross Revenue, but subject to change at any time upon 30 days’ written notice to you
• Local Marketing Spending Requirement:  a minimum of $500 per month

Section III – Number of Franchised and Company-Owned Hawaii Fluid Art 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:  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:  3
• Net Change:  +3

Section IV – News Updates on the Hawaii Fluid Art Franchise

• Hawaii Fluid Art: Franchisees Bring Joy Every Day

• How One Woman Turned Pandemic-Induced Boredom and a Makeshift Garage Art Studio Into a Thriving Franchise

• Hawaii Fluid Art Opens New Location in New Albany

• Hawaii Fluid Art Opens New Location in Coppell, Texas

• Hawaii Fluid Art Opens New Location in Frisco

• Hawaii Fluid Art Opens New Location in Delaware

• Hawaii Fluid Art Did Not Rank on Entrepreneur’s 2023 Franchise 500 List

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

• The financial performance representation is historic based upon Hawaii Fluid Art’s existing Company-Owned Affiliate which operates in and around Waikoloa, Hawaii (“HFA Waikoloa”). It includes historical financial results from Hawaii Fluid Art’s existing Company-Owned Affiliate whose businesses were in operation for all of 2021. This is the only criteria that were used to select the financial performance information that is included in Item 19.

• As of December 31, 2021, Hawaii Fluid Art had 2 Company-Owned Affiliates, one of which was open and operating during the 2021 calendar year. Hawaii Fluid Art omitted the other Company-Owned Affiliate location as it opened in July of 2021 and thus did not meet the reporting requirements to be included in this Item 19.

• This Item 19 details the Gross Revenue generated by HFA Waikoloa during a period comprising the fiscal year 2021 (a “Measurement Period”), along with (a) the costs and expenses associated with operating each location (collectively, the “Operating Costs”); and (b) the estimated fees that would have been incurred by each location in connection with the Royalty Fees, Marketing Fees (excluding those that each location also pays), if it were a Franchised Business governed by Hawaii Fluid Art’s current form of Franchise Agreement over the Measurement Period.

Profit and Loss (January to December 2021)

Revenue

• Gross Sales:  $407,253 (100.0%)
• Less: Sales Returns and Allowances:  $0 (0.0%)
• Gross Revenue:  $407,253 (100.0%)

Expenses

• Advertising:  $2,651 (0.7%)
• Bank Charges:  $118 (0.0%)
• Charitable Contributions:  $225 (0.1%)
• Commissions:  $4,580 (1.1%)
• Dues and Subscriptions:  $150 (0.0%)
• Insurance:  $1,695 (0.4%)
• Interest:  $1,356 (0.3%)
• Licenses and Fees:  $150 (0.0%)
• Postage:  $113 (0.0%)
• Rent:  $11,325 (2.8%)
• Supplies:  $15,860 (3.9%)
• Utilities:  $2,322 (0.6%)
• Wages:  $33,210 (8.2%)

Franchise Expenses

• Royalty:  $32,580 (8.0%)
• Brand Fund Contribution:  $8,145 (2.0%)
• Technology Fee:  $6,000 (1.5%)

Total Expenses:  $120,481 (29.6%)

EBITDA (if franchised):  $286,772 (70.4%)

• The figures in the table above use the historical information that Hawaii Fluid Art Franchising has provided. You should be advised that no certified public accountant has audited these figures or expressed his or her opinion concerning their contents or form, nor has Hawaii Fluid Art sought to independently verify their accuracy.

• “Rent” represents rental costs from May until the end of 2021. Over the course of a full year this figure will likely be higher.

• “Wages” represents wages paid from May until the end of 2021. Over the course of a full year this figure will likely be higher.

• “Total Expenses” means other expenses attributable to the operation of a Hawaii Fluid Art Business, including supplies, office supplies, merchant fees and banking charges, business licenses and permits, office expenses, marketing expenses, local/co-op marketing expenses, charitable contributions, and other miscellaneous expenses.

• This sum also includes fees that are attributable to a franchisee running a Franchised Business under Hawaii Fluid Art’s current Franchise Agreement. These Fees are listed in Item 6 of the document and include (i) Royalty Fees which are 8% of Net Sales; and (ii) Marketing Fund Contributions that are 2% of Net Sales. To calculate the estimated fees under (i) and (ii), the total Gross Revenue was multiplied by the applicable percentage.

• “EBITDA” means Gross Revenue minus Total Expenses. EBITDA does not include interest paid on debt, taxes, depreciation, or amortization expenses. EBITDA Margin Percentage means EBITDA expressed as a percentage of Gross Revenue.

• This information may not reflect all operating expenses, or other costs or expenses that you may elect to incur which must be deducted from the gross revenues figure in order to obtain your net income or profit. This will affect the net income and/or cash flow of any outlet and must be carefully considered and evaluated.

• The actual performance of any outlet will depend on a number of factors specific to the location, including:

• The impact of the COVID-19 pandemic and any related closures or stay at home orders;
• Any health care law regulatory compliance expenses;
• Rent, interest, or other financing costs for land, buildings, equipment, and inventory;
• Initial franchise fee and organization costs;
• Economic and weather conditions of various geographic areas;
• Competition from a variety of other businesses;
• Different acquisition, development, construction, and property costs;
• Cost of equipment;
• Occupancy expenses such as rent, utilities, and property taxes;
• Labor costs, payroll taxes, and laws concerning employees and employee benefits;
• Different traffic counts, accessibility, visibility, and parking;
• Different results from advertising;
• Outlets have been in business for different periods of time in their respective markets;
• Cost of product and supply costs;
• Franchise payments including royalties; and
• Workers’ compensation and insurance coverage.

• These and other expenses you incur will affect the net income and cash flow of the outlet. You should consider them and evaluate the impact on your operations.

• This Item 19 does not reflect certain pre-opening costs and expenses over the Measuring Period that you are likely to incur in connection with development of a new Franchised Business.

Section VI – Hawaii Fluid Art Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️