Hello Garage Franchise: Average Sales ($717K) vs. Cost ($215K-$245K)

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

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

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

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

Section V – Presentation and analysis of Hello Garage’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, median, highest, and lowest number of booked sales, average amount per booked sale, booked sales, install revenue, and lead to appointment conversion for the 5 Hello Garage franchised businesses operating in 28 territories that have been in operation for 2 or more years for the period ending December 31, 2022; and the 15 Hello Garage franchised businesses operating in 54 territories that have been in operation for less that 2 years during the 12-month period ending December 31, 2022, separately stated

• 2022 booked sales and install revenue for the Hello Garage in Omaha and Kansas, separately stated

• 2021 and 2022 gross revenue, certain costs (product cost, labor, royalty fee, brand fund, advertising, fuel and maintenance, technology, merchant services and insurance, small tools and equipment, and sales compensation), and gross revenue less certain costs for the Hello Garage in Omaha and Kansas, separately stated

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

Section I – Hello Garage Franchise Costs

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

• Initial Franchise Fee:  $49,500
• Technology On-Boarding Fee and Software License Fees:  $844
• Minimum Opening Marketing Spend:  $20,000 to $30,000
• Launch Kit:  $1,300
• Vehicle Financing and Vehicle Wrap:  $3,000 to $7,000
• Opening Inventory Purchase and Initial Equipment Package:  $46,024 to $50,754
• Business Licenses and Permits:  $140 to $250
• Computer System:  $0 to $4,000
• Travel Expenses to Attend Initial Training In-Person:  $2,000 to $3,000
• Insurance:  $700 to $1,500
• Trade Show Booth:  $1,300 to $2,000
• Franchise Resource Bookkeeping Fee:  $750 per franchisee
• Additional Funds for 3 Months:  $6,000 to $10,000
• Total Estimated Hello Garage Franchise Costs:  $131,558 to $160,898

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

• Hello Garage’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:  6% of Gross Revenue
• Hello Garage Brand Fund:  the greater of $150 or 2% of Gross Revenue
• Minimum Local Advertising Spend Requirement:  for Franchised Businesses that operate in one Protected Territory, a minimum spend amounting to the greater of 10% of Gross Revenue or $60,000 per year. For Franchised Businesses that operate in two or more Protected Territories, a minimum spend amounting to the greater of 10% of Gross Revenue or $35,000 per Protected Territory per year.

Section III – Number of Franchised and Company-Owned Hello Garage Outlets

Franchised

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  15
• Net Change:  +15

2021

• Outlets at the Start of the Year:  15
• Outlets at the End of the Year:  92
• Net Change:  +77

2022

• Outlets at the Start of the Year:  92
• Outlets at the End of the Year:  141
• Net Change:  +49

Company-Owned

2020

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  9
• Net Change:  +6

2021

• Outlets at the Start of the Year:  9
• Outlets at the End of the Year:  9
• Net Change:  0

2022

• Outlets at the Start of the Year:  9
• Outlets at the End of the Year:  10
• Net Change:  +1

Section IV – News Updates on the Hello Garage Franchise

• Hello Garage Develops Simple, Inexpensive Slatwall Accessory Lock

• New Business Promises Homeowners Floor-to-Ceiling Garage Transformations

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

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

• Hello Garage’s affiliate, HG Operations Nebraska, opened one Hello Garage business in November 2019 that operates in three territories in the Omaha, Nebraska metropolitan area (two territories in Nebraska, and one territory in Iowa) (“HG Nebraska”).

• Hello Garage’s affiliate, HG Operations Kansas, opened one Hello Garage business in October 2020 that operates 6 territories in Kansas City, Missouri (“HG KC”).

• In addition, there were 20 franchised Hello Garage businesses operating in 82 territories that were in operation for the full 12-month period ending December 31, 2022.

• Each of the territories contain about 75,000 qualified households.

Part 1 – Twenty Locations Operating During the 12-Month Period Ending December 31, 2022

• The first table below represents 5 Hello Garage franchised businesses operating in 28 territories that have been in operation for two or more years for the period ending December 31, 2022.

• The second table below presents data Hello Garage collected respecting those remaining 15 Hello Garage franchised businesses operating in 54 territories that have been in operation for the 12-month period ending December 31, 2022.

• The charts include the value of all customer sales during the 12-month period ending December 31, 2022.

• Not included in the table below are any Hello Garage franchised businesses that began operations in the 12-month period ending December 31, 2022, the 2 Hello Garage franchised businesses operating in 12 territories that ceased operations in the 12-month period ending December 31, 2022, the 1 Hello Garage franchised business operating in 4 territories that was temporarily closed in the 12-month period ending December 31, 2022, and the 3 Hello Garage franchised businesses in 5 territories that transferred the business in the 12-month period ending December 31, 2022.

A. Five Franchised Hello Garage Businesses Operating for 2+ Years During the 12-Month Period Ending December 31, 2022

Number of Booked Sales

• Average:  264
• Median:  264
• High:  440
• Low:  103

Average Amount Per Booked Sale

• Average:  $5,608
• Median:  $5,832
• High:  $6,417
• Low:  $4,774

Booked Sales

• Average:  $1,504,206
• Median:  $1,403,317
• High:  $2,598,247
• Low:  $600,729

Install Revenue

• Average:  $1,272,997
• Median:  $1,253,002
• High:  $2,208,124
• Low:  $451,783

Lead to Appointment Conversion

• Average:  65%
• Median:  65%
• High:  83%
• Low:  57%

B. Fifteen Franchised Hello Garage Businesses Operating for Less Than 2 Years During the 12-Month Period Ending December 31, 2022

Number of Booked Sales

• Average:  121
• Median:  119
• High:  265
• Low:  59

Average Amount Per Booked Sale

• Average:  $4,216
• Median:  $4,149
• High:  $5,519
• Low:  $3,057

Booked Sales

• Average:  $531,722
• Median:  $436,645
• High:  $1,469,846
• Low:  $259,102

Install Revenue

• Average:  $532,090
• Median:  $402,596
• High:  $1,407,684
• Low:  $278,712

Lead to Appointment Conversion

• Average:  70%
• Median:  66%
• High:  92%
• Low:  58%

• “Booked Sales” are the total value of customer sales contracts that were signed between January 1, 2022 and December 31, 2022.

• “Average Amount Per Booked Sale” is the total Booked Sales divided by the Number of Booked Sales.

• “Install Revenue” is the total Gross Revenue received from installations performed between January 1, 2022 and December 31, 2022.

• “Lead to Appointment Conversion” is the percentage of time that a customer lead resulted in a sales appointment.

Part 2 – Booked Sales and Install Revenue for Corporate Stores for the 12-Month Period Ending December 31, 2022

2022

• HG Omaha Booked Sales:  $1,866,061
• HG Omaha Install Revenue:  $1,782,554
• HG KC Booked Sales:  $2,584,662
• HG KC Install Revenue:  $2,208,124

Part 3 – Gross Revenue, Costs as a Percentage of Gross Revenue of HG Operations Nebraska’s and Kansas’ Hello Garage Business for the 12-Month Period Ending December 31, 2021 and 2022

• The following table below includes the historic Gross Revenue and certain expenses during the 12-month periods ending December 31, 2021 and December 31, 2022 based on data Hello Garage collected respecting HG Omaha and HG KC.

HG Omaha 2021

Gross Revenue:  $1,458,140 (100.0%)

Certain Costs as a Percentage of Revenue

• Product Cost:  37.7%
• Labor:  15.3%
• Royalty Fee:  6.0%
• Brand Fund:  2.0%
• Advertising:  10.9%
• Fuel and Maintenance:  1.3%
• Technology:  0.4%
• Merchant Services and Insurance:  3.0%
• Small Tools and Equipment:  1.4%
• Sales Compensation:  3.9%
• Total Certain Costs:  81.9%

Gross Revenue Less Certain Costs:  $265,381 (18.2%)

HG Omaha 2022

Gross Revenue:  $1,782,554 (100.0%)

Certain Costs as a Percentage of Revenue

• Product Cost:  39.2%
• Labor:  14.9%
• Royalty Fee:  6.0%
• Brand Fund:  2.0%
• Advertising:  11.7%
• Fuel and Maintenance:  1.2%
• Technology:  0.4%
• Merchant Services and Insurance:  3.1%
• Small Tools and Equipment:  0.4%
• Sales Compensation:  6.4%
• Total Certain Costs:  85.3%

Gross Revenue Less Certain Costs:  $265,535 (14.9%)

HG KC 2021

Gross Revenue:  $988,648 (100.0%)

Certain Costs as a Percentage of Revenue

• Product Cost:  34.0%
• Labor:  15.9%
• Royalty Fee:  6.0%
• Brand Fund:  2.0%
• Advertising:  14.6%
• Fuel and Maintenance:  2.6%
• Technology:  1.0%
• Merchant Services and Insurance:  1.9%
• Small Tools and Equipment:  1.3%
• Sales Compensation:  4.0%
• Total Certain Costs:  83.3%

Gross Revenue Less Certain Costs:  $165,104 (16.7%)

HG KC 2022

Gross Revenue:  $2,208,124 (100.0%)

Certain Costs as a Percentage of Revenue

• Product Cost:  35.5%
• Labor:  14.2%
• Royalty Fee:  6.0%
• Brand Fund:  2.0%
• Advertising:  17.4%
• Fuel and Maintenance:  2.4%
• Technology:  0.7%
• Merchant Services and Insurance:  1.6%
• Small Tools and Equipment:  1.4%
• Sales Compensation:  6.0%
• Total Certain Costs:  87.2%

Gross Revenue Less Certain Costs:  $282,001 (12.8%)

2022 Average (HG Omaha and HG KC)

Gross Revenue:  $1,995,339 (100.0%)

Certain Costs as a Percentage of Revenue

• Product Cost:  37.4%
• Labor:  14.6%
• Royalty Fee:  6.0%
• Brand Fund:  2.0%
• Advertising:  14.6%
• Fuel and Maintenance:  1.8%
• Technology:  0.6%
• Merchant Services and Insurance:  2.4%
• Small Tools and Equipment:  0.9%
• Sales Compensation:  6.2%
• Total Certain Costs:  86.5%

Gross Revenue Less Certain Costs:  $273,768 (13.7%)

• “Gross Revenue” means the aggregate amount of all sales of goods and services, whether for cash, by check, credit card or otherwise, made or provided at or in connection with the Franchised Business. “Gross Revenue” does not include any federal, state, municipal or other sales, value added or retailer’s excise taxes that you pay or accrue. For the purposes of the Franchise Agreement, a sale occurs at the time the goods are provided or installed or the services are performed. Gross Revenue will not be adjusted for uncollected accounts.

• “Product Cost” reflects the costs as a percentage of revenue of the total costs incurred to acquire the required material inventory.

• “Labor” reflects the costs as a percentage of revenue of the amount spent on installation crew labor, including employees and independent contractors. Labor does not include a salary for a general manager or any sales or administrative staff. Hello Garage assumes that your Designated Owner will act as the Operating Manager.

• “Royalty Fee” reflects the costs as a percentage of revenue of the royalty fee that will be due under the Franchise Agreement.

• “Brand Fund” reflects the costs as a percentage of revenue of the brand fund fee that will be due under the Franchise Agreement.

• “Advertising” reflects the costs as a percentage of revenue of the local advertising requirements you are required to spend under the Franchise Agreement.

• “Fuel” reflects the costs as a percentage of revenue of the fuel for your vehicle, sales vehicle, and other equipment in the operation of your Franchised Business.

• “Maintenance” reflects the costs as a percentage of revenue of maintaining and repairing the equipment and vehicle.

• “Technology” reflects the costs as a percentage of revenue of the technology you are expected to purchase in the development and operation of your Franchised Business.

• “Merchant Services and Insurance” reflects the costs as a percentage of revenue of credit card processing fees and insurance.

• “Small Tools and Equipment” reflects the costs as a percentage of revenue of tools and equipment needed for the Dream Team installers.

• “Sales Compensation” reflects employees’ base salary and commission expenses as a percentage of revenue for the portion of that Gross Revenue that was not sold by the franchise owner or a General Manager.

• The data presented in Item 19 is based on the information reported to Hello Garage by its affiliates or franchisees. You should conduct an independent investigation of the costs and expenses you will incur in managing your own Hello Garage Franchised Business.

• There are no material financial and operational characteristics of the company-owned territories that are reasonably anticipated to differ materially from future operational franchise outlets.

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