M14 Hoops Franchise: Annual Sales ($1.19M) vs. Cost ($97K-$127K)

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

Section I – Estimated initial investment (franchise costs) for an M14 Hoops franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for an M14 Hoops franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned M14 Hoops 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 M14 Hoops franchise opportunity

Section V – Presentation and analysis of M14 Hoops’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2020, 2021, and 2022 annual gross sales, cost of goods sold, gross profit, disclosed expenses, franchise adjustment, and adjusted profit for the one company-owned M14 Hoops outlet in Indianapolis, Indiana that is representative of the franchise that M14 Hoops offers under the Disclosure Document

• 2022 gross sales, number of players, and average spend per player, by category, for the one company-owned M14 Hoops outlet in Indianapolis, Indiana that is representative of the franchise that M14 Hoops offers under the Disclosure Document

Section VI – Key ratios, comparables, computations, and analyses for the M14 Hoops franchise opportunity (exclusive content for Platinum subscribers)

Section I – M14 Hoops Franchise Costs

• M14 Hoops franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $49,500
• Travel for Owner’s Initial Training:  $500 to $4,000
• Travel for New Hire Process:  $500 to $2,500
• Initial Head Trainer/Director of Basketball Operations (“DBO”) Training:  $20,000
• Travel for Head Trainer/DBO Initial Training:  $1,500 to $5,000
• Initial Marketing:  $6,500 to $10,000
• Furniture and Fixtures, Equipment, Signage, and Office Supplies:  $1,000 to $3,500
• Computer and Software System:  $2,250 to $4,250
• Insurance Deposits – 3 Months:  $80 to $250
• Professional Fees:  $500 to $3,000
• Licenses and Permits:  $50 to $500
• Additional Funds – 3 Months:  $15,000 to $25,000
• Total Estimated M14 Hoops Franchise Costs:  $97,380 to $127,500

Section II – M14 Hoops’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• M14 Hoops’ 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:  8% of weekly Gross Sales, subject to a quarterly Minimum Royalty
• Minimum Royalty:  the annual Minimum Royalty for one Territory shall be as follows: Year 1: $0; Year 2: $8,000 ($2,000/quarter); Year 3: $16,000 ($4,000/quarter); Years 4-10: $24,000 ($6,000/quarter)
• Brand Development Fund:  not currently assessed; up to 1% of Gross Sales
• Local Marketing:  not currently required; may be adjusted to 1% of Gross Sales
• Local and Regional Advertising Cooperatives:  as established by cooperative members, up to 2% of Gross Sales

Section III – Number of Franchised and Company-Owned M14 Hoops 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:  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:  2
• Net Change:  0

2022

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

Section IV – News Updates on the M14 Hoops Franchise

• M14 Hoops Did Not Rank on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the M14 Hoops Franchise (Item 19, 2023 FDD)

• 2020 Measurement Period refers to the period of January 1, 2020, through December 31, 2020. 2021 Measurement Period refers to the period of January 1, 2021, through December 31, 2021. 2022 Measurement Period refers to the period of January 1, 2022, through December 31, 2022.

• Adjusted Profit means Gross Profit less Disclosed Expenses and Adjustment. Adjusted Profit is not equal to net profit or income and, except as to Cost of Goods and Services Sold and Disclosed Expenses, does not include the deduction of all other expenses incurred by an M14 Hoops Business including, but not limited to, other operating expenses, interest, taxes, depreciation, and amortization.

• Adjustments for Franchisee Related Expenses are for expenses that you will be required to pay to M14 Hoops as a franchisee but that were not incurred by the Company-Owned Outlet.

• Company-Owned Outlet means an Outlet owned either directly or indirectly by M14 Hoops, its affiliate, or any person identified in Item 2 of the Disclosure Document. A Company-Owned Outlet also includes any Outlet that is operated as a joint venture owned in part by M14 Hoops, its affiliate, or any person identified in Item 2 of the Disclosure Document, or that is managed by M14 Hoops, its affiliate, or any person identified in Item 2.

• Costs of Goods and Services Sold means the direct non-managerial and non-administrative cost of goods sold and labor incurred by an Outlet in directly performing Approved Services and Products resulting in Gross Sales. Cost of Goods and Services Sold do not include managerial expenses, administrative expenses, Disclosed Expenses, general expenses, or operating expenses.

• Disclosed Expenses refers to a limited selection of expenses as disclosed in the tables to this Item 19, comprised of the following select expense categories: rent, utilities, facility maintenance, insurance, computer and internet, marketing, office supply expenses, vehicle expenses, and franchisor-related charges for contact center fees, technology fees, brand development fund fees, and royalty fees.

• Franchise Outlet refers to an M14 Hoops Business operated under a Franchise Agreement that is not a Company-Owned Outlet.

• Gross Profit means Gross Sales less Cost of Goods and Services Sold.

• Gross Sales means the total revenue derived by each outlet less sales tax, discounts, allowances, and returns.

• The financial information was prepared on a basis consistent with generally accepted accounting principles during the respective measurement periods. The information in this analysis has not been audited, and is based on historical financial data.

