Scenthound: $466K Average Sales vs. $318K-$499K Franchise Cost

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

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

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

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

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

• 2023 average, median, maximum, and minimum gross revenue by quartile for the 34 Scenthound Scenters that were open for a full 12 months ending December 31, 2023

• 2023 average, median, maximum, and minimum membership counts by quartile for the 34 Scenthound Scenters that were open for a full 12 months ending December 31, 2023

• 2023 membership counts for the first 12 months after opening by quartile for the 34 Scenthound Scenters that were open for a full 12 months ending December 31, 2023

• 2023 average member count, gross revenue, membership fees, other revenue from members, total revenue from members, and revenue from non-members for the 34 Scenthound Scenters that were open for a full 12 months ending December 31, 2023

• 2023 average gross revenue, disclosed operating expenses, and net operating income for the 22 Scenthound Scenters that were open for a full 12 months ending December 31, 2023 and reported expense and net operating income information

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

Section I – Scenthound Franchise Costs

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

• Initial Franchise Fee:  $49,900
• Leasehold Improvements:  $135,900 to $242,600
• Fixtures/Equipment/Furniture:  $33,000 to $35,000
• Millwork:  $13,285 to $24,200
• Signage:  $5,500 to $12,500
• Architect Review Fee:  $0 to $1,500
• Computer System:  $4,500
• Technology Fee:  $1,649 to $2,849
• Startup Supplies Package:  $6,500
• Initial Retail Inventory Package:  $1,500
• Career Plug Fees:  $0 to $420
• Grand Opening Marketing:  $12,000 to $17,000
• Training Travel Expenses:  $250 to $4,500
• Opening Support Fee:  $3,500
• Rent (3 months):  $0 to $17,000
• Security Deposit:  $2,000 to $9,000
• Business Licenses/Permits:  $1,500 to $6,700
• Professional Fees:  $1,500 to $4,500
• Insurance Deposits and Premiums (3 months):  $1,000 to $3,000
• Utility Deposits:  $200 to $800
• Extension Fee:  $0 to $2,500
• Additional Funds (3 months):  $45,000 to $50,000
• Total Estimated Scenthound Franchise Costs:  $318,684 to $499,969

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

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

• Initial Franchise Fee:  $49,900
• Royalty Fee:  6% of Gross Revenue
• Brand Fund Contribution:  up to 1.5% of Gross Revenue
• Local Advertising:  5.5% of Gross Revenue with a minimum of $25,000 per year and an annual maximum of $35,000

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

Franchised

2021

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  18
• Net Change:  +17

2022

• Outlets at the Start of the Year:  18
• Outlets at the End of the Year:  34
• Net Change:  +16

2023

• Outlets at the Start of the Year:  34
• Outlets at the End of the Year:  71
• Net Change:  +37

Company-Owned

2021

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  5
• Net Change:  0

2022

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  5
• Net Change:  0

2023

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  5
• Net Change:  0

Section IV – News Updates on the Scenthound Franchise

• Scenthound Franchisees Jim and Christy Boswell Named Franchise Owners of the Year by the International Franchise Association

• Scenthound Achieves Historic Growth in 2023 Transforming the Dog Care Industry

• Scenthound Opened 18 Locations in Q4 2023

• Scenthound Accelerates Disruption of Pet Wellness Industry with Triple-Digit Growth in Franchise Expansion, Membership

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

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

• The first franchised Scenter opened on December 14, 2020. As of December 31, 2023, there are 71 operating franchised Scenters. 34 of the 71 Scenters were open for a full 12 months ending December 31, 2023 (“Qualifying Centers”) and have a reporting period from January 1, 2023 to December 31, 2023 (the “Reporting Period”).

Part 1 – 2023 Gross Revenue by Quartile

Top Quartile

• Maximum Gross Revenue:  $771,581
• Average Gross Revenue:  $658,401
• Median Gross Revenue:  $649,132
• Minimum Gross Revenue:  $600,405
• Count of Qualifying Centers:  8
• Number and Percent of Centers Above Average:  3 (38%)

Top-Middle Quartile

• Maximum Gross Revenue:  $592,218
• Average Gross Revenue:  $514,708
• Median Gross Revenue:  $507,428
• Minimum Gross Revenue:  $463,691
• Count of Qualifying Centers:  9
• Number and Percent of Centers Above Average:  4 (44%)

Bottom-Middle Quartile

• Maximum Gross Revenue:  $450,957
• Average Gross Revenue:  $396,413
• Median Gross Revenue:  $390,464
• Minimum Gross Revenue:  $352,779
• Count of Qualifying Centers:  9
• Number and Percent of Centers Above Average:  4 (44%)

Bottom Quartile

• Maximum Gross Revenue:  $326,270
• Average Gross Revenue:  $299,470
• Median Gross Revenue:  $313,187
• Minimum Gross Revenue:  $245,881
• Count of Qualifying Centers:  8
• Number and Percent of Centers Above Average:  5 (63%)

All

• Maximum  Gross Revenue:  $771,581
• Average Gross Revenue:  $466,560
• Median Gross Revenue:  $457,324
• Minimum Gross Revenue:  $245,881
• Count of Qualifying Centers:  34
• Number and Percent of Centers Above Average:  16 (47%)

• “Gross Revenue” in this Item 19 is defined as all sales, revenues, charges, and receipts from whatever source (whether in the form of cash, check, credit or debit card, barter exchange, trade credit or other credit transactions) that arise, directly or indirectly, from the operation of or in connection with a Scenter.

• Gross Revenue includes all revenues earned from products and services offered at a Scenter, space in a Scenter leased to subcontractors (if approved by Scenthound), usage income, and insurance proceeds received in the event of a loss or interruption of business due to a casualty or similar event at your Scenter.

• Gross Revenue excludes sales taxes collected from customers and paid to the appropriate taxing authority, tips, or gratuities provided to employees and any other bona fide refunds to customers.

Part 2 – Membership Counts as of December 31, 2023 by Quartile

Top Quartile

• Maximum Membership Count:  900
• Average Membership Count:  768
• Median Membership Count:  770
• Minimum Membership Count:  644
• Count of Qualifying Centers:  8
• Number and Percent of Centers Above Average:  4 (50%)

Top-Middle Quartile

• Maximum Membership Count:  644
• Average Membership Count:  569
• Median Membership Count:  566
• Minimum Membership Count:  514
• Count of Qualifying Centers:  9
• Number and Percent of Centers Above Average:  3 (33%)

Bottom-Middle Quartile

• Maximum Membership Count:  482
• Average Membership Count:  452
• Median Membership Count:  446
• Minimum Membership Count:  441
• Count of Qualifying Centers:  9
• Number and Percent of Centers Above Average:  4 (44%)

Bottom Quartile

• Maximum Membership Count:  410
• Average Membership Count:  356
• