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

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

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

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

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

• 2022 and 2021 combined gross sales for all AlphaGraphics franchised business centers in the U.S.

• 2022 average and median gross sales (and median gross sales for the top 25% and lowest 25%) for the 234 AlphaGraphics franchised business centers that (i) have been in operation in the United States for 1 year or more as of December 31, 2022, and (ii) submitted all required sales reports regarding 2022 (“Reporting Criteria”)

• 2022 median gross sales, gross margin, operating expenses (payroll, accounting and legal fees, advertising and marketing, auto operating expenses, building rent, royalties, lease and rental expenses, office supplies, property and liability insurance, travel and entertainment, utilities, and all other overhead expenses), EBITDA, and miscellaneous stats (depreciation, interest) for 163 AlphaGraphics business centers, which represents all business centers that met the Reporting Criteria (as defined above) as of December 31, 2022, excluding 71 business centers that did not provide any/complete expense data

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

Section I – AlphaGraphics Franchise Costs

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

• Initial Franchise Fee:  $48,950
• Opening/Reopening Performance Package:  $10,000
• Center Development Package:  $146,565
• MIS System (PrintSmith Vision):  $15,000
• CRM System (Print Speak):  $250
• agOnline System:  $1,500
• Real Estate & Leasehold Improvements and Construction:  $10,000 to $40,000
• Digital Printing Equipment:  $0 to $3,600
• Finance Costs:  $0 to $17,000
• Miscellaneous Opening Costs:  $600 to $6,800
• Travel and Expense for Training:  $2,450 to $4,900
• Additional Funds – 12 Months:  $50,000 to $74,000
• Total Estimated AlphaGraphics Franchise Costs:  $285,315 to $368,565

Section II – AlphaGraphics’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

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

• Initial Franchise Fee:  $48,950
• Royalties:  royalties range from 7% down to 3% of Gross Sales, subject to a yearly minimum
• AlphaGraphics Integrated Marketing Fees (“AIM Fees”):  2½% of Franchised Business Center’s Gross Sales. Currently, AlphaGraphics caps AIM Fees at $19,453/year for your first Franchised Business Center and $9,667/year for each additional Franchised Business Center, subject to a yearly minimum.

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

Franchised

2020

• Outlets at the Start of the Year:  250
• Outlets at the End of the Year:  248
• Net Change:  -2

2021

• Outlets at the Start of the Year:  248
• Outlets at the End of the Year:  242
• Net Change:  -6

2022

• Outlets at the Start of the Year:  242
• Outlets at the End of the Year:  237
• Net Change:  -5

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 AlphaGraphics Franchise

• AlphaGraphics Franchisee Sales Increase 23% in 2022

• AlphaGraphics Recognized as One of the Leading Franchise Brands in the U.S.

• AlphaGraphics Recognized as a Top Franchise for Veterans

• AlphaGraphics Franchise Owner Louis Malooley Named Prestigious Franny Award Winner

• AlphaGraphics Ranked No. 435 on Entrepreneur’s 2023 Franchise 500 List

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

Part 1 – Total Gross Sales for the Two Most Recent Calendar Years for All U.S. Business Centers

• The table below shows the combined Gross Sales for all franchised U.S. Business Centers during AlphaGraphics’ last two calendar years.

• 2021 Calendar Year:  $246,604,000
• 2022 Calendar Year:  $307,652,000

• In 2021, AlphaGraphics had 248 franchised Business Centers in the United States on January 1, 2021, and 242 on December 31, 2021.

• In 2022, AlphaGraphics had 242 franchised Business Centers in the United States on January 1, 2022, and 237 on December 31, 2022.

• Total Gross Sales have been rounded to the nearest thousand.

Part 2 – Annual Gross Sales for Business Centers Operating in Calendar Year 2022

• Part 2 below lists the annual Gross Sales information reported for calendar year 2022 by AlphaGraphics’ franchised Business Centers that (i) have been in operation in the United States for 1 year or more as of December 31, 2022 – that is, Business Centers that first opened before January 1, 2022 and were still open as of December 31, 2022, and (ii) submitted all required sales reports regarding 2022 (“Reporting Criteria”).

• It excludes data from: (i) 7 Business Centers that were terminated or permanently closed during calendar year 2022 (of those, 0 franchised Business Centers closed in 2022 after being open for less than 12 months); and (ii) 2 Business Centers that opened in 2022 and thus were not in operation for all of the 2022 calendar year.

• As of December 31, 2022, AlphaGraphics had 237 Business Centers open and operating in the United States; of those, 234 Business Centers met the Reporting Criteria.