Part 1 – Gross Sales, Cost of Goods Sold, and Disclosed Expenses of Indy Outlet for the 2020, 2021, and 2022 Measurement Periods (Utilizes Short-Term Gym Rental Facilities)

• During the 2020 Measurement Period, M14 Hoops did not have any Franchise Outlets. During neither the 2021 Measurement Period nor the 2022 Measurement Period, M14 Hoops did not have any Franchise Outlets that were open and in operation at the start of the Measurement Period. The information reported in this Item 19 relates exclusively to M14 Hoops’ Company-Owned Outlets.

• M14 Hoops has two Company-Owned Outlets. The first Company-Owned Outlet is located in Chicago, Illinois (“Chicagoland Outlet”). The Chicagoland Outlet has been in operation since October 2015. The Chicagoland Outlet is not representative of the franchise that M14 Hoops offers under the Disclosure Document as it occupies and operates out of a dedicated 53,000 square foot basketball facility. M14 Hoops does not disclose any financial performance data of its Chicagoland Outlet.

• The second Company-Owned Outlet is located in Indianapolis, Indiana maintaining a physical office location in Fishers, Indiana. Fishers, Indiana is a suburb of Indianapolis, Indiana (“Indy Outlet”). The Indy Outlet does not have a dedicated basketball facility and provides Approved Services and Products from third-party sites. The Indy Outlet is representative of the franchise that M14 Hoops offers under the Disclosure Document.

• The Indy Outlet has been in operation since January 2016 and operates in a market where the M14 Hoops brand maintains significant awareness among consumers and a significant market presence for over five years. The territory in which this Company-Owned Outlet operates includes approximately 400,000 people with a Territory approximately comprised of one Territory.

• Below M14 Hoops reports select financial performance data of its Company-Owned Outlet for the 2020 Measurement Period, 2021 Measurement Period, and 2022 Measuring Period.

2020

Gross Sales

• Programs and Instruction:  $549,787 (99.8%)
• Miscellaneous Sales:  $1,095 (0.2%)
• Total Gross Sales:  $550,882 (100.0%)

Cost of Goods Sold

• Hourly Trainer Labor:  $33,261 (6.0%)
• Gym Rental:  $96,401 (17.5%)
• Miscellaneous Fees:  $0 (0.0%)
• Credit Card Processing Fees:  $16,123 (2.9%)
• Cost of Merchandise Sold:  $1,371 (0.3%)
• Supplies and Equipment:  $811 (0.1%)
• Total Cost of Goods Sold:  $147,967 (26.9%)

Gross Profit:  $402,915 (73.1%)

Disclosed Expenses

• Direct (Full-Time) Labor:  $94,630 (17.2%)
• Uniforms:  $13,093 (2.4%)
• Office Supplies:  $7,962 (1.4%)
• Telephone:  $7,462 (1.4%)
• Rent (Office):  $6,245 (1.1%)
• Professional Services:  $6,355 (1.2%)
• Advertising and Marketing:  $4,262 (0.8%)
• Travel and Meals:  $3,781 (0.7%)
• Insurance:  $2,094 (0.4%)
• Computer and Internet:  $1,702 (0.3%)
• Auto Expense:  $1,289 (0.2%)
• Staff Development and Training:  $0 (0.0%)
• Other Expenses:  $2,105 (0.4%)
• Total Expenses:  $150,980 (27.4%)

Adjustment (Disclosed Expenses Not Paid by Company-Owned Outlet But Charged to Franchisees)

• Royalty Fee:  $44,071 (8.0%)

Adjusted Profit:  $207,864 (37.7%)

2021

Gross Sales

• Programs and Instruction:  $1,097,671 (99.9%)
• Miscellaneous Sales:  $645 (0.1%)
• Total Gross Sales:  $1,098,316 (100.0%)

Cost of Goods Sold

• Hourly Trainer Labor:  $115,874 (10.6%)
• Gym Rental:  $199,978 (18.2%)
• Miscellaneous Fees:  $1,600 (0.1%)
• Credit Card Processing Fees:  $31,878 (2.9%)
• Cost of Merchandise Sold:  $1,492 (0.1%)
• Supplies and Equipment:  $706 (0.1%)
• Total Cost of Goods Sold:  $351,528 (32.0%)

Gross Profit:  $746,788 (68.0%)

Disclosed Expenses

• Direct (Full-Time) Labor:  $93,828 (8.5%)
• Uniforms:  $15,392 (1.4%)
• Office Supplies:  $9,431 (0.9%)
• Telephone:  $7,496 (0.7%)
• Rent (Office):  $6,560 (0.6%)
• Professional Services:  $7,844 (0.7%)
• Advertising and Marketing:  $7,255 (0.7%)
• Travel and Meals:  $6,179 (0.5%)
• Insurance:  $2,539 (0.2%)
• Computer and Internet:  $3,715 (0.3%)
• Auto Expense:  $3,652 (0.3%)
• Staff Development and Training:  $693 (0.1%)
• Other Expenses:  $6,233 (0.6%)
• Total Expenses:  $170,817 (15.6%)

