HOMEstretch: $1.66M Average Sales vs. $104K-$171K Franchise Cost

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

Section I – Estimated initial investment (franchise costs) for a HOMEstretch franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a HOMEstretch franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned HOMEstretch outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the HOMEstretch franchise opportunity

Section V – Presentation and analysis of HOMEstretch’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 gross revenue, cost of goods sold, gross profit, SGA (selling, general, and administrative) expenses, net operating income, estimated fees, and net income after estimated fees for the 3 affiliate-owned HOMEstretch locations that were open as of December 31, 2023

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

Section I – HOMEstretch Franchise Costs

• HOMEstretch franchise costs, based on Item 7 of the company’s 2024 FDD:

• Initial Franchise Fee:  $60,000
• Equipment:  $2,000 to $7,500
• Office Equipment, Computers, Office Supplies:  $2,000 to $3,500
• Training Expenses:  $550 to $2,550
• Utility and Security Deposits:  $0 to $1,500
• Leasehold Improvements:  $0 to $750
• Rent:  $250 to $3,000
• Furniture and Fixtures:  $0 to $1,500
• Vehicle and Vehicle Wrap:  $1,200 to $20,000
• Business Software:  $2,000 to $4,500
• Business Licenses:  $200 to $2,000
• Vehicle Insurance:  $600 to $1,000
• Business Insurance:  $600 to $1,500
• Professional Fees:  $3,000 to $5,000
• Initial Marketing Collateral and Company Attire:  $2,000 to $2,500
• Initial Marketing Requirement:  $10,000 to $15,000
• Additional Funds (3 months):  $20,000 to $40,000
• Total Estimated HOMEstretch Franchise Costs:  $104,400 to $171,800

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

• HOMEstretch’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2024 FDD:

• Initial Franchise Fee:  $60,000

• Royalty Fee; Minimum Weekly Royalty Fee:  the greater of: (i) 7.25% of the Gross Revenue generated by the Franchised Business during the prior week; and (ii) the Minimum Royalty Fee. The Minimum Weekly Royalty Fee is based on (i) how many Territories you operate in, and (ii) how long you have been operating.

• Brand Fund:  the Brand Fund is currently 1% of the Gross Revenue generated by the Franchised Business. HOMEstretch reserves the right to increase this amount up to a maximum of 3% of the Gross Revenue generated by the Franchised Business.

• Local Advertising Requirement:  the greater of (i) $750 per franchisee per month, or (ii) 1.5% of Gross Revenue. HOMEstretch reserves the right to increase this amount to the greater of (i) $750 per franchisee per month, or (ii) 3% of the Gross Revenue generated by the Franchised Business each month.

Section III – Number of Franchised and Company-Owned HOMEstretch Outlets

Franchised

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

2023

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

Company-Owned

2021

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  2
• Net Change:  +1

2022

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

2023

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  3
• Net Change:  +1

Section IV – News Updates on the HOMEstretch Franchise

• HOMEstretch Franchise Offers a Solution to Home Sale Headaches

• Cincinnati Startup HOMEstretch to Franchise with Five New Markets Pegged for 2023

• HOMEstretch Did Not Rank on Entrepreneur’s 2024 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the HOMEstretch Franchise (Item 19, 2024 FDD)

• As of December 31, 2023, there were 3 affiliate-owned locations (each, an “Affiliate-Owned Location”) and 0 franchised locations operating. This Financial Performance Representation sets forth certain historical sales and cost information in connection with the 3 Affiliate-Owned Locations. HOMEstretch did not exclude any Affiliate-Owned or franchised locations from this Financial Performance Representation.

