In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:
Section I – Estimated initial investment (franchise costs) for a Temporary Wall Systems franchise, based on Item 7 of the company’s 2023 FDD
Section II – Initial franchise fee, royalty fee, and marketing fee for a Temporary Wall Systems franchise, based on Items 5 and 6 of the company’s 2023 FDD
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Section IV – News updates on the Temporary Wall Systems franchise opportunity
Section V – Presentation and analysis of Temporary Wall Systems’ 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 gross sales, cost of goods sold, gross profit, disclosed expenses, franchisor fees, and EBITDA for the one affiliate-owned Temporary Wall Systems location that has been open and operating since April 2017 and has been utilizing the Proprietary Marks and the System in five Protected Territories
- 2022 and 2021 composition of gross sales (installation and removal fees, logistic fees, supplies and materials, purchase of wall panels, lease of wall panels) generated by the one affiliate-owned Temporary Wall Systems location that has been open and operating since April 2017 and has been utilizing the Proprietary Marks and the System in five Protected Territories
- 2017-2022 modular wall and component purchases by the one affiliate-owned Temporary Wall Systems location that has been open and operating since April 2017 and has been utilizing the Proprietary Marks and the System in five Protected Territories
Section VI – Key ratios, comparables, computations, and analyses for the Temporary Wall Systems franchise opportunity (exclusive content for Platinum subscribers)
Section I – Temporary Wall Systems Franchise Costs
- Temporary Wall Systems franchise costs, based on Item 7 of the company’s 2023 FDD:
- Initial Franchise Fee: $59,900 to $69,900
- Franchisor Directed Advertising Fee Deposit: $3,000
- Initial Inventory: $50,000 to $150,000
- Travel Expenses to Training: $250 to $3,000
- Security Deposits: $0 to $500
- Rent: $0 to $500
- Office Furniture: $0 to $1,000
- Vehicle: $0 to $60,000
- Vehicle Enhancements and Vehicle Wrap: $3,000 to $6,000
- Tools and Equipment: $2,000 to $5,000
- Business Management and Technology System: $1,000 to $3,000
- Business Licenses: $0 to $300
- Technology Fee (3 Months): $1,797
- Industry Certifications: $0 to $500
- Professional Fees: $500 to $2,000
- Insurance Deposit and Initial Premiums: $4,000 to $9,000
- Grand Opening Marketing: $5,000 to $7,000
- Additional Funds (3 Months): $15,000 to $30,000
- Total Estimated Temporary Wall Systems Franchise Costs: $145,447 to $352,497
Section II – Temporary Wall Systems’ Initial Franchise Fee, Royalty Fee, and Marketing Fee
- Temporary Wall Systems’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:
- Initial Franchise Fee: $59,900 to $69,900
- Royalty Fee: the greater of: (i) 8% of your Gross Revenue; or (ii) the Minimum Royalty Fee
- Brand Fund Contribution: currently, 1% of your Gross Revenue. Temporary Wall Systems reserves the right to increase your Brand Fund Contribution to 3% of your Gross Revenue.
- Local Advertising Requirement: currently, the minimum required spend is a minimum of $3,000 per month. Temporary Wall Systems may increase the Local Advertising Requirement up to a maximum of $4,000 per month upon 90 days’ prior written notice to you. An amount up to one half of the Local Advertising Requirement, currently a minimum of $1,500 per month, must be paid to Franchisor (“Franchisor Directed Advertising Fee”), which amount will be applied as a credit to your Local Advertising Requirement amount.
- Regional Advertising and Promotional Cooperative: if established, determined by the cooperative
Section III – Number of Franchised and Company-Owned Temporary Wall Systems Outlets
Franchised
2020
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When I owned a UPS Store, I learned firsthand how much your ZIP code shapes your outcome. I sold my store at a premium because my territory was in a high-value area. The best areas go first, and once they're gone, they're gone. Enter your ZIP code, and a territory specialist will walk you through the franchises still available near you, drawing on information that isn't publicly accessible, saving you months of wasted research.🔴Free Webinar: 6 Under-the-Radar Franchise Concepts That Serious Buyers Should Know
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- 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: 8*
- Net Change: +3
*Five of these outlets were formerly affiliate-owned and have been converted to franchised.
Company-Owned
2020
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 5
- Net Change: 0
2021
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When I owned a UPS Store, I learned firsthand how much your ZIP code shapes your outcome. I sold my store at a premium because my territory was in a high-value area. The best areas go first, and once they're gone, they're gone. Enter your ZIP code, and a territory specialist will walk you through the franchises still available near you, drawing on information that isn't publicly accessible, saving you months of wasted research.📈Dreaming of Multi‑Unit Success? Lock In Prime Territories Before They're Gone.
