Wireless Zone Franchise: Average Sales ($2M) vs. Cost ($182K-$443K)

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

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

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

Section III – Number of franchised and company-owned Wireless Zone 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 Wireless Zone franchise opportunity

Section V – Presentation and analysis of Wireless Zone’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 and median number of postpay activations, upgrades, and transactions (postpay activations and upgrades combined) per store per month for the top 10%, bottom 10%, and all 420 Wireless Zone franchise stores that were open during the entire calendar year 2022

• 2022 average, high, and low gross revenue, gross profit, gross profit margin, and net activations and upgrades, by quintile, for the 420 Wireless Zone franchise stores that were open during the entire calendar year 2022

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

Section I – Wireless Zone Franchise Costs

• Wireless Zone franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $1,000 to $25,000
• New Franchisee Training and Travel and Living Expenses While Training:  $2,500 to $8,000 per person
• Real Estate/Rent:  not included
• Real Estate Improvements:  $10,000 to $50,000
• Business Equipment and Supplies:  $10,000 to $16,000
• Computer Equipment, Signs, Fixtures, Kiosks, and Displays:  $73,500 to $161,000
• Miscellaneous Opening Costs:  $2,500 to $15,500
• Initial Product Inventory:  $50,000 to $75,000
• Initial Marketing Program:  $5,000
• Sales Tax, Use Tax, Other Similar Tax, Freight and Delivery Charges:  $3,000 to $38,000
• Additional Funds for 3 Months:  $25,000 to $50,000
• Total Estimated Wireless Zone Franchise Costs (excluding real estate costs):  $182,500 to $443,500

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

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

• Initial Franchise Fee:  $1,000 to $25,000
• Royalties:  not more than 22% of the Gross Profit you earn through sales at your Store

Section III – Number of Franchised and Company-Owned Wireless Zone Outlets

Franchised

2020

• Outlets at the Start of the Year:  403
• Outlets at the End of the Year:  412
• Net Change:  +9

2021

• Outlets at the Start of the Year:  412
• Outlets at the End of the Year:  428
• Net Change:  +16

2022

• Outlets at the Start of the Year:  428
• Outlets at the End of the Year:  447
• Net Change:  +19

Company-Owned

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

2022

• 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 Wireless Zone Franchise

• Wireless Zone and TCC to Donate 120,000 Backpacks with School Supplies Through Annual Give Back Event

• Chaplin School Gets Help from Wireless Zone

• New Owner of Verizon Store in Mansfield Says a Full Remodel Coming Soon

• Wireless Zone Ranked No. 149 on Entrepreneur’s 2023 Franchise 500 List

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

• Wireless Zone franchisees sell and service wireless telephones, wireless data, satellite communications, personal communications devices, and other forms of wireless, wireline, and Internet-based communication devices, services, and accessories, and entertainment and security products and services.

• Below are tables containing financial performance representations based on the Provider’s postpay activations and upgrades data for all franchised Stores for the calendar year 2022, as provided to Wireless Zone by its Provider. The Provider reports postpay activations and upgrades data to Wireless Zone using a reporting system applicable to all of the Stores. Wireless Zone has not audited these figures.

Part 1 – Number of Postpay Activation and Upgrade Transactions

• The average number of postpay activation and upgrade transactions in the tables are net of deactivations.

• Wireless Zone has omitted the first month of data from all new franchise locations in 2022 that were open less than half the month during the first month.

• Wireless Zone offers substantially the same services to all of the Stores whose data is reported in the tables below as it does to new franchisees. New Stores will offer substantially the same products and services to consumers as were offered by these Stores.

• The first table reports data for all 420 Stores that were open as franchised Stores during the entire calendar year 2022. The second table reports data for the top 10% of the 420 Stores that were open during the entire calendar year 2022, and the third table reports data for the bottom 10% of these 420 Stores.

• The rankings of the top 10% and bottom 10% of these 420 Stores were based on the total number of transactions (postpay activations and upgrades combined) per Store per month.

Franchise Stores Open 12 Full Months in 2022 (420 Stores)

• Average Number of Postpay Activations Per Store Per Month:  48
• Median Number of Postpay Activations Per Store Per Month:  41
• Average Number of Upgrades Per Store Per Month:  113
• Median Number of Upgrades Per Store Per Month:  103
• Average Number of Transactions Per Store Per Month (Postpay Activations and Upgrades Combined):  161
• Median Number of Transactions Per Store Per Month (Postpay Activations and Upgrades Combined):  143

Top 10% of Franchise Stores Open 12 Full Months in 2022 (42 Stores)

• Average Number of Postpay Activations Per Store Per Month:  102
• Median Number of Postpay Activations Per Store Per Month:  102
• Average Number of Upgrades Per Store Per Month:  240
• Median Number of Upgrades Per Store Per Month:  228
• Average Number of Transactions Per Store Per Month (Postpay Activations and Upgrades Combined):  342
• Median Number of Transactions Per Store Per Month (Postpay Activations and Upgrades Combined):  320

Bottom 10% of Franchise Stores Open 12 Full Months in 2022 (42 Stores)

• Average Number of Postpay Activations Per Store Per Month:  20
• Median Number of Postpay Activations Per Store Per Month:  21
• Average Number of Upgrades Per Store Per Month:  43
• Median Number of Upgrades Per Store Per Month:  42
• Average Number of Transactions Per Store Per Month (Postpay Activations and Upgrades Combined):  63
• Median Number of Transactions Per Store Per Month (Postpay Activations and Upgrades Combined):  63

Part 2 – Gross Revenue and Gross Profit Information

• Wireless Zone excluded the results of 39 Stores from the 2022-year chart because they were not open and operating for the entire 12-month period ending December 31, 2022. Wireless Zone excluded 10 of these Stores as they closed during this time period.

