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

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

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

Section III – Number of franchised and company-owned Hounds Town USA 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 Hounds Town USA franchise opportunity

Section V – Presentation and analysis of Hounds Town USA’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 gross revenue for the one affiliate-owned and 21 franchised Hounds Town USA locations that had been open at least 12 months as of December 31, 2022

• 2022 average, median, highest, and lowest gross revenue for the one affiliate-owned and 21 franchised Hounds Town USA locations that had been open at least 12 months as of December 31, 2022, based on the maturity of the Hounds Town USA businesses (open 10+ years, 5+ years, 2-5 years, 1-2 years, and 12 months)

• 2022 average daycare occupancy, average boarding occupancy, and average total occupancy for 20 franchised Hounds Town USA locations that had been open at least 12 months as of December 31, 2022, based on the maturity of the Hounds Town USA businesses (open 10+ years, 5+ years, 2-5 years, 1-2 years, and 12 months)

• 2022 average net operating income (in dollars and as a percentage of net revenue) for the one affiliate-owned and 19 franchised Hounds Town USA locations that had been open at least 12 months as of December 31, 2022 and submitted the requested financial information to Hounds Town USA

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

Section I – Hounds Town USA Franchise Costs

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

• Initial Franchise Fee:  $49,000
• Launch Fee:  $30,000
• Pre-Opening Marketing Package:  $15,000
• Microsite and Social Media Setup:  $300
• Financial Training Access:  $300
• Travel Expenses Related to Training:  $3,000 to $10,000
• Pre-Opening Lease Payments:  $0 to $24,000
• Furniture, Fixtures, and Equipment:  $30,500 to $43,000
• Leasehold Improvements:  $225,000 to $388,000
• Architect Fees:  $6,500 to $15,000
• Site Survey:  $1,500 to $4,000
• Concept Design:  $2,500 to $6,000
• Security and Utility Deposits:  $7,000 to $10,000
• Opening Inventory:  $500 to $1,000
• Post-Opening Marketing:  $25,000
• Business Licenses and Permits:  $200 to $2,500
• Fire Alarm System:  $10,000 to $15,000
• Logo Gear and Uniforms:  $1,000 to $3,000
• Signage:  $3,000 to $8,000
• Insurance:  $2,100 to $4,000
• Computer Hardware:  $0 to $2,500
• POS Setup Fee:  $500
• POS Fee – 3 months:  $900
• Closed Circuit Camera Systems:  $10,000 to $20,000
• Professional Fees:  $2,500 to $6,000
• Vehicle Lease, Signage, Insurance:  $0 to $8,000
• Bookkeeping Services:  $900
• Additional Funds for 3 Months:  $30,000 to $80,000
• Total Estimated Hounds Town USA Franchise Costs:  $457,200 to $771,900

Section II – Hounds Town USA’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

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

• Initial Franchise Fee:  $49,000 to $125,000
• Royalty:  6% of Gross Sales
• Brand Fund Contribution:  2% of Gross Sales
• Local Advertising Requirement:  the difference between the amount you spent on local advertising each month and your required local advertising expenditure, which is based on the number of months you have operated, as follows: 4-12 months in operation: $5,000 per month; 13-36 months in operation: $4,000 per month; 37+ months in operation: 2% of Gross Sales
• Advertising Cooperatives:  established by cooperative members, between 1% and 2% of Gross Sales

Section III – Number of Franchised and Company-Owned Hounds Town USA Outlets

Franchised

2020

• Outlets at the Start of the Year:  9
• Outlets at the End of the Year:  14
• Net Change:  +5

2021

• Outlets at the Start of the Year:  14
• Outlets at the End of the Year:  20
• Net Change:  +6

2022

• Outlets at the Start of the Year:  20
• Outlets at the End of the Year:  37
• Net Change:  +17

Company-Owned

2020

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

2021

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

2022

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

Section IV – News Updates on the Hounds Town USA Franchise

• Hounds Town USA Celebrates Prosperous Mid-Year Numbers with Impressive Growth Momentum

• Hounds Town USA Reveals Bold New Look Through Strategic Brand Evolution

• Hounds Town USA Ranks No. 950 on the 2023 Inc. 5000 List

• Hounds Town USA Celebrates a Strong Finish to 2022 Securing the Spot as a Top Franchise for 2023

• Doggy Daycare Brand Hounds Town USA Restructures Leadership Team

• Hounds Town USA Ranked No. 348 on Entrepreneur’s 2023 Franchise 500 List

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

• As of December 31, 2022, there were 37 franchised Hounds Town USA Businesses (“Franchised Locations”) and one affiliate-owned Hounds Town USA Business (“Affiliate Location”).