Colin started as a team member at 21 and now owns 6 locations in Tampa Bay. Lisa came from marketing and built 21 in San Diego. The most successful multi-unit owners move early and secure markets with room to grow. Use our free tool to search multiple ZIP codes and find franchises where you can still stack locations, before someone else does. A franchise specialist will be in touch to present what's available.- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 5
- Net Change: 0
2022
- Outlets at the Start of the Year: 5*
- Outlets at the End of the Year: 0
- Net Change: 0
*Five of these outlets were formerly affiliate-owned and have been converted to franchised.
Section IV – News Updates on the Temporary Wall Systems Franchise
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Temporary Wall Systems Franchise (Item 19, 2023 FDD)
- This Financial Performance Representation discloses the historical financial information regarding one affiliate-owned Temporary Wall Systems location (the “Affiliate Location”) that has been open and operating since April 2017 and has been utilizing the Proprietary Marks and the System in five Protected Territories.
- The financial information provided to Temporary Wall Systems by the Affiliate Location is for the period January 1, 2021 through December 31, 2022 (the “2021-2022 Measurement Period”).
- On July 14, 2022, the Affiliate Location became a franchisee. All of its territories are operated from a single office (consistent with how multi-unit franchisees with contiguous territories are permitted to operate).
- Temporary Wall Systems has not audited the amounts set forth in this Item below.
- Only the Affiliate Location has sold this much. Your individual results may differ. There is no assurance that you will sell as much.
Part 1 – Gross Sales, Cost of Goods Sold, Gross Profit, and Adjusted Net Income Generated by the Affiliate Location Over the 2021-2022 Measurement Period
2022 Measurement Period
Gross Sales: $2,635,092 (100.00%)
Cost of Goods Sold
- Contract Labor: $5,689 (0.22%)
- Equipment Rental: $4,223 (0.16%)
- Labor I&R: $134,235 (5.09%)
- Labor Taxes: $41,801 (1.59%)
- Supplies and Materials: $99,750 (3.79%)
- Total Cost of Goods Sold: $285,699 (10.84%)
Gross Profit: $2,349,394 (89.16%)
Disclosed Expenses
- G&A: $391,345 (14.85%)
- Payroll Expense: $385,342 (14.62%)
- Transportation Expense: $52,724 (2.00%)
Franchisor Fees
- Royalty Fee (8%): $210,807 (8.00%)
- Brand Fund Fee (1%): $26,351 (1.00%)
- Technology Fee ($599/month): $7,188 (0.27%)
Total Disclosed Expenses: $1,073,757 (40.75%)
Adjusted Profit: $1,275,637 (48.41%)
2021 Measurement Period
Gross Sales: $1,803,503 (100.00%)
Cost of Goods Sold
- Contract Labor: $15,762 (0.90%)
- Equipment Rental: $8,687 (0.50%)
- Labor I&R: $134,316 (7.40%)
- Labor Taxes: $45,987 (2.50%)
- Supplies and Materials: $65,023 (3.60%)
- Total Cost of Goods Sold: $269,775 (15.00%)
Gross Profit: $1,533,728 (85.00%)
Disclosed Expenses
- G&A: $190,275 (10.60%)
- Payroll Expense: $487,350 (27.00%)
- Transportation Expense: $29,233 (1.60%)
Franchisor Fees
- Royalty Fee (8%): $144,280 (8.00%)
- Brand Fund Fee (1%): $18,035 (1.00%)
- Technology Fee ($599/month): $7,188 (0.40%)
Total Disclosed Expenses: $874,274 (48.50%)
Adjusted Profit: $659,454 (36.60%)
- “Gross Sales” is defined to include all income of any type or nature and from any source that you derive or receive directly or indirectly from, through, by or on account of the operation of the Franchised Business at any time after the signing of your Franchise Agreement, in whatever form and from whatever source, including, but not limited to, cash, services in kind from barter and/or exchange, on credit or otherwise, as well as business interruption insurance proceeds, all without deduction for expenses, including marketing expenses and taxes. However, the definition of Gross Revenue does not include sales tax that is collected from customers and actually transmitted to the appropriate taxing authorities.
- “Contract Labor” is a one-time, temporary labor that was hired for assistance on a single project. This is a direct cost of a few jobs.
- “Equipment Rental” includes equipment such as lifts, larger trucks, or other miscellaneous one-time use equipment that is a direct cost of completing a specific job.
