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

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

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

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

Section V – Presentation and analysis of MilkShake Factory’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 sales, discounts, adjusted gross sales, cost of goods sold, labor, other operating costs and expenses, other estimated fees (Royalties and Brand Fund), and adjusted gross sales less COGS, labor, other disclosed operating costs and expenses, and estimated fees for the 8 affiliate-owned MilkShake Factory Shops that were open and operating over the entirety of the 2022 calendar year (“Part 1 Shops”)

• percentage of gross sales that is attributable to a certain kind of menu item over the 2022 calendar year, namely (1) milkshakes, (2) chocolates, and (3) other approved products, amongst all Part 1 Shops and the 1 affiliate-owned MilkShake Factory Shop that opened in April 2022 (“Recent Shop”) (for the months it was open in 2022)

• 2022 total transactions, average daily transactions, and average check for each of the Part 1 Shops

• percentage of gross sales generated amongst all Part 1 Shops and the Recent Shop (when open) during the 2022 calendar year broken down by: (i) month of operation in 2022; and (ii) hour of operation amongst these Shops

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

Section I – MilkShake Factory Franchise Costs

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

• Initial Franchise Fee:  $60,000
• Initial Training Fee:  $8,500
• Training – Costs and Expenses:  $5,800 to $8,800
• Lease – Security Deposit:  $2,500 to $5,897
• Architectural and Design Services:  $18,650 to $19,150
• Real Estate and Construction Management Services:  $20,000
• Leasehold Improvements:  $134,430 to $315,411
• Furniture, Fixtures, and Equipment (“FFE”):  $143,325 to $150,325
• Signage (Exterior/Interior):  $15,900 to $17,500
• Initial Inventory (Pre-Opening):  $8,000 to $14,000
• Computer System and IT Equipment (and Any Initial Required Software Fees):  $16,950 to $17,750
• Grand Opening Marketing Spend:  $10,050 to $12,000
• Uniforms:  $1,690 to $2,500
• Professional Fees:  $500 to $6,000
• Business Permits and Licensing:  $1,000 to $2,500
• Insurance – Deposit and 3 Months of Premiums:  $650 to $1,000
• Additional Funds – 3 Months:  $14,600 to $35,691
• Total Estimated MilkShake Factory Franchise Costs:  $462,545 to $697,024

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

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

• Initial Franchise Fee:  $60,000

• Royalty Fee:  during your first year of operations, 6% of Adjusted Gross Sales generated by your Franchised Business over the preceding reporting period. During your second year of operations, the greater of: (i) 6% of Adjusted Gross Sales generated by your Franchised Business over the preceding reporting period; or (ii) $1,200 per month. During your third and each subsequent year of operations, the greater of: (i) 6% of Adjusted Gross Sales generated by your Franchised Business over the preceding reporting period; and (ii) $1,500/month

• Brand Development Fund:  currently, 2% of Adjusted Gross Sales generated by your Franchised Business over the preceding reporting period

• Local Advertising Requirement:  currently, your minimum Local Advertising Requirement amounts to the following: (i) 2% of Adjusted Gross Sales generated by your Franchised Business during the preceding calendar month in connection with Adjusted Gross Sales generated by the Franchised Business up to $500,000 in a given calendar year of operations; and (ii) 1% of the Adjusted Gross Sales generated by your Franchised Business in excess of $500,000 in any calendar year of operations

Section III – Number of Franchised and Company-Owned MilkShake Factory 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:  0
• Net Change:  0

Company-Owned

2020

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  8
• Net Change:  +2

2021

• Outlets at the Start of the Year:  8
• Outlets at the End of the Year:  8
• Net Change:  0

2022

• Outlets at the Start of the Year:  8
• Outlets at the End of the Year:  9
• Net Change:  +1

Section IV – News Updates on the MilkShake Factory Franchise

• The Milkshake Factory Goes National

• The MilkShake Factory Franchise Serves Up Quality and Tradition

• The Milkshake Factory Launches Franchising Initiative

• Franworth and Milkshake Factory Form Partnership to Scale Premium Milkshake and Chocolate Dessert Destination

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

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

Part 1 – Average Gross Sales and Adjusted Gross Sales Generated, as Well as Certain Operating Costs and Expenses Incurred, by the Part 1 Shops Over the 2022 Calendar Year

• Part 1 in this Item below discloses the historical Adjusted Gross Sales generated by the 8 Affiliate-Owned Shops that were open and operating over the entirety of the 2022 calendar year (each, a “Part 1 Shop”) over that 2022 calendar year (the “Part 1 Measurement Period”).

