NerdsToGo: $327K Average Sales vs. $133K-$181K Franchise Cost

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

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

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

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

Section V – Presentation and analysis of NerdsToGo’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 gross revenue for the 27 NerdsToGo franchise locations that were in continuous operation for the entire 2022 calendar year (excluding locations that temporarily closed, had limited operations with a single employee, or did not report gross revenue in 2022), by quartile

• 2022 average gross revenue, cost of goods sold, operating expenses, EBITDA, franchise principal compensation, and total franchisee principal’s benefit for the 8 NerdsToGo franchise locations that were in continuous operation for the entire 2022 calendar year and submitted financial statements to NerdsToGo

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

Section I – NerdsToGo Franchise Costs

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

• Initial Franchise Fee:  $49,750
• Vehicle Finance for One Branded Vehicle:  $1,350 to $1,800
• Vehicle Graphics for One Branded Vehicle:  $500 to $2,900
• Equipment, Tools, and Systems for One Branded Vehicle:  $4,450 to $4,735
• Deposits:  $2,153 to $3,041
• Leasehold Improvements:  $7,080 to $8,000
• Furniture, Fixtures, Cabinetry, and Displays:  $4,129 to $10,122
• Administrative Supplies:  $479 to $945
• Insurance:  $873 to $1,250
• Signage – Inside and Outside:  $2,829 to $9,178
• Professional Fees (lawyer, accountant, etc.):  $1,350 to $3,711
• Marketing Introduction Plan:  $14,500
• Marketing Materials and Uniforms:  $1,105 to $2,400
• Design Fee:  $500
• Travel, Lodging, and Meals for Initial Training:  $2,285 to $3,200
• Additional Funds (for First 4 Months):  $40,000 to $65,000
• Total Estimated NerdsToGo Franchise Costs:  $133,333 to $181,032

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

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

• Initial Franchise Fee:  $49,750

• Royalty Fee:  4% of Gross Service/Software Sales and 1% of Gross Product Sales for the first 12 months of operation. Beginning on the 13th month of operation through the end of the term of the Franchise Agreement, the greater of $1,000 or 8% of Gross Service/Software Sales and 2% of Gross Product Sales.

• Marketing Fund Contribution:  1% of Gross Service/Software Sales and Gross Product Sales for the first 12 months of operation. Beginning on the 13th month of operation through the end of the term of the Franchise Agreement, 2% of Gross Service/Software Sales and Gross Product Sales.

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

Franchised

2020

• Outlets at the Start of the Year:  25
• Outlets at the End of the Year:  25
• Net Change:  0

2021

• Outlets at the Start of the Year:  25
• Outlets at the End of the Year:  30
• Net Change:  +5

2022

• Outlets at the Start of the Year:  30
• Outlets at the End of the Year:  32
• Net Change:  +2

Company-Owned

2020

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2021

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2022

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

Section IV – News Updates on the NerdsToGo Franchise

• NerdsToGo Celebrates Unprecedented Growth and Entry Into New Markets, Planning for Further Development in 2024

• Propelled Brands on Pace for Record-Breaking Year with Network-Wide Growth in First Half of 2023

• NerdsToGo Continues to Grow One Year After Rebranding

• NerdsToGo of Bellevue Wins Distinguished Franchisee Award

• NerdsToGo Recognizes Achievements and Honors Franchisees at 2023 Convention in Las Vegas, NV

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

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

• On December 31, 2022, there were 32 NerdsToGo locations open and in operation and 27 were in continuous operation during the entire calendar year ending December 31, 2022.

• The table below shows historical financial performance for the 27 NerdsToGo locations that were in continuous operation for the entire 2022 calendar year and excludes locations that temporarily closed, had limited operations with a single employee, or did not report Gross Revenue in 2022.

• As used in this Item 19, “Gross Revenue” is defined as the grand total of all sale transactions reported in a period, less sales tax, discounts, allowances, and returns. Gross Revenue is generated primarily (but not entirely) from four categories: (i) on-site service calls, (ii) on-site product sales, (iii) walk-in service, and (iv) walk-in product sales. “On-site” refers to service and sales performed at the customer’s location.

Part 1 – Systemwide Gross Revenue – Franchised Locations Operating for the Entire 2022 Calendar Year

Total Reporting Businesses

• Number of Reporting Businesses:  27
• Highest Gross Revenue:  $1,000,598
• Lowest Gross Revenue:  $51,456
• Average Gross Revenue:  $327,771
• Number at or Above Average:  11
• Percentage at or Above Average:  40.7%
• Median Gross Revenue:  $259,395

Top Quartile

• Number of Reporting Businesses:  7
• Highest Gross Revenue:  $1,000,598
• Lowest Gross Revenue:  $391,045
• Average Gross Revenue:  $631,179
• Number at or Above Average:  3
• Percentage at or Above Average:  42.9%
• Median Gross Revenue:  $610,810

3rd Quartile

• Number of Reporting Businesses:  6
• Highest Gross Revenue:  $361,489
• Lowest Gross Revenue:  $263,621
• Average Gross Revenue:  $329,828
• Number at or Above Average:  4
• Percentage at or Above Average:  66.7%
• Median Gross Revenue:  $334,514

