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

Section I – Estimated initial investment (franchise costs) for a ShelfGenie franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a ShelfGenie franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned ShelfGenie outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the ShelfGenie franchise opportunity

Section V – Presentation and analysis of ShelfGenie’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 average, median, high, and low gross sales per order for the 43 ShelfGenie franchisees, operating 232 franchised businesses each with a territory of approximately 125,000 households and open during the 2022 Reporting Period (January 1, 2022 through December 31, 2022), that had orders that were not excluded orders

• 2022 percentage of appointments resulting in a closed order for the 43 ShelfGenie franchisees, operating 232 franchised territories (consisting of approximately 125,000 households each) and open during the 2022 Reporting Period, that had orders that were not excluded orders

• 2022 average gross sales, cost of goods sold, gross margin, and annual rebates for the 43 ShelfGenie franchisees, operating 232 franchised territories (consisting of approximately 125,000 households each) and open during the 2022 Reporting Period, that had orders that were not excluded orders

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

Section I – ShelfGenie Franchise Costs

• ShelfGenie franchise costs (Executive Franchise), based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $69,500 + $200 per 1,000 additional households over 250,000 up to a total of 375,000 households
• Leasehold Improvements:  $0 to $1,000
• Vehicles:  $0 to $1,500
• Furniture, Home Show Display, and Fixtures:  $0 to $20,000
• Technology and Office Equipment; Supplies:  $1,500 to $3,000
• Insurance:  $2,000 to $4,500
• Advertising & Promotional and Local Marketing Spending for First Three Months:  $3,200 to $9,600
• Training, Travel, Lodging, and Food:  $1,000 to $3,500
• Business Licenses and Permits:   $100 to $1,000
• Professional Fees:  $0 to $5,000
• Additional Funds for 3 Months:  $5,000 to $15,000
• Total Estimated ShelfGenie Franchise Costs:  $82,300 to $133,600 (plus any additional franchise fee)

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

• ShelfGenie’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  Executive Franchise – $69,500; Owner/Operator Franchise – $29,500
  

• License Fee:  Executive Franchise – the greater of $400 per month per Territory (minimum license fee) or 5%-7% of Gross Sales (depending on the Business’ annual Gross Sales for the current calendar year); Owner/Operator Franchise – the greater of $200 per month (minimum license fee) or 5%-7% of Gross Sales (depending on the Business’ annual Gross Sales for the current calendar year)

• Marketing, Advertising, and Promotion (MAP) Fund Fee:  2% of Gross Sales, in addition to Minimum Local Marketing Spending

• Local Marketing Groups (LMGs):  not to exceed 3% of Gross Sales. Your contribution to the LMG will count towards any required Minimum Local Marketing Spending but any required Minimum Local Marketing Spending will not represent a limit on your LMG contributions.

• Minimum Local Marketing Spending:  Executive Franchise: the greater of $3,200 or 15% of Gross Sales per month per Territory; Owner/Operator Franchise: the greater of $1,600 or 15% of Gross Sales per month

Section III – Number of Franchised and Company-Owned ShelfGenie Outlets

Franchised

2020

• Outlets at the Start of the Year:  143
• Outlets at the End of the Year:  178
• Net Change:  +35

2021

• Outlets at the Start of the Year:  178
• Outlets at the End of the Year:  227
• Net Change:  +49

2022

• Outlets at the Start of the Year:  227
• Outlets at the End of the Year:  227
• Net Change:  0

Company-Owned

2020

• Outlets at the Start of the Year:  21
• Outlets at the End of the Year:  18
• Net Change:  -3

2021

• Outlets at the Start of the Year:  18
• Outlets at the End of the Year:  16
• Net Change:  -2

2022

• Outlets at the Start of the Year:  16
• Outlets at the End of the Year:  13
• Net Change:  -3

Section IV – News Updates on the ShelfGenie Franchise

• Interview: Andy Pittman, ShelfGenie

• Neighborly Honors Its Top Performing Franchises

• ShelfGenie Ranked No. 281 on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the ShelfGenie Franchise (Item 19, 2023 FDD)

• As of December 31, 2022, there were a total of 227 ShelfGenie franchised businesses. Such total of 227 franchised businesses consisted of 37 franchised businesses with approximately 250,000 household territories and 190 franchised businesses with approximately 125,000 household territories.