Part 1 – Total Gross Revenue, Cost of Goods Sold, Gross Profit, SG&A Expenses, Net Operating Income, and Estimated Fees by the First Affiliate-Owned Location in 2023

Gross Revenue:  $2,718,218 (100.0%)

Cost of Goods Sold

• Labor:  $860,958 (31.7%)
• Materials:  $737,069 (27.1%)
• Total Cost of Goods Sold:  $1,598,027 (58.8%)

Gross Profit:  $1,120,191 (41.2%)

Selling, General, and Administrative Expenses

• Cars and Trucks:  $19,967 (0.7%)
• Insurances:  $43,208 (1.6%)
• Legal and Professional:  $7,521 (0.3%)
• Office Supplies/Software: $19,521 (0.7%)
• Manager Wages:  $107,531 (4.0%)
• Banking Fees:  $38,873 (1.4%)
• Selling and Referral Fees:  $22,939 (0.8%)
• Rent:  $13,200 (0.5%)
• Taxes and Licenses:  $15,462 (0.6%)
• Total Selling, General, and Administrative Expenses:  $288,233 (10.6%)

Net Operating Income:  $831,968 (30.6%)

Estimated Fees

• Estimated Royalty Fee:  $197,071 (7.3%)
• Estimated Technology Fee:  $6,000 (0.2%)
• Estimated Brand Fund:  $27,182 (1.0%)
• Estimated Local Advertising Requirement:  $40,773 (1.5%)

Net Income After Estimated Fees:  $560,942 (20.6%)

Part 2 – Total Gross Revenue, Cost of Goods Sold, Gross Profit, SG&A Expenses, Net Operating Income, and Estimated Fees by the Second Affiliate-Owned Location in 2023

Gross Revenue:  $602,436 (100.0%)

Cost of Goods Sold

• Labor:  $150,519 (25.0%)
• Materials:  $145,047 (24.1%)
• Total Cost of Goods Sold:  $295,566 (49.1%)

Gross Profit:  $306,870 (50.9%)

Selling, General, and Administrative Expenses

• Cars and Trucks:  $8,336 (1.4%)
• Insurances:  $0 (0.0%)
• Legal and Professional:  $0 (0.0%)
• Office Supplies/Software: $3,396 (0.6%)
• Manager Wages:  $59,719 (9.9%)
• Banking Fees:  $5,518 (0.9%)
• Selling and Referral Fees:  $32,231 (5.3%)
• Rent:  $22,031 (3.7%)
• Taxes and Licenses:  $823 (0.1%)
• Total Selling, General, and Administrative Expenses:  $132,054 (21.9%)

Net Operating Income:  $174,816 (29.0%)

Estimated Fees

• Estimated Royalty Fee:  $43,694 (7.3%)
• Estimated Technology Fee:  $6,000 (1.0%)
• Estimated Brand Fund:  $6,027 (1.0%)
• Estimated Local Advertising Requirement:  $9,040 (1.5%)

Net Income After Estimated Fees:  $110,079 (18.3%)

Part 3 – Total Gross Revenue, Cost of Goods Sold, Gross Profit, SG&A Expenses, Net Operating Income, and Estimated Fees by the Third Affiliate-Owned Location in 2023

Gross Revenue:  $102,834 (100.0%)

Cost of Goods Sold

• Labor:  $35,473 (34.5%)
• Materials:  $29,853 (29.0%)
• Total Cost of Goods Sold:  $65,326 (63.5%)

Gross Profit:  $37,508 (36.5%)

Selling, General, and Administrative Expenses

• Cars and Trucks:  $57 (0.1%)
• Insurances:  $0 (0.0%)
• Legal and Professional:  $0 (0.0%)
• Office Supplies/Software: $749 (0.7%)
• Manager Wages:  $28,894 (28.1%)
• Banking Fees:  $0 (0.0%)
• Selling and Referral Fees:  $0 (0.0%)
• Rent:  $5,187 (5.0%)
• Taxes and Licenses:  $0 (0.0%)
• Total Selling, General, and Administrative Expenses:  $34,886 (33.9%)

Net Operating Income:  $2,621 (2.5%)

Estimated Fees

• Estimated Royalty Fee:  $7,455 (7.3%)
• Estimated Technology Fee:  $2,500 (2.4%)
• Estimated Brand Fund:  $1,028 (1.0%)
• Estimated Local Advertising Requirement:  $3,750 ($750/month)

Net Income After Estimated Fees:  $(12,113) (-11.8%)

• “Gross Revenue” means all revenue that the Affiliate-Owned Location receives or otherwise derives from operating the Affiliate-Owned Location, whether from cash, check, credit or debit card, or other credit transactions. Gross Revenue includes any proceeds from any business interruption insurance applicable to loss of revenue.