• Wireless Zone also omitted the first month of data from all Stores in 2022 that were open less than half the month during the first month of the period to ensure more accurate averages.

• Based on its calculations, Wireless Zone compiled the chart below, showing the average and median gross revenue, gross margin percentage, gross profit, and activations and upgrades each month for the top 20% of those franchises on the gross profit model, the second 20%, the middle 20%, the fourth quintile, and the bottom 20%.

• All of the closed Stores identified above were open for more than 12 months before closing.

• As used in the charts below, and in Wireless Zone’s Franchise Agreement, the following terms are defined:

• “Allowable Cost” means (i) cost attributable to Wireless Zone-approved devices, products, accessories, goods, and services sold at the Store, as set forth in the WZ LLC Price Sheet; (ii) Fees; (iii) Chargebacks: and (iv) Non-Return Chargebacks.

• The cost attributable to any device, product, accessory, good, or service will be determined based on the WZ LLC Price Sheet in effect at the time of sale. Allowable Costs do not include administrative costs, sales costs, overhead, business costs, corporate costs, labor, depreciation, inventory, rent, taxes, or any other kind of operational, business, administrative, or regulatory cost or expense.

• “Gross Profit” means, for any calendar month, the Gross Revenue of the Store less Allowable Cost.

• “Gross Revenue” means all revenue received from or in connection with the Store, including but not limited to the following: (i) sale of devices, products, accessories, goods, and services; (ii) commissions; (iii) 50% of residuals; (iv) device trade-ins; (v) customer fees; and (vi) other payments from the Provider or any supplier or vendor to WZ LLC that may be distributed to a store owner.

• Gross Revenue does not include: (i) incentives or other short-term sales program compensation funded by WZ LLC; (ii) market development funds; and (iii) co-op advertising funds.

Quintile 1 (84 Franchised Stores)

• Average Gross Revenue:  $3,626,732
• Highest Gross Revenue:  $7,205,436
• Lowest Gross Revenue:  $2,316,253
• Average Gross Profit:  $949,514
• Highest Gross Profit:  $1,718,666
• Lowest Gross Profit:  $702,179
• Weighted Average Gross Margin Percentage:  26%
• Average Net Activations and Upgrades:  3,480

Quintile 2 (84 Franchised Stores)

• Average Gross Revenue:  $2,344,913
• Highest Gross Revenue:  $3,109,291
• Lowest Gross Revenue:  $1,627,284
• Average Gross Profit:  $601,862
• Highest Gross Profit:  $701,608
• Lowest Gross Profit:  $517,330
• Weighted Average Gross Margin Percentage:  26%
• Average Net Activations and Upgrades:  2,254

Quintile 3 (84 Franchised Stores)

• Average Gross Revenue:  $1,800,219
• Highest Gross Revenue:  $2,436,728
• Lowest Gross Revenue:  $1,354,051
• Average Gross Profit:  $457,433
• Highest Gross Profit:  $516,930
• Lowest Gross Profit:  $403,204
• Weighted Average Gross Margin Percentage:  25%
• Average Net Activations and Upgrades:  1,738

Quintile 4 (84 Franchised Stores)

• Average Gross Revenue:  $1,344,247
• Highest Gross Revenue:  $1,730,318
• Lowest Gross Revenue:  $839,093
• Average Gross Profit:  $349,835
• Highest Gross Profit:  $402,728
• Lowest Gross Profit:  $306,511
• Weighted Average Gross Margin Percentage:  26%
• Average Net Activations and Upgrades:  1,325

Quintile 5 (84 Franchised Stores)

• Average Gross Revenue:  $932,368
• Highest Gross Revenue:  $1,419,149
• Lowest Gross Revenue:  $524,274
• Average Gross Profit:  $242,884
• Highest Gross Profit:  $304,306
• Lowest Gross Profit:  $140,365
• Weighted Average Gross Margin Percentage:  26%
• Average Net Activations and Upgrades:  898

Median (420 Franchised Stores)

• Median Gross Revenue:  $1,797,004
• Median Gross Profit:  $454,024
• Weighted Median Gross Margin Percentage:  26%
• Median Net Activations and Upgrades:  1,720

All (420 Franchised Stores)

• Average Gross Revenue:  $2,009,696
• Highest Gross Revenue:  $7,205,436
• Lowest Gross Revenue:  $524,274
• Average Gross Profit:  $520,306
• Highest Gross Profit:  $1,718,666
• Lowest Gross Profit:  $140,365
• Weighted Average Gross Margin Percentage:  26%
• Average Net Activations and Upgrades:  1,939

• These financial performance representation figures do not reflect the costs of sales, operating expenses, freight expenses, inventory loss expense, royalties, or other costs or expenses that must be deducted from the gross revenue or gross profit figures to obtain your net income or profit.

• The data reported in the table above are averages and could vary greatly by geographic region, the length of time the Store has been in business, sales volume, sales mix, your particular Provider, the length of time that Provider has been operating in the area, the terms of contract with the Provider, the service plan selected by the Store customer, and customer usage.

• Some Stores have earned these amounts. Your individual results may differ. There is no assurance that you’ll earn as much.

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