• The following tables and accompanying footnotes contain historical financial performance representations for the 21 Franchised Locations and one Affiliate Location that had been open at least 12 months as of December 31, 2022 (“Reporting Group”).

• Sixteen Franchised Locations had not been open at least 12 months as of December 31, 2022 and have been excluded from the Reporting Group.

• The Affiliate Location has been open for over 19 years and benefits from brand recognition in Ronkonkoma, New York and surrounding areas. Franchised Hounds Town USA Businesses will share many of the same characteristics as the Affiliate Location, including degree of competition and services and goods offered.

• The Affiliate Location pays Royalties, Brand Fund Contributions, and will pay the Technology Fee and Local Advertising Management Fee once implemented, but is not subject to the Local Advertising Requirement.

• Part 1 and Part 2 present the Net Revenue of the Affiliate Location and Franchised Locations in the Reporting Group, respectively, for calendar years 2020, 2021, and 2022. Part 1 and Part 2 also include the year-over-year sales growth of the Reporting Group by comparing 2020 Net Revenue to 2021 Net Revenue and comparing the 2021 Net Revenue with the 2022 Net Revenue.

• Part 3 divides the Reporting Group into subsets based on the maturity of the Hounds Town USA Businesses.

• Part 4 provides data regarding daycare and boarding numbers for the Reporting Group.

• Part 5 includes the Net Income of the Reporting Group for the 2022 Reporting Period.

• Hounds Town USA obtained the numbers for the Affiliate Location from internal accounting records. The figures have not been audited, but Hounds Town USA has no reason to doubt their accuracy.

• Hounds Town USA requested the financial information from all Franchised Locations in the Reporting Group. Hounds Town USA received information from all of those Franchised Locations except from Store 010 (Detroit), which was part of a resell during 2022 and did not receive net income information. Store 019 (Central Bucks) did not provide the net income information. Because of this, these two locations’ financial information was not included in Part 5.

Part 1 – Net Revenue, Year-Over-Year Sales Growth for the Affiliate Location During Calendar Years 2020 to 2022

Ronkonkoma

• Date Open:  January 2004
• 2020 Net Revenue:  $647,369
• 2021 Net Revenue:  $932,858
• 2022 Net Revenue:  $957,436
• 2020 to 2021 YOY Sales Growth:  44.14%
• 2021 to 2022 YOY Sales Growth:  2.63%

Part 2 – Net Revenue for the Franchised Locations in the Reporting Group During Calendar Year 2022

Open 10+ Years

• Farmingdale:  $1,329,089

Open 5+ Years

• Commack:  $998,916
• Island Park:  $822,097

Open 2-5 Years

• South Jersey:  $725,372
• Bergen:  $751,281
• Hicksville:  $954,573
• Garden City:  $1,252,442
• Pittsburgh:  $606,076
• Detroit:  $473,750
• Smyrna:  $510,858
• Sanford:  $556,476
• Hillsdale:  $580,865
• Nashville:  $642,685
• Space Coast:  $688,591
• Henderson:  $677,324

Open 1-2 Years

• Gaithersburg:  $552,650
• Stone Mountain:  $372,797
• Central Bucks:  $485,044
• Metuchen:  $690,371
• Wilmington:  $192,608

Open 12 Months

• Aurora:  $293,629

Average for Franchised Locations

• 2022 Average Gross Revenue (21 Locations):  $674,166

Part 3 – Reporting Group Average and Median Net Revenue by Maturity During Calendar Year 2022

Open 10+ Years (1 Affiliate and 1 Franchised Location)

• 2022 Average Net Revenue:  $1,143,262
• 2022 Median Net Revenue:  $1,143,262
• 2022 Highest Net Revenue:  $1,329,089
• 2022 Lowest Net Revenue:  $957,436

Open 5+ Years (2 Franchised Locations)

• 2022 Average Net Revenue:  $910,507
• 2022 Median Net Revenue:  $910,507
• 2022 Highest Net Revenue:  $998,916
• 2022 Lowest Net Revenue:  $822,097

Open 2-5 Years (12 Franchised Locations)

• 2022 Average Net Revenue:  $701,691
• 2022 Median Net Revenue:  $660,005
• 2022 Highest Net Revenue:  $1,252,442
• 2022 Lowest Net Revenue:  $473,750

Open 1-2 Years (5 Franchised Locations)

• 2022 Average Net Revenue:  $458,694
• 2022 Median Net Revenue:  $485,044
• 2022 Highest Net Revenue:  $690,371
• 2022 Lowest Net Revenue:  $192,608

Open 12 Months (1 Franchised Location)

• 2022 Average Net Revenue:  $293,629
• 2022 Median Net Revenue:  $293,629
• 2022 Highest Net Revenue:  $293,629
• 2022 Lowest Net Revenue:  $293,629

Part 4 – Annual Daycare and Boarding Occupancy for the Reporting Group in Calendar Year 2022

• Part 4 provides annual daycare and boarding numbers for the Reporting Group.