• Gross Revenue also includes promotional allowances or rebates paid to the Affiliate-Owned Location in connection with the purchase of products or supplies or its referral of customers.

• Gross Revenue does not include (i) any bond fide returns and credits that are actually provided to customers, and (ii) any sales or other taxes that are collected from customers and paid directly to the appropriate taxing authority.

• “Labor” means the total cost and compensation each Affiliate-Owned Location paid in connection with the engagement of productive labor and subcontractors to provide the Approved Services.

• “Materials” means the total cost each Affiliate-Owned Location paid to purchase various items to provide the Approved Services such as paint, paint supplies, dry wall, carpet and flooring materials, dumpsters, mulch, cleaning products, handyman materials, etc.

• “Total COGS” is calculated by adding the total cost of Labor and Materials together.

• “Gross Profit” is calculated by subtracting Total COGS from Gross Revenue.

• “Cars & Trucks” means the total cost associated with routine maintenance, fuel, and repairs for the HOMEstretch vehicles, which can include box trucks, sprinter vans, and pick-up trucks, to provide the Approved Services. In 2023, the first Affiliate-Owned Location owned 5 vehicles comprising of 1 16 ft. box truck, 2 transit vans, and 2 pick-up trucks. In 2023, the second Affiliate-Owned Location provided a monthly stipend to its Project Manager for use of his personal pick-up truck for business needs. Vehicle ownership in Affiliate-Owned Location 1 was 0, 1, 4, and 5 for the years ended 2019, 2020, 2021, and 2022, respectively.

• “Insurance” means the total cost of business liability, vehicle, and worker’s compensation insurance.

• “Legal & Professional Services” means the cost of hiring independent professionals such as accountants to review and prepare financial statements and tax returns, attorneys to assist with routine legal work, and designers to assist with website enhancements, video editing, and content creation.

• “Office Supplies & Software” is the cost associated with routine office expenses such as computers, printers, software used to provide the Approved Services, and office supplies at HOMEstretch’s physical location.

• “Manager Wages” means the total salary and employer taxes of HOMEstretch project managers who oversee hourly employees and subcontractors, schedule jobs, and ensure the satisfactory completion of all jobs.

• “Banking Fees” are the costs incurred to use standard banking services and the credit card processing fees that HOMEstretch is charged when customers pay invoices with credit cards.

• “Selling & Referral Fees” means the fees charged to HOMEstretch in relation to partnership agreements with third-party referral partners. These partnerships include select real estate brokerages and third-party services that charge HOMEstretch a percentage fee for leads that it receives.

• “Rent” means the rent payments that HOMEstretch pays on a monthly basis to utilize its space to conduct the Approved Services.

• “Taxes & Licenses” means the amounts paid to certain municipal, state, and federal agencies for business related licenses and vehicle registrations.

• “Total SG&A Expenses” is calculated by adding the expenses listed under SG&A.

• “Net Operating Income” is calculated by subtracting Total SG&A Expenses from Gross Profit.

• “Estimated Royalty Fee” means the Royalty Fee that each Affiliate-Owned Location would have had to pay HOMEstretch over each period if each Affiliate-Owned Location were owned by a System franchisee and governed by HOMEstretch’s current form of Franchise Agreement. HOMEstretch calculated the Estimated Royalty Fee by multiplying Gross Revenue by the greater of (i) the Minimum Royalty Fee, or (ii) .0725 to account for the Royalty Fee of the greater of (i) the Minimum Royalty, or (ii) 7.25% set forth and required under HOMEstretch’s current form of Franchise Agreement.