- “Supplies and Materials” includes items and job materials that are not modular walls or components, such as ancillary hardware and tools.
- “Total Cost of Goods Sold” is calculated by adding Contract Labor, Equipment Rental, Labor I&R, Labor Taxes, and Supplies and Materials.
- “Gross Profit” is calculated by subtracting Total Cost of Goods Sold from Gross Sales.
- “G&A” includes advertising and promotion, bank charges, computer and Internet, dues and subscriptions, insurance, new business development, office expenses, other taxes and fees, accounting services, legal services, outside consulting services, rent, telephone, and utilities.
- “Payroll Expense” includes all wages and salaries paid to the owners, union and non-union employees, payroll taxes, and employee benefits.
- “Transportation Expense” includes automobile fuel, repairs, maintenance, insurance, parking and tolls, and other travel expenses.
- The Term “Royalty Fee” means the Royalty Fee that the Affiliate Location would have had to pay Temporary Wall Systems over the 2021-2022 Measurement Period if the Affiliate Location were owned by a System franchisee and governed by Temporary Wall Systems’ current form of Franchise Agreement. Temporary Wall Systems calculated the Royalty Fee by multiplying Gross Sales by .08 to account for the Royalty Fee of 8% set forth and required under the current form of Franchise Agreement.
- The term “Brand Fund Contribution” means the Brand Fund Contribution that the Affiliate Location would have had to pay Temporary Wall Systems over the 2021-2022 Measurement Period if the Affiliate Location were owned by a System franchisee and governed by Temporary Wall Systems’ current form of Franchise Agreement. Temporary Wall Systems calculated the Brand Fund Contribution by multiplying Gross Sales by .01 to account for the Brand Fund Contribution of 1% set forth and required under the current form of Franchise Agreement.
- “Technology Fee” is calculated by taking Temporary Wall Systems’ current Technology Fee of $599 and multiplying that number by 12.
- “Total Disclosed Expenses” is calculated by adding: (a) G&A; (b) Payroll Expense; (c) Transportation Expense; (d) Royalty Fee; (e) Brand Fund Contribution; and (f) Technology Fee.
- “Adjusted Profit” is calculated by taking the Gross Profit and subtracting that number by the Total Disclosed Expenses. Adjusted Profit is not equal to net profit or income and, except as to Cost of Goods Sold and Disclosed Expenses, does not include the deduction of all other expenses incurred by a Franchised Business including, but not limited to, other operating expenses, management wages, interest, taxes, depreciation, and amortization.
Part 2 – Composition of Gross Sales Generated by the Affiliate Location Over the 2021-2022 Measurement Period
2022 Measurement Period
- Installation & Removal Fees: $498,151 (18.90%)
- Logistic Fees: $103,671 (3.93%)
- Supplies & Materials: $19,755 (0.75%)
- Wall Panel – Purchase: $24,322 (0.92%)
- Wall Panels – Lease: $1,989,193 (75.49%)
- Total Income: $2,635,092 (100.00%)
2021 Measurement Period
- Installation & Removal Fees: $444,587 (24.70%)
- Logistic Fees: $95,916 (5.30%)
- Supplies & Materials: $21,286 (1.20%)
- Wall Panel – Purchase: $15,801 (0.90%)
- Wall Panels – Lease: $1,228,005 (68.10%)
- Total Income: $1,803,503 (100.00%)
Part 3 – Historical Modular Wall and Component Purchases by the Affiliate Location During the 2017, 2018, 2019, 2020, 2021, and 2022 Calendar Years
- 2017: $24,551.50
- 2018: $154,596.40
- 2019: $110,580.85
- 2020: $129,385.46
- 2021: $406,949.40
- 2022: $170,862.36
- Since its inception in 2017, the Affiliate Location has spent $826,062.61 on Modular Wall and Component Purchases.
- At its inception, the Affiliate Location did not follow the initial inventory purchase currently required in Item 7.
- Modular Wall and Component Purchases include, but is not limited to, the following items: Parts, Pieces, Accessories, Modular Wall Panels, Doors, Locks, Door Handles, Corner Panels, and Extension Panels.
- Affiliate Location means a location owned either directly or indirectly by Temporary Wall Systems, its affiliate, or any person identified in Item 2 of the Franchise Disclosure Document.
- Temporary Wall Systems recently restructured the size of the Designated Territory that it grants under the current form of Franchise Agreement. Prospective franchisees were previously offered territories that were larger than the Designated Territory (4,000 Target Buildings) that you will receive.
Section VI – Temporary Wall Systems Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️
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