• Two Hounds Town USA Businesses in the Reporting Group are not represented below (Affiliate Location Store 0001 – Ronkonkoma and Franchise Location 0019 – Central Bucks) as those locations transitioned to a new POS machine and Hounds Town USA was unable to obtain this data.

Open 10+ Years (1 Franchised Location)

• 2022 Daycare Occupancy:  19,658
• 2022 Boarding Occupancy:  10,412
• Total 2022 Occupancy:  30,070

Open 5+ Years (2 Franchised Locations)

• 2022 Average Daycare Occupancy:  13,315
• 2022 Average Boarding Occupancy:  7,830
• Total 2022 Average Occupancy:  21,145

Open 2-5 Years (12 Franchised Locations)

• 2022 Average Daycare Occupancy:  10,715
• 2022 Average Boarding Occupancy:  7,309
• Total 2022 Average Occupancy:  18,024

Open 1-2 Years (4 Franchised Locations)

• 2022 Average Daycare Occupancy:  5,960
• 2022 Average Boarding Occupancy:  4,797
• Total 2022 Average Occupancy:  10,757

Open 12 Months (1 Franchised Location)

• 2022 Average Daycare Occupancy:  5,696
• 2022 Average Boarding Occupancy:  2,313
• Total 2022 Average Occupancy:  8,009

All (20 Franchised Location)

• 2022 Average Daycare Occupancy:  10,220
• 2022 Average Boarding Occupancy:  6,764
• Total 2022 Average Occupancy:  16,984

• “Daycare” refers to the total number of dogs utilizing a Hounds Town USA Business for daycare services during calendar year 2022.

• “Boarding” refers to the total number of dogs utilizing a Hounds Town USA Business for boarding services during calendar year 2022.

• “Total 2022 Occupancy” refers to the total number of customers/dogs that sought boarding and/or daycare services during calendar year 2022.

• The daycare, boarding, and total occupancy numbers represented in Part 4 are historical numbers from the fiscal year 2022 and your individual results may differ. Several factors contribute to these numbers such as, but not limited to, size of facility and your ability to execute Hounds Town USA’s dog management approach.

Part 4 – 2022 Net Operating Income for the Affiliate Location and Franchised Locations in the Reporting Group During Calendar Year 2022

Affiliate Location

• Ronkonkoma:  $335,371 (35% of net revenue)

Franchised Locations

Open 10+ Years

• Farmingdale:  $494,336 (37% of net revenue)

Open 5+ Years

• Commack:  $453,825 (45% of net revenue)
• Island Park:  $422,442 (51% of net revenue)

Open 2-5 Years

• South Jersey:  $148,366 (20% of net revenue)
• Bergen:  $175,697 (23% of net revenue)
• Hicksville:  $147,057 (15% of net revenue)
• Garden City:  $440,236 (35% of net revenue)
• Pittsburgh:  $100,830 (16% of net revenue)
• Smyrna:  $198,315 (38% of net revenue)
• Sanford:  $158,457 (28% of net revenue)
• Hillsdale:  $50,687 (8% of net revenue)
• Nashville:  $258,190 (40% of net revenue)
• Space Coast:  $162,945 (23% of net revenue)
• Henderson:  $163,390 (24% of net revenue)

Open 1-2 Years

• Gaithersburg:  $140,601 (25% of net revenue)
• Stone Mountain:  $61,932 (16% of net revenue)
• Metuchen:  $279,612 (40% of net revenue)
• Wilmington:  $95 (.04% of net revenue)

Open 12 Months

• Aurora:  $(51,140) (-17% of net revenue)

Average for Franchised Locations

• 2022 Average Net Operating Income Percentage (19 Locations):  $200,309 (24.6% of net revenue)

• “Net Operating Income” means Gross Profit (i.e., Net Revenue less Cost of Goods Sold) less Operating Expenses. Net Operating Income does not include the deduction of other non-operating expenses, including interest, depreciation, amortization, or taxes. It does not include the deduction of the Other Expenses (i.e., owner salary and benefits; staff bonuses; meals, transportation, and entertainment; client gifts; interest; taxes; depreciation/amortization; other expenses; and other income).

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