• Of the 9 total Affiliate-Owned Shops that were open and operating as of December 31, 2022, Part 1 excludes and does not account for the performance of: (i) 1 Shop because it did not open until April 2022 and, as such, was not open for the entire Measurement Period (the “Recent Shop”); and (ii) 1 other Shop – which is located in the Southside area of Pittsburgh, PA – because this affiliate’s operations, menu, and premises are not substantially similar to the other Affiliate-Owned Shops or the Franchised Business being offered in the Disclosure Document (the “Excluded Shop”) – which is also not accounted for in Item 20 of the Disclosure Document.

Averages of the 8 Part 1 Shops

Gross Sales:  $760,226 (103.8%)

Less Discounts:  $27,835 (3.8%)

Adjusted Gross Sales:  $732,391 (100.0%)

Primary Operating Costs

• COGS:  $232,620 (31.8%)
• Labor:  $134,869 (18.4%)

Adjusted Gross Sales Less COGS and Labor:  $364,902 (49.8%)

Other Operating Costs and Expenses

• Occupancy-Related Costs:  $67,007 (9.1%)
• Bank Fees:  $22,515 (3.1%)
• Cleaning Supplies:  $9,312 (1.3%)
• Maintenance/Repairs/Equipment:  $7,169 (1.0%)
• IT-Related Fees and Costs:  $6,125 (0.8%)
• Utilities:  $17,069 (2.3%)
• Certain Other Operating Costs and Expenses Incurred in Operations:  $11,594 (1.6%)
• Estimated Local Advertising:  $7,324 (1.0%)
• Total of Other Operating Costs and Expenses:  $148,115 (20.2%)

Other Estimated Fees

• Royalties:  $43,943 (6.0%)
• Brand Fund:  $14,648 (2.0%)

Adjusted Gross Sales Less COGS, Labor, Other Disclosed Operating Costs/Expenses, and Estimated Fees:  $158,196 (21.6%)

• Gross Sales means all gross receipts, less tips and sales tax.

• Discounts means any approved coupon, discounts, and promotion. You will be able to deduct only approved coupons, discounts, and promotions from Gross Sales.

• Adjusted Gross Sales means Gross Sales less Discounts, and represents the amount upon which you will base your Royalty Fee, Local Advertising Requirement, and Fund Contribution under your Franchise Agreement with MilkShake Factory.

• COGS means all variable cost inputs to facilitate customer sales, including all food items, cups, lids, and other paper goods.

• Labor means all hourly and salaried labor including wages, payroll taxes, and benefits. This definition excludes the cost of multi-unit managers and general managers.

• Adjusted Gross Sales less COGS and Labor means Adjusted Gross Sales less COGS and Labor.

• Occupancy-Related Costs means base rent and all related NNN (triple net) costs, including common area maintenance, insurance, and tax-related obligations under the lease.

• Bank Fees means all credit card processing fees and other special processing fees.

• Cleaning Supplies means all cleaning and janitorial supplies to operate the store.

• Maintenance/Repairs/Equipment means all standard maintenance items, such as floor mat replacement services and HVAC maintenance, necessary repair items, and any equipment replacement.

• IT-Related Fees and Costs means all store level expenses for Point-of-Sale, Restaurant Management Software, Gift Cards, Panther Funds, and Security Camera services.

• Utilities means the following utility expenses: electric, water, power, internet, and phone.

• Certain Other Operating Costs and Expenses Incurred in Operations means a certain license fee, uniforms, employee morale events, charitable contributions, licenses, permits, fees, parking leases, and travel. This range does not include or account for any other operating costs or expenses that are not specifically identified in this Explanatory Note.

• Estimated Local Advertising means the calculated estimated local marketing expenditures a location would have been required to pay had it been a franchise operating pursuant to the Franchise Disclosure Document.

