LaundroLab Franchise: Average Sales ($985K) vs. Cost ($1.59M-$1.94M)

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

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

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

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

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

• 2022 revenue, expenses, and EBITDA (no service of delivery accounts and service of delivery accounts only, separately stated) for the 2 laundromat businesses operated by 2 of LaundroLab’s affiliates that are substantially similar to the type of business for which LaundroLab offers franchises in the disclosure document

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

Section I – LaundroLab Franchise Costs

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

• Initial Franchise Fee:  $49,500
• New Franchised Business Opening Investment Services:  $18,500
• Delivery Account Set-Up Fee:  $0 to $8,000
• Lease Deposit (First Month):  $3,000 to $10,000
• New Store Opening Advertising:  $20,000
• Leasehold Improvements:  $540,000 to $620,000
• Architecture/Engineering:  $30,000 to $35,000
• Signage:  $10,000 to $20,000
• Computer Equipment:  $500 to $2,000
• Point-of-Sale Equipment:  $500 to $1,000
• Laundry Equipment:  $851,216 to $1,007,680
• Inventory:  $2,000 to $4,000
• Licenses and Professional Services:  $1,000 to $2,000
• Prepaid Insurance Premium:  $7,500 to $12,500
• Training Expenses:  $1,000 to $4,000
• Additional Funds for 3 Months:  $30,000 to $60,000
• Camera and Security System: $20,000 to $40,000
• Office Equipment:  $500 to $1,000
• Televisions:  $2,000 to $5,000
• Furniture:  $4,000 to $12,000
• Uniforms:  $500 to $1,000
• Legal Fees:  $2,000 to $10,000
• Total Estimated LaundroLab Franchise Costs:  $1,593,716 to $1,943,180

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

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

• Initial Franchise Fee:  $49,500
• Royalty Fee:  Royalties will not begin until 6 months after the opening date or 20 months from signing the Franchise Agreement, whichever occurs earlier (the “Waived Royalty Period”). Beginning in the month immediately after the Waived Royalty Period and continuing throughout the remainder of the franchise term, your Royalty will be the greater of: (i) $500 per month; or (ii) 6% of your Gross Revenues.
• Brand Fund Contribution:  currently, 1% of Gross Revenues and not to exceed 2% of Gross Revenues
• Local Advertising, Marketing, and Promotional Expenditures:  Beginning in the 4th month your Business is opened and continuing through the 15th month after the Business is opened, you must spend a minimum of $1,000 per month on local marketing and promotion. Beginning in the 16th month after the Business is opened, and continuing throughout the remainder of the Term, you must spend a minimum of $500 per month on local marketing and promotion.

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

Franchised

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:  3
• Net Change:  +3

Company-Owned

2020

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2021

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  2
• Net Change:  +1

2022

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

Section IV – News Updates on the LaundroLab Franchise

• LaundroLab Corporate Team Adds Three

• Laundromat Franchise Creates a Kinder, More Welcoming Way to Clean Clothes

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

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

• This Item sets forth certain historical financial performance information for 2 laundromat businesses operated by 2 of LaundroLab’s affiliates that are substantially similar to the type of business for which LaundroLab offers franchises in the disclosure document.

• Both affiliated businesses operate in North Carolina. The newer Business, which opened in approximately December 2021, operates under the “LaundroLab” Mark. The older Business, which opened in approximately July 2018, operates under the trademark “The Laundry Room.”

• Both Businesses offer the same products and services to be offered by franchised LaundroLab Businesses, are the same size as the franchised LaundroLab Businesses the franchisor expects to grant, and operate in the same manner the franchisor expects franchised LaundroLab Businesses to operate. There are no material differences between these 2 affiliated Businesses and the franchised LaundroLab Businesses the franchisor expects to grant.

• The information presented in this Item 19 consists of full profit and loss statements (through EBITDA, which is defined below) for:

• (1) the affiliated Business operated under the Laundry Room trademark during its full calendar year of operation in 2022; and
• (2) the affiliated Business operated under the LaundroLab Mark during its full calendar year of operation in 2022.

• However, these full profit and loss statements do not include any revenues or related expenses on account of the affiliated Businesses’ servicing of Delivery Accounts. Financial performance information for each Business’s servicing of Delivery Accounts (beginning with the 2022 calendar year) is presented in separate charts. The franchisor separates this information because it does not expect franchisees to begin servicing Delivery Accounts when their Businesses first open.

• While the affiliated Businesses did not pay Royalties, Brand Fund Contributions, or Technology Investment Contributions during the measured operating periods, this Item 19 imputes those charges to the Businesses (except for Royalties during their first partial year of operation because franchised Businesses generally need not begin paying Royalties until 6 months after they open).

• Gross Revenues are defined in the Franchise Agreement to include all revenues generated from all business conducted at or from the Business, including amounts received from laundry services (including providing services to Delivery Accounts), products, merchandise, and tangible property of any nature whatsoever, whether in cash or for credit, and whether collected or uncollected.