Calendar Year 2022

• Average Annual Gross Sales:  $1,296,618
• Median Annual Gross Sales:  $889,276
• Median Annual Gross Sales of Top 25%:  $2,241,872
• Median Annual Gross Sales of Lowest 25%:  $439,276

• Of the 234 Business Centers included in Part 2, 77 (33%) met or exceeded the average annual Gross Sales of the Business Centers for calendar year 2022. The range of annual Gross Sales for all Business Centers was $131,465 (lowest) to $9,714,943 (highest) in 2022.

• The average 2022 annual Gross Sales for the Top 25% Business Centers was $2,789,308. Of the 59 Business Centers included in the Top 25%, 18 (31%) met or exceeded the average annual Gross Sales of the Top 25% Business Centers for calendar year 2022. The range of 2022 annual Gross Sales for the Top 25% Business Centers was $1,558,101 (lowest) to $9,714,943 (highest).

• The average 2022 annual Gross Sales for the Lowest 25% Business Centers was $431,365. Of the 59 Business Centers included in the Lowest 25%, 30 (51%) met or exceeded the average annual Gross Sales of the Lowest 25% Business Centers for calendar year 2022. The range of 2022 annual Gross Sales for the Lowest 25% Business Centers was $131,465 (lowest) to $639,690 (highest).

Part 3 – Certain Information for Business Centers for Calendar Year 2022

• Part 3 below describes certain cost and expense information as a percentage of Gross Sales for franchisees operating a U.S. Business Center during 2022.

• There are a total of 163 Business Centers included in Part 3 below for Calendar Year 2022, which represents all Business Centers that met the Reporting Criteria (as defined above) as of December 31, 2022, excluding 71 Business Centers that did not provide any/complete expense data.

Median (All 163 Centers)

• Gross Sales:  $1,020,445
• Gross Margin:  69.6%
• Payroll:  27.3%
• Accounting & Legal Fees:  0.6%
• Advertising & Marketing:  2.4%
• Auto Operating Expenses:  0.9%
• Building Rent:  7.1%
• Royalties:  5.6%
• Lease & Rental Expense:  2.8%
• Office Supplies:  0.7%
• Property & Liability Insurance:  0.5%
• Travel & Entertainment:  0.5%
• Utilities:  1.6%
• All Other Overhead/Miscellaneous Income:  4.7%
• EBITDA:  14.9%
• Depreciation:  0.7%
• Interest: 0.4%

• All figures in Part 3 are medians. The average 2022 annual Gross Sales for all 163 Business Centers included in Part 3 was $1,503,959. Of the 163 Business Centers included in Part 3, 52 (32%) met or exceeded the average annual Gross Sales for calendar year 2022. The range of 2022 annual Gross Sales for these 163 Business Centers was $144,294 (lowest) to $9,717,297 (highest).

• “Gross Margin” is defined as Gross Sales less cost of goods sold. Cost of goods sold includes material costs, equipment costs, and vendor services (outsourced tasks) but does not include Labor or Rent. In the table, Gross Margin is expressed as a percentage of Gross Sales.

• The average 2022 annual Gross Margin for all 163 Business Centers included in Part 3 was 69.2%. Of the 163 Business Centers included in Part 3, 86 (53%) met or exceeded the average annual Gross Margin for calendar year 2022.

• Payroll is defined as the total of direct labor (labor directly employed in the production of product, including benefits) and indirect labor (labor not employed in the production of product, such as administrative or sales personnel), including payroll taxes and group medical, for the U.S. Business Center. In many cases, it may also include owner’s salary.

• Advertising & Marketing is defined as the total advertising, promotion, AIM fees, and all other advertising and marketing expenses.

• Building Rent is defined as the rent paid to the landlord of the premises where the U.S. Business Center is located and any property taxes paid on the building.

• Royalties is defined as the gross royalties paid to AlphaGraphics, Inc. and does not take into account Universal Service Credits that some franchisees currently receive (taken into account in other overhead expenses) which can be used as a credit against Royalties owed.

• Property & Liability Insurance is defined as the total property and liability insurance.

• Utilities is defined as the total telephone, internet, gas, and electric expense.

• All Other Overhead is defined as the miscellaneous costs and income that includes Managed Service Fees, Universal Services Credits, freight income and freight expenses, other income and other expenses, and other administrative expenses (includes bad debt, banking fees, charitable contributions, credit card fees, dues and subscriptions, shipping, property taxes, licenses and fees, etc.).

• EBITDA is defined as the earnings before interest, taxes, depreciation, and amortization. In many cases, it does not include owner’s salary.

• The average 2022 annual EBITDA for all 163 Business Centers included in Part 3 was 14.6%. Of the 163 Business Centers included in Part 3, 84 (52%) met or exceeded the average annual EBITDA for calendar year 2022.

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