• “Estimated Local Advertising Requirement” means the total Local Advertising expenditures that the Affiliate-Owned Location would have to expend over each period if each Affiliate-Owned Location were owned by a System franchisee and governed by HOMEstretch’s current form of Franchise Agreement. HOMEstretch calculated the Estimated Local Advertising Requirement by multiplying the Gross Revenue generated by the Affiliate-Owned Location by the greater of (i) $750/month, or (ii) .015 to account for the Local Advertising Requirement of the greater of (i) $750/month, or (ii) 1.5% of Gross Revenue set forth and required under HOMEstretch’s current form of Franchise Agreement.

• Actual local advertising spend for First Affiliated-Owned Location was $48,376 for 2023. Actual local advertising spend for Second Affiliate-Owned Location was $19,549 for 2023. Actual local advertising spend for Third Affiliate-Owned Location was $8,195 for 2023.

• “Estimated Technology Fee” means the total Technology Fee expenditures that the Affiliate-Owned Locations would have to expend over each period if each Affiliate-Owned Location were owned by a System franchisee and governed by HOMEstretch’s current form of Franchise Agreement. HOMEstretch calculated the Estimated Technology Fee by multiplying the current Technology Fee of $500 per month by the number of months in each applicable period.

• “Estimated Brand Fund” means the total Brand Fund contribution that the Affiliate-Owned Locations would have to expend over each period if each Affiliate-Owned Location were owned by a System franchisee and governed by HOMEstretch’s current form of Franchise Agreement. HOMEstretch calculated the Brand Fund by multiplying the total Gross Revenue by .01 to account for the 1% Brand Fund contribution.

• “Net Income After Estimated Fees” is calculated by subtracting the Estimated Royalty Fee, Estimated Local Advertising Requirement, Estimated Technology Fee, and Estimated Brand Fund from Net Operating Income.

Averages for the 3 Affiliate-Owned Locations That Were Open as of December 31, 2023 (Calculated by Franchise Chatter)

Gross Revenue:  $1,141,163 (100.0%)

Cost of Goods Sold

• Labor:  30.4%
• Materials:  26.7%
• Total Cost of Goods Sold:  57.1%

Gross Profit:  42.9%

Selling, General, and Administrative Expenses

• Cars and Trucks:  0.7%
• Insurances:  0.5%
• Legal and Professional:  0.1%
• Office Supplies/Software: 0.7%
• Manager Wages:  14.0%
• Banking Fees:  0.8%
• Selling and Referral Fees:  2.0%
• Rent:  3.1%
• Taxes and Licenses:  0.2%
• Total Selling, General, and Administrative Expenses:  22.1%

Net Operating Income:  20.8%

Estimated Fees

• Estimated Royalty Fee:  7.3%
• Estimated Technology Fee:  1.2%
• Estimated Brand Fund:  1.0%
• Estimated Local Advertising Requirement:  2.2%

Net Income After Estimated Fees:  $103,846 (9.1%)

Averages for the 2 Affiliate-Owned Locations That Were Open During the Full 2023 Calendar Year (Calculated by Franchise Chatter)

Gross Revenue:  $1,660,327 (100.0%)

Cost of Goods Sold

• Labor:  28.4%
• Materials:  25.6%
• Total Cost of Goods Sold:  54.0%

Gross Profit:  46.0%

Selling, General, and Administrative Expenses

• Cars and Trucks:  1.1%
• Insurances:  0.8%
• Legal and Professional:  0.2%
• Office Supplies/Software: 0.6%
• Manager Wages:  7.0%
• Banking Fees:  1.2%
• Selling and Referral Fees:  3.1%
• Rent:  2.1%
• Taxes and Licenses:  0.4%
• Total Selling, General, and Administrative Expenses:  16.5%

Net Operating Income:  29.5%

Estimated Fees

• Estimated Royalty Fee:  7.3%
• Estimated Technology Fee:  0.6%
• Estimated Brand Fund:  1.0%
• Estimated Local Advertising Requirement:  1.5%

Net Income After Estimated Fees:  $317,122 (19.1%)

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