• Gross Revenues, however, do not include the amount of any applicable sales tax imposed by any federal, state, municipal, or other governmental authority if such taxes are stated separately when the customer is charged. Also excluded from Gross Revenues are the amounts derived from the operation of approved, lawful arcade games and ATM machines within the premises, and amounts of any documented refunds, chargebacks, credits, and allowances given to customers in good faith.

• The information in this Item 19 is not audited.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you will earn as much.

Part 1 – Financial Performance of First Affiliate-Owned Unit (The Laundry Room)

No Service of Delivery Accounts (January 2022 to December 2022)

Revenue

• Arcade Games:  $20,216
• ATM:  $5,000
• Discounts:  ($7,439)
• POS Sales:  $4,510
• Vending Machine Revenue:  $58,646
• Wash/Dry/Fold:  $39,813
• Washer/Dryer/LaundryPay Revenue:  $723,949
• Total Revenue:  $844,695

Expenses

• Advertising & Marketing:  $2,056
• Bank Charges & Fees:  $1,327
• Business Personal Property Tax:  $8,331
• Insurance:  $16,144
• Internet & Telephone Expense:  $1,600
• Janitorial Services:  $5,351
• Laundry Equipment Repairs & Maintenance:  $13,280
• Legal & Professional Services:  $4,345
• Merchant Account Fees:  $8,446
• Miscellaneous Expenses:  $4,791
• Office Supplies, Expense & Software:  $5,778
• Other Repairs & Maintenance:  $16,678
• Payroll Expenses:  $162,735
• Rent & TICAM Expense:  $113,762
• Security Expense:  $8,960
• Supplies Expense (COGS):  $25,354
• Utilities:  $132,210
• Royalty Fee:  $49,169
• Brand Fund Contribution:  $8,195
• Technology Investment:  $3,600
• Total Expenses:  $592,109

EBITDA:  $252,586

Service of Delivery Accounts Only (January 2022 to December 2022)

Delivery Account Payments:  $577,201

Expenses

• Laundry Supplies:  $28,989
• Payroll Expenses:  $379,715
• Utilities:  $20,246
• Royalty:  $34,632
• Brand Fund Contribution:  $5,772
• Total Expenses:  $469,354

EBITDA:  $107,847

Part 2 – Financial Performance of Second Affiliate-Owned Unit (LaundroLab Eastland)

No Service of Delivery Accounts (January 2022 to December 2022)

Revenue

• Arcade Games:  $13,820
• ATM:  $1,114
• Discounts:  ($16,362)
• POS Sales:  $3,823
• Vending Machine Revenue:  $24,971
• Wash/Dry/Fold:  $12,688
• Washer/Dryer/LaundryPay Revenue:  $330,379
• Total Revenue:  $370,433

Expenses

• Advertising & Marketing:  $20,000
• Bank Charges & Fees:  $312
• Business Personal Property Tax:  $8,400
• Insurance:  $6,817
• Internet & Telephone Expense:  $1,190
• Janitorial Services:  $4,307
• Laundry Equipment Repairs & Maintenance:  $1,108
• Legal & Professional Services:  $4,081
• Merchant Account Fees:  $3,725
• Miscellaneous Expenses:  $4,410
• Office Supplies, Expense & Software:  $9,543
• Other Repairs & Maintenance:  $4,185
• Payroll Expenses:  $95,042
• Rent & TICAM Expense:  $92,867
• Security Expense:  $2,222
• Supplies Expense (COGS):  $11,542
• Utilities:  $42,18
• Royalty Fee:  $14,125
• Brand Fund Contribution:  $3,555
• Technology Investment:  $3,600
• Total Expenses:  $333,159

EBITDA:  $37,273

Service of Delivery Accounts Only (January 2022 to December 2022)

Delivery Account Payments:  $177,717

Expenses

• Laundry Supplies:  $15,141
• Payroll Expenses:  $116,598
• Utilities:  $7,367
• Royalty:  $7,905
• Brand Fund Contribution:  $1,777
• Total Expenses:  $148,789

EBITDA:  $28,929

Part 3 – Average Financial Performance of the 2 Affiliate-Owned Units (Calculated by Franchise Chatter)

No Service of Delivery Accounts (January 2022 to December 2022)

Revenue

• Arcade Games:  $17,018 (2.8%)
• ATM:  $3,057 (0.5%)
• Discounts:  ($11,901) (-2.0%)
• POS Sales:  $4,166 (0.7%)
• Vending Machine Revenue:  $41,808 (6.9%)
• Wash/Dry/Fold:  $26,251 (4.3%)
• Washer/Dryer/LaundryPay Revenue:  $527,164 (86.8%)
• Total Revenue:  $607,564 (100.0%)

Expenses

• Advertising & Marketing:  $11,028 (1.8%)
• Bank Charges & Fees:  $820 (0.1%)
• Business Personal Property Tax:  $8,366 (1.4%)
• Insurance:  $11,481 (1.9%)
• Internet & Telephone Expense:  $1,395 (0.2%)
• Janitorial Services:  $4,829 (0.8%)
• Laundry Equipment Repairs & Maintenance:  $7,194 (1.2%)
• Legal & Professional Services:  $4,213 (0.7%)
• Merchant Account Fees:  $6,086 (1.0%)
• Miscellaneous Expenses:  $4,601 (0.8%)
• Office Supplies, Expense & Software:  $7,661 (1.3%)
• Other Repairs & Maintenance:  $10,432 (1.7%)
• Payroll Expenses:  $128,888 (21.2%)
• Rent & TICAM Expense:  $103,314 (17.0%)
• Security Expense:  $5,591 (0.9%)
• Supplies Expense (COGS):  $18,448 (3.0%)
• Utilities:  $87,169 (14.3%)
• Royalty Fee:  $31,647 (5.2%)
• Brand Fund Contribution:  $5,875 (1.0%)
• Technology Investment:  $3,600 (0.6%)
• Total Expenses:  $462,634 (76.1%)

EBITDA:  $144,930 (23.9%)

Service of Delivery Accounts Only (January 2022 to December 2022)

Delivery Account Payments:  $377,459 (100.0%)

Expenses

• Laundry Supplies:  $22,065 (5.8%)
• Payroll Expenses:  $248,156 (65.7%)
• Utilities:  $13,806 (3.7%)
• Royalty:  $21,268 (5.6%)
• Brand Fund Contribution:  $3,774 (1.0%)
• Total Expenses:  $309,072 (81.9%)

EBITDA:  $68,388 (18.1%)

• Arcade Game revenue is defined as revenue generated from in-store coin-operated amusement games. Arcade Games were temporarily suspended in April 2020 and May 2020 due to the COVID-19 pandemic. Revenue from Arcade Games is not counted within Gross Sales. Therefore, franchisees need not pay royalties or Brand Fund contributions on revenue from Arcade Games.

• ATM means the revenue received from the use of ATM machines at the Business premises. Revenue from the use of ATM machines at the Business premises is not counted within Gross Sales. Therefore, franchisees need not pay royalties or Brand Fund contributions on revenue from the use of ATM machines.

• Discounts means the discounts provided to customers on washer and dryer runs.

• POS Sales means revenue generated from over-the-counter sales of retail items, including clothes hangers and laundry bags.

• Vending Machine Revenue means revenue generated from retail items sold in vending machines, including drinks, snacks, detergents, softeners, and other miscellaneous laundry supplies.

• Wash/Dry/Fold revenue means revenue generated from drop-off wash, dry, and fold services. Wash/Dry/Fold services were temporarily suspended in April 2020 and May 2020 due to the COVID-19 pandemic.

• Washer/Dryer/LaundryPay revenue includes all self-service revenue generated from the use of the washers and dryers at the Business premises.

• Advertising & Marketing means expenses for local, digital, and traditional advertising and marketing.

• Bank Charges & Fees means any business-related bank charges and fees.

• Business Personal Property Tax is taxes paid on the value of Business-owned property.

• Insurance is insurance-related expenses such as workers’ compensation and general liability.

• Internet & Telephone Expense means expenses incurred to maintain on-site high-speed internet and phone services.

• Janitorial Services includes expenses incurred for janitorial services and in purchasing cleaning supplies.

• Laundry Equipment Repairs & Maintenance includes expenses incurred for repairs and maintenance performed on specific equipment such as changers, washing machines, dryers, and carts.

• Legal & Professional Services means expenses incurred for legal and/or bookkeeping services.

• Merchant Account Fees means expenses incurred for third-party credit card processing services.

• Miscellaneous Expenses include recruiting expense, uniforms, website hosting expense, contractors, meals and entertainment, customer reimbursement, fines and penalties, and pest control.

• Office Supplies, Expense & Software includes expenses incurred from purchases of generic office supplies (pens, paper, laminating pouches, etc.), personal protective equipment, office furniture, and software pertaining to in-store television signage.

• Other Repairs & Maintenance include expenses incurred from repairs and maintenance performed on non-laundry equipment such as arcade games, HVAC, and plumbing.

• Payroll Expenses means expenses incurred for payroll taxes and fees and wages paid to employees.

• Rent & TICAM Expense means amounts paid to the landlord, including rent, taxes, insurance, and common area maintenance fees.

• Security Expense means expenses incurred for security services, including monthly monitoring and security sensors.

• Supplies Expense (COGS), or cost of goods sold, means expenses incurred to purchase all supplies, including vending machine supplies, POS supplies, and laundry supplies.

• Utilities means expenses incurred for utilities, including charges for electrical and water services.

• Royalty Fee is imputed based on the Royalty Fee currently set forth in the disclosure document (6% of Gross Revenues).

• Brand Fund Contribution is imputed based on the Brand Fund Contribution currently set forth in the disclosure document (1% of Gross Revenues).

• Technology Investment is imputed based on the Technology Investment Contribution currently set forth in the disclosure document ($300 per month).

• “EBITDA” means earnings before interest, taxes, depreciation, and amortization. The figures in the charts exclude all owner compensation/salary.

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