2nd Quartile

• Number of Reporting Businesses:  7
• Highest Gross Revenue:  $259,395
• Lowest Gross Revenue:  $194,025
• Average Gross Revenue:  $231,267
• Number at or Above Average:  4
• Percentage at or Above Average:  57.1%
• Median Gross Revenue:  $235,129

Bottom Quartile

• Number of Reporting Businesses:  7
• Highest Gross Revenue:  $174,757
• Lowest Gross Revenue:  $51,456
• Average Gross Revenue:  $119,103
• Number at or Above Average:  5
• Percentage at or Above Average:  71.4%
• Median Gross Revenue:  $136,265

• The average Gross Revenue figures included in this analysis are based on sales reports submitted to NerdsToGo by each franchisee. The figures in the sales reports have not been audited and NerdsToGo has not undertaken to otherwise independently verify (i) the accuracy of such information or (ii) whether such information was prepared in accordance with generally accepted accounting principles.

Part 2 – Results of 2022 Financial Survey

• In addition to the average Gross Revenue analysis for 2022 presented above, certain expenses expressed as a percentage of Gross Revenue have been provided based on the experience of certain of the foregoing NerdsToGo locations in 2022 described below. The expense figures were extracted from the 2022 financial statements submitted by the NerdsToGo franchisees included in NerdsToGo’s 2022 Financial Survey.

• NerdsToGo has not been provided with expense data from 19 of the 27 NerdsToGo franchise locations that were open and in continuous operation during the 2022 calendar year. This was primarily due to the close proximity of year-end to the time of compilation of these numbers and such 19 NerdsToGo franchise locations were not included in the expense figures provided herein.

• You should note that expense data for the 8 NerdsToGo franchise locations included in the 2022 compilation relate to operations during the 2022 calendar year.

• The information relating to the operations expenses provided by the NerdsToGo locations and used by NerdsToGo in determining the numerical values provided has not been audited and such information has not necessarily been prepared on a basis consistent with generally accepted accounting principles.

• NerdsToGo is unable to verify whether the expense data submitted by each NerdsToGo location for each separately provided expense item appropriately reflect the types of expenses which are ordinarily incurred by NerdsToGo locations, and which should be included in the item according to generally accepted accounting principles.

• Each percentage given on this analysis reflects the mean average of the total percentages for the applicable expense item provided by the reporting NerdsToGo locations (i.e., the aggregate sum of the expense percentages of all reporting NerdsToGo locations divided by the number of reporting NerdsToGo locations). The expense percentages for the various expense items provided by each reporting NerdsToGo location reflect that NerdsToGo location’s expenses as a percentage of its Gross Revenue.

• No percentage given on this analysis is the actual expense percentage experienced by any one NerdsToGo location and the actual expense percentages for the reporting NerdsToGo location on any expense item may vary significantly.

• The following expenses represent the major expense items for a NerdsToGo location and should not be considered the only expenses that a NerdsToGo location will incur.

2022 Year-End Average P&L for NerdsToGo Locations (8 Locations Reporting)

Gross Revenue:  $518,200 (100.0%)

Cost of Goods Sold:  $151,530 (29.2%)

Operating Expenses

• Labor, including Franchisee Principal Compensation:  $153,274 (29.6%)
• Advertising:  $35,295 (6.8%)
• Facilities:  $24,778 (4.8%)
• Royalties:  $38,164 (7.4%)
• Other General and Administrative Expenses:  $72,717 (14.0%)

EBITDA:  $29,899 (5.8%)

Franchise Principal Compensation:  $59,434 (11.5%)

Total Franchisee Principal’s Benefit:  $101,877 (19.7%)

• The highest and lowest reported Gross Revenue for the 8 NerdsToGo locations that provided 2022 financial statements were $1,013,952 and $237,873, respectively.

• The amount of gross revenue realized, and expenses incurred will vary from unit to unit. Gross revenue and expenses at franchisee’s NerdsToGo location will be directly affected by many additional factors not noted above, including, without limitation, the location’s geographic location, competition in the market, the presence of other NerdsToGo locations, the quality of management, the effectiveness of sales and marketing, and the prices charged for products and services sold at the location.

• Further, the Franchise Agreement to which each franchisee included in this analysis is subject is different from the Franchise Agreement attached to the current Disclosure Document. Among other terms, the Franchise Agreement attached to the current Disclosure Document requires an initial franchise fee of $49,750 and a continuing Service Fee of 8% on Service Revenue and 2% on Product Revenue. This analysis, therefore, should only be used as a reference for you to use in conducting your own analysis.

Part 3 – Contribution of B2B “Nerd Assure” Program

• In September 2021, NerdsToGo launched its business-to-business (“B2B”) focused NerdAssure program. This program provides remote monitoring and other services for B2B customers and focuses on longer-term recurring monthly charges for these services.

• As of December 31, 2022, 19 locations had opted in to the NerdAssure Program.

• For the period between January 1, 2022 and December 31, 2022, the average monthly recurring revenue per location from the NerdAssure program was $7,104 (6 or 31.6% of which met or exceed that average), with a median revenue per location of $5,483. The lowest reported revenue was $1,716 and the highest reported revenue was $28,838.

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

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