• For purposes of consistency, ShelfGenie has reported the number of businesses for purposes of this Item 19 such that each of the 37 franchised businesses (with 250,000-household territories) were treated as two businesses (each business with a 125,000-household territory), resulting in a total of 264 franchised businesses each with a territory of approximately 125,000 households.

• Of these 264 businesses, 232 businesses (the “Reporting Businesses”) were open during the reporting period of January 1, 2022 through December 31, 2022 (the “Reporting Period”). Excluded from this Item 19 are 14 franchisees (operating a total of 18 franchised businesses) who did not have at least one franchised business open for the entire Reporting Period.

• Businesses that closed during the Reporting Period are excluded from the data reported in this Item 19. Fourteen ShelfGenie franchised businesses closed during 2022. Of the 14 businesses that closed, no business closed after being open for less than 12 months.

• The following tables present information regarding the (a) average and median Gross Sales per Order for the Reporting Period, (b) systemwide percentage of Appointments Resulting in a Closed Order for the Reporting Period, and (c) the average gross sales, cost of goods sold, sales per territory, gross margin, and annual rebate amount for each franchisee (by market) for the Reporting Period.

• The following tables also include the number of ShelfGenie businesses (i.e., 125,000-household territories) owned by those franchisees included in the data for each applicable chart; however, the average and median Gross Sales per Order amounts and the systemwide Percentage of Appointments Resulting in a Closed Order include Gross Sales, orders, and appointments from adjacent territories operated by the franchisees where the franchisee does not own the territory but has the right to offer and provide services in the additional territory under an “Out of Area” Amendment to its Franchise Agreement (Territory Available for Sale Amendment). Not all franchisees operate in additional territories under a Territory Available for Sale Amendment; however, those that do, report Gross Sales per order and appointment information to ShelfGenie, which is included in the financial disclosures in this Item 19.

• ShelfGenie obtained the data included in these tables from information provided to it by its franchisees through the company’s software program for the Reporting Period. Neither ShelfGenie nor its independent certified public accountants have audited or verified any of the sales and other figures reported to it. Franchisees are not required to use generally accepted accounting principles when reporting these figures.

Part 1 – Average and Median Gross Sales Per Order for System During 2022 Reporting Period

All ShelfGenie Franchisees Operating for All of 2022 That Had Orders That Were Not Excluded Orders

• Number of Reporting Franchisees:  43
• Number of ShelfGenie Businesses (i.e., 125,000-Household Territories) Owned by Reporting Franchisees:  232
• High Gross Sales Per Order:  $5,973
• Average Gross Sales Per Order:  $4,767
• Median Gross Sales Per Order:  $4,585
• Low Gross Sales Per Order:  $3,584

• “Franchisee” refers to an individual or entity that is ShelfGenie’s franchisee that operated at least one ShelfGenie Business for the Reporting Period. Several of ShelfGenie’s Franchisees own and operate multiple ShelfGenie Businesses which are typically for territories that share common borders in the same region.

• If a franchisee operates multiple ShelfGenie Businesses in the same metropolitan area (each a “Market”), such franchisee is counted in the definition of Franchisees only once for such Market, and if a franchisee operates ShelfGenie Businesses in multiple Markets, such franchisee is counted in the definition of Franchisee once for each such Market.

• The chart reflects Franchisees that were open for 12 full months throughout the Reporting Period. However, for some Franchisees with multiple Businesses/territories, some of the multiple Businesses or territories may not have been open for the entire Reporting Period.

• In calculating the Average Gross Sales per Order for the System, ShelfGenie excluded all Excluded Orders. Average Order for the System does not include any sales taxes that were collected or paid in connection with the orders.

• “Excluded Orders” refers to orders that were for friends or family, charitable events, and employees involving a discount of 80% or more off the franchisee’s suggested retail price and were not a true representation of an actual customer order. An order having a discount of 80% or more off the Franchisee’s suggested retail price indicates or suggests (a) the order was a reorder of products, (b) the order was for personal or display usage, and/or (c) the order was not an arms-length sales transaction.