• Total of Other Operating Costs and Expenses means the sum of Occupancy-Related Costs, Bank Fees, Cleaning Supplies, Maintenance/Repairs/Equipment, IT-Related Fees and Costs, Utilities, Certain Other Operating Costs and Expenses Incurred in Operations, and Estimated Local Advertising.

• Estimated Royalties (calculated at 6% of Adjusted Gross Sales) means the calculated estimated Royalty Fees a location would have been required to pay had it been a franchise operating pursuant to the Franchise Disclosure Document.

• Estimated Brand Fund Contribution (calculated at 2% of Adjusted Gross Sales) means the calculated estimated Brand Fund expenditures a location would have been required to pay had it been a franchise operating pursuant to the Franchise Disclosure Document.

Part 2 – Gross Revenue Generated by Product Category Amongst Total Revenues Generated by Part 1 Locations and Recent Location Over the 2022 Calendar Year

• Part 2 of this Item discloses the percentage of Gross Sales that is attributable to a certain kind of menu item (or type of Approved Product) over the 2022 calendar year, namely (1) milkshakes, (2) chocolates, and (3) other Approved Products, amongst all Part 1 Shops and the Recent Shop (for the months it was open in 2022).

• Shakes and Sundaes:  85% of Adjusted Gross Sales Generated in 2022
• Chocolate (Retail):  14% of Adjusted Gross Sales Generated in 2022
• Other Products:  1% of Adjusted Gross Sales Generated in 2022
• Total:  100% of Adjusted Gross Sales Generated in 2022

Part 3 – Total Check/Transaction Information Generated by Part 1 Locations Over the 2022 Calendar Year

• Part 3 of this Item discloses the total number of transactions generated by the Part 1 Shops over the 2022 calendar year, along with the average number of transactions generated by each such Shop per business day that Shop was open and actively operating.

Affiliate Shop 1

• Total Transactions:  71,118
• Average Daily Transactions:  198
• Average Check:  $13.33

Affiliate Shop 2

• Total Transactions:  43,345
• Average Daily Transactions:  120
• Average Check:  $12.55

Affiliate Shop 3

• Total Transactions:  76,511
• Average Daily Transactions:  213
• Average Check:  $10.54

Affiliate Shop 4

• Total Transactions:  52,113
• Average Daily Transactions:  145
• Average Check:  $13.95

Affiliate Shop 5

• Total Transactions:  60,986
• Average Daily Transactions:  169
• Average Check:  $15.65

Affiliate Shop 6

• Total Transactions:  39,379
• Average Daily Transactions:  109
• Average Check:  $15.32

Affiliate Shop 7

• Total Transactions:  49,348
• Average Daily Transactions:  137
• Average Check:  $14.73

Affiliate Shop 8

• Total Transactions:  28,408
• Average Daily Transactions:  135
• Average Check:  $15.21

Part 4 – Percentage of Total Transactions Generated in Terms of Month/Seasonality and Business Day/Hour

• Part 4 of this Item discloses the percentage of Gross Sales generated amongst all Part 1 Shops and the Recent Shop (when open) during the 2022 calendar year broken down by: (i) month of operation in 2022; and (ii) each business day and each hour of operation amongst these Shops over the typical and recommended operational hours MilkShake Factory recommends in its current Manuals (12 pm EST to 10 pm EST) over that period.

By Month

• January:  6.4%
• February:  7.8%
• March:  9.2%
• April:  10.2%
• May:  10.3%
• June:  8.5%
• July:  8.4%
• August:  8.4%
• September:  7.9%
• October:  8.4%
• November:  7.2%
• December:  7.2%

By Hour of Operation

• Noon to 1pm:  4.5%
• 1 to 2pm:  5.4%
• 2 to 3pm:  6.7%
• 3 to 4pm:  8.1%
• 4 to 5pm:  8.1%
• 5 to 6pm:  8.5%
• 6 to 7pm:  11.6%
• 7 to 8pm:  15.7%
• 8 to 9pm:  16.3%
• 9 to 10pm:  11.9%

• The information and data provided in this Item is historical in nature and was provided/reported to MilkShake Factory by the affiliate owners of the Part 1 Shops and Recent Shop for the measurement period(s) discussed above. MilkShake Factory has not independently audited or otherwise verified this information using a third party.

• Only the affiliate-owned Shops above have earned this much. There is no assurance that you will sell as much.

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