Pearle Vision Franchise: Average Sales ($1.14M) vs. Cost ($639K-$990K)

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

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

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

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

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

• 2022 net total revenue (net retail revenue and net exam revenue), cost of goods sold, gross margin, retail dispensing margin, total expenses (payroll, occupancy, royalty & advertising, other expenses), and EBITDA for the 134 Pearle Vision licensed eyecare centers owned by an optometrist or opthalmologist

• 2022 net total revenue (net retail revenue and net exam revenue), cost of goods sold, gross margin, retail dispensing margin, total expenses (payroll, occupancy, royalty & advertising, other expenses), and EBITDA for the 71 Pearle Vision licensed eyecare centers owned by an optician or investor who subleases space to an optometrist or opthalmologist

• 2022 net total revenue (net retail revenue and net exam revenue), cost of goods sold, gross margin, retail dispensing margin, total expenses (payroll, occupancy, royalty & advertising, other expenses), and EBITDA for the 166 Pearle Vision licensed eyecare centers owned by an optometrist, opthalmologist, optician, or investor that employs the optometrist or opthalmologist

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

Section I – Pearle Vision Franchise Costs

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

• Initial Franchise Fees:  $30,000 for New Franchisee; $20,000 for Existing Franchisee
• A&E Fees:  $16,300
• Construction:  $317,000 to $430,000
• Signage, Fixtures, Furniture, and Décor:  $93,700 to $129,200
• Equipment:  $40,000 to $75,000
• Inventory:  $33,000 to $84,000
• Point-of-Sale and Computer System:  $11,395 to $23,519
• Grand Opening Advertising:  $15,000
• Real Estate:   $13,794 to $20,691
• Training Expenses:  $0 to $2,000
• Security Deposits:  $1,300 to $15,000
• Insurance:  $13,000 to $25,000
• Additional Funds:  $54,750 to $125,000
• Total Estimated Pearle Vision Franchise Costs:  $639,239 to $990,710 for New Franchisee; $629,239 to $980,710 for Existing Franchisee

Section II – Pearle Vision’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

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

• Initial Franchise Fees:  $30,000 for New Franchisee; $20,000 for Existing Franchisee
• Royalty:  7% of Gross Revenues
• Advertising Contribution:  8% of Gross Revenues

Section III – Number of Franchised and Company-Owned Pearle Vision Outlets

Franchised

2020

• Outlets at the Start of the Year:  417
• Outlets at the End of the Year:  429
• Net Change:  +12

2021

• Outlets at the Start of the Year:  429
• Outlets at the End of the Year:  443
• Net Change:  +14

2022

• Outlets at the Start of the Year:  443
• Outlets at the End of the Year:  449
• Net Change:  +6

Company-Owned

2020

• Outlets at the Start of the Year:  63
• Outlets at the End of the Year:  58
• Net Change:  -5

2021

• Outlets at the Start of the Year:  58
• Outlets at the End of the Year:  59
• Net Change:  +1

2022

• Outlets at the Start of the Year:  59
• Outlets at the End of the Year:  62
• Net Change:  +3

Section IV – News Updates on the Pearle Vision Franchise

• From BOGO to Best-in-Class: How CMO Doug Zarkin Transformed the Pearle Vision Brand by Thinking Human

• Pearle Vision Ranked No. 38 on Entrepreneur’s 2023 Franchise 500 List

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

• Parts 1 to 3 below are based on unaudited balance sheets and statements of operations/income statements and monthly reports (“MFRs”) submitted to Pearle Vision by current franchisees using its full service operating model. That is the same type of franchise as is being offered to you. Pearle Vision is not offering any other type of franchise.

• The full service operating model includes an integrated supply chain and point-of-sale system that includes Frame Board Management, Lab Service Management, Lens Management, and financial reporting. It allows franchisees to simplify the retail side of their business, leverage centralized purchasing power, and focus on caring for patients.

• The unaudited balance sheets and statements of operations/income statements on which Parts 1 to 3 are based are referred to in this Item 19 as the “Full Service Operating Model Unaudited Financial Statements.”

• For 2022, Pearle Vision included information for 371 EyeCare Centers using its full service operating platform. No company-owned EyeCare Centers are included. These EyeCare Centers have at least one year of operating results and have submitted Full Service Operating Model Unaudited Financial Statements and MFRs for the last fiscal year.

• Other EyeCare Centers were not included in this information because they: (a) are not using the full service operating platform (32), (b) have less than 1 year of operating results (18), (c) did not submit their fourth quarter operating results in a timely manner (29), or (d) are located in Canada (12).

• Pearle Vision may review the Full Service Operating Model Unaudited Financial Statements and MFRs periodically and it believes the Full Service Operating Model Unaudited Financial Statements accurately reflect the operations at such EyeCare Centers.

Part 1 – Pearle Vision EyeCare Centers Owned by an Optometrist or Opthalmologist

• All monetary amounts are in thousands (000s).

Average of 134 Centers

Revenue

• Net Retail Revenue:  $917 (75.5%)
• Net Exam Revenue:  $298 (24.5%)
• Net Total Revenue:  $1,214 (100.0%)

Less: Cost of Goods Sold:  $339 (27.9%)

Gross Margin:  $876 (72.2%)

Retail Dispensing Margin:  $578 (63.0%)

Expenses

• Payroll:  $355 (29.2%)
• Occupancy:  $98 (8.1%)
• Royalty & Advertising:  $132 (10.9%)
• Other Expenses:  $79 (6.5%)
• Total Expenses:  $665 (54.8%)

EBITDA:  $211 (17.4%)

Part 2 – Pearle Vision EyeCare Centers Owned by an Optician or Investor Who Subleases Space to an Optometrist or Ophthalmologist

• All monetary amounts are in thousands (000s).

Average of 71 Centers

Revenue

• Net Retail Revenue:  $954 (100.0%)
• Net Exam Revenue:  $0 (0.0%)
• Net Total Revenue:  $954 (100.0%)

Less: Cost of Goods Sold:  $342 (35.8%)

Gross Margin:  $612 (64.2%)

Retail Dispensing Margin:  $612 (64.2%)

Expenses

• Payroll:  $207 (21.7%)
• Occupancy:  $86 (9.0%)
• Royalty & Advertising:  $140 (14.7%)
• Other Expenses:  $47 (4.9%)
• Total Expenses:  $480 (50.3%)

EBITDA:  $132 (13.8%)

Part 3 – Pearle Vision EyeCare Centers Owned by an Optometrist, Ophthalmologist, Optician, or Investor That Employs the Optometrist or Ophthalmologist

• All monetary amounts are in thousands (000s).

Average of 166 Centers

Revenue

• Net Retail Revenue:  $924 (80.6%)
• Net Exam Revenue:  $222 (19.4%)
• Net Total Revenue:  $1,146 (100.0%)

Less: Cost of Goods Sold:  $329 (28.7%)

Gross Margin:  $817 (71.3%)

Retail Dispensing Margin:  $595 (64.4%)

Expenses

• Payroll:  $345 (30.1%)
• Occupancy:  $115 (10.0%)
• Royalty & Advertising:  $132 (11.5%)
• Other Expenses:  $45 (3.9%)
• Total Expenses:  $636 (55.5%)

EBITDA:  $180 (15.7%)

• “Net Retail Revenue” means net income from sales of prescription and non-prescription eyeglasses, contact lenses, optical goods and services, after all discounts.

• “Net Exam Revenue” means net income from optometric professionals working in the store or in adjoining premises.

• “Net Total Revenue” means net income from sales of prescription and non-prescription eyeglasses, contact lenses, optical goods and services, after all discounts (“Net Retail Revenue”) plus net income from optometric professionals working in the store or in adjoining premises.

• “Cost of Goods Sold” means material cost related to prescription and non-prescription eyeglasses, contact lenses, and optical goods, which includes freight-in, less purchase discounts. Additionally, this category includes non-owner lab labor, outside lab services, and lease/repair of lab equipment.

• “Gross Margin” means Net Total Revenue less Cost of Goods Sold.

• “Retail Dispensing Margin” means Net Retail Revenue less Cost of Goods Sold.

• “Payroll” includes salaries, wage, bonuses, and commissions for the owner along with any non-owner OD (Doctor of Optometry). The category also includes all other employee salary, wages, bonuses, and commissions. All payroll taxes and benefits were included as well.

• “Occupancy” includes the base and percent rent according to franchisee’s lease arrangement; property taxes; depreciation; repairs and maintenance; utilities; other common area maintenance expenditures. Occupancy charges could be offset by income related to the sub-lease of space.

• “Royalty & Advertising Fees” are 7% of net dispensing sales and national and local advertising fees are 6% and 2% (respectively) of net dispensing sales except for EyeCare Centers developed pursuant to a Development Agreement. Pearle Vision does not collect royalties on Professional Fee Revenues.

• “Other Expenses” represent other store expenses that are not captured in another category. Examples include, but are not limited to, professional services (CPA, legal, payroll services, etc.); interest expense; office supplies; travel & entertainment; communications; and store visuals.

• “EBITDA” represents earnings before deductions for interest, taxes, depreciation, and amortization expenses.

• Pearle Vision provided the same products, services, training, and support to all of the EyeCare Centers included in Parts 1 to 3 above that it will provide to you. The EyeCare Centers included offered substantially the same products and services to the public, except that some EyeCare Centers contained a surfacing lab, which enables a Franchisee to produce most eyewear in approximately one hour.

• Pearle Vision does not require you to be an optometrist in order to obtain a franchise. However, if you are an optometrist or operate in a state that allows a layperson to employ an optometrist, you will earn professional fee revenues in addition to Net Retail Sales, which may affect your Owner’s Income.

• Some outlets have earned these amounts. Your individual results may differ. There is no assurance that you will earn as much.

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