• For repeat customers, each order for a project placed by a customer is treated as a separate order.

Part 2 – Percentage of Customer Appointments That Resulted in a Closed Customer Order During 2022 Reporting Period

All Reporting Franchisees for All of 2022 That Had Orders That Were Not Excluded Orders

• Number of Reporting Franchisees:  43
• Number of ShelfGenie Territories (Consisting of Approximately 125,000 Households Each):  232
• Total Number of Appointments for the System (not including Excluded Orders):  16,271
• Total Number of Closed Orders for the System Resulting from Appointments (not including Excluded Orders):  8,703
• Percentage of Appointments Resulting in a Closed Order (not including Excluded Orders):  53.5%

• An “Appointment” is viewed as an initial meeting at a customer’s home or business where the work will be performed.

• A “Closed Order” is an order where a Franchisee reported a sale to a customer. A Closed Order may involve more than one meeting with the same customer to close the sale.

• In the event of a new order by a customer, the new order is treated as an additional Closed Order with an additional Appointment.

Part 3 – 2022 Franchisee Average Gross Sales, Cost of Goods Sold, Gross Margin, and Annual Rebate Amount

• Included in the chart below is data for the Reporting Period for 43 Franchisees who owned and operated a total of 232 ShelfGenie Businesses during the Reporting Period.

• If a franchisee operates multiple ShelfGenie Businesses in the same metropolitan area (each a “Market”), such franchisee is counted in the definition of Franchisees only once for such Market, and if a franchisee operates ShelfGenie Businesses in multiple Markets, such franchisee is counted in the definition of Franchisee once for each such Market.

• Number of Reporting Franchisees:  43
• Number of ShelfGenie Territories (Consisting of Approximately 125,000 Households Each):  232
• Average Gross Sales:  $957,236
• Average Gross Sales Per Territory:  $177,419
• Average Cost of Goods Sold:  $280,523
• Average Gross Margin:  70.7%
• Average Annual Rebates:  $11,737

• Cost of Goods Sold (“COGS”) means the cost of the Core Products (e.g., shelving, cabinets, etc.) sold by the franchisee to the customer as well as freight costs.

• COGS does not include (i) miscellaneous items like clips, spacers, and other supplies that may be necessary to install the Core Products, (ii) insurance, shipping, freight, and delivery charges for the Core Products, and (iii) any sales tax, use tax, or other taxes that may be due in connection with franchisee purchases of Core Products.

• COGS does not include any additional manufacturing rebates that Manufacturing may have offered during the Reporting Period.

• The term “Gross Sales” includes the total revenues and receipts from whatever source (whether in the form of cash, credit, agreement to pay, barter, trade, or other consideration) that arise, directly or indirectly, from the operation of or in connection with a ShelfGenie business whether under any of the Marks or otherwise.

• Gross Sales exclude sales taxes collected from customers and paid to the appropriate taxing authority and any other bona fide refunds, rebates, or discounts that ShelfGenie authorizes in writing. Gross Sales also exclude sales from any Excluded Services (as defined in a mutually executed Excluded Services Addendum).

• “Gross Sales Per Territory” were calculated by taking the total Gross Sales number for the applicable Market (as defined in the above table) and dividing the number by the number of territories included in the Market.

• “Gross Margin” is the proportion, expressed as a percentage, that each Franchisee’s total Gross Sales, excluding COGS, represents in relation to each Franchisee’s total Gross Sales before deducting COGS.

• The Rebate amounts included in the above chart are rebates that Franchisees received during the Reporting Period from Manufacturing, based on purchases the Franchisees made from Manufacturing. Rebates begin only after a Franchisee meets a minimum quarterly purchase threshold, imposed per franchised business.

• Each territory for purposes of the above table includes approximately 125,000 houses or households. The table is broken up by Market (defined above) (or portion thereof if multiple Franchisees operate within a single Market), such that there may be some Franchisees represented more than once if they operate in multiple separate Markets.

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

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