Adjustment (Disclosed Expenses Not Paid by Company-Owned Outlet But Charged to Franchisees)

• Royalty Fee:  $87,865 (8.0%)

Adjusted Profit:  $488,106 (44.4%)

2022

Gross Sales

• Programs and Instruction:  $1,196,004 (99.8%)
• Miscellaneous Sales:  $2,124 (0.2%)
• Total Gross Sales:  $1,198,253 (100.0%)

Cost of Goods Sold

• Hourly Trainer Labor:  $112,549 (9.4%)
• Gym Rental:  $205,516 (17.2%)
• Miscellaneous Fees:  $0 (0.0%)
• Credit Card Processing Fees:  $38,028 (3.2%)
• Cost of Merchandise Sold:  $3,071 (0.3%)
• Supplies and Equipment:  $564 (0.0%)
• Total Cost of Goods Sold:  $359,728 (30.0%)

Gross Profit:  $835,525 (69.7%)

Disclosed Expenses

• Direct (Full-Time) Labor:  $145,723 (12.2%)
• Uniforms:  $19,041 (1.6%)
• Office Supplies:  $7,109 (0.6%)
• Telephone:  $6,162 (0.5%)
• Rent (Office):  $9,486 (0.8%)
• Professional Services:  $13,401 (1.1%)
• Advertising and Marketing:  $8,079 (0.7%)
• Travel and Meals:  $5,929 (0.5%)
• Insurance:  $4,139 (0.3%)
• Computer and Internet:  $1,448 (0.1%)
• Auto Expense:  $5,130 (0.4%)
• Staff Development and Training:  $0 (0.0%)
• Other Expenses:  $26,651 (2.2%)
• Total Expenses:  $252,298 (21.1%)

Adjustment (Disclosed Expenses Not Paid by Company-Owned Outlet But Charged to Franchisees)

• Royalty Fee:  $95,860 (8.0%)

Adjusted Profit:  $487,367 (40.7%)

• Direct Labor includes the wages paid to coaches and instructors including the applicable employer taxes. Owner compensation is not included in Part 1.

• Gym Rental represents the amounts paid for short-term rental of gym facilities where instructional and camp sessions are held.

• Outside Services represents amounts paid to non-employee coaches and instructors.

• Adjustments for Franchisee-Related Expenses are for expenses that you will be required to pay to M14 Hoops as a franchisee but that were not incurred by the Company-Owned Outlet.

• The recurring monthly Royalty Fee is equal to 8% of Gross Sales.

• M14 Hoops does not collect a marketing fund from its franchisees so it did not subtract a marketing fund from this data.

Part 2 – Gross Sales by Category of Indy Outlet for the 2022 Measurement Period

Spring Academy

• Players:  417
• 2022 Gross Sales:  $330,224 (27.6%)
• Average Spend Per Player:  $792

Fall Academy

• Players:  313
• 2022 Gross Sales:  $284,343 (23.7%)
• Average Spend Per Player:  $908

Fall Pre-Academy

• Players:  15
• 2022 Gross Sales:  $9,745 (0.8%)
• Average Spend Per Player:  $650

Summer Camps

• Players:  381
• 2022 Gross Sales:  $151,330 (12.6%)
• Average Spend Per Player:  $397

Winter Overtime

• Players:  145
• 2022 Gross Sales:  $56,885 (4.7%)
• Average Spend Per Player:  $392

First Step

• Players:  141
• 2022 Gross Sales:  $36,259 (3.0%)
• Average Spend Per Player:  $257

Summer League

• Players:  229
• 2022 Gross Sales:  $63,424 (5.3%)
• Average Spend Per Player:  $277

Winter Camps

• Players:  155
• 2022 Gross Sales:  $33,795 (2.8%)
• Average Spend Per Player:  $218

Winter Rapidfire

• Players:  29
• 2022 Gross Sales:  $8,380 (0.7%)
• Average Spend Per Player:  $289

Summer Night Training

• Players:  84
• 2022 Gross Sales:  $9,901 (0.8%)
• Average Spend Per Player:  $118

Evaluations

• Players:  921
• 2022 Gross Sales:  $18,430 (1.5%)
• Average Spend Per Player:  $20

Team/Group Instruction

• Players:  272
• 2022 Gross Sales:  $27,200 (2.3%)
• Average Spend Per Player:  $100

Sunday Skills

• Players:  56
• 2022 Gross Sales:  $16,735 (1.4%)
• Average Spend Per Player:  $299

Private Instruction

• 2022 Gross Sales:  $142,637 (11.9%)
• Average Spend Per Player:  $75/each

General/Other

• 2022 Gross Sales:  $8,965 (0.7%)

Total

• 2022 Gross Sales:  $1,198,253 (100.0%)

• Average Spend per Player is calculated by dividing the Gross Sales earned by the number of players in each program.

• Some Outlets have earned this amount. Your individual results may differ. There is no assurance that you will earn as much.

Section VI – M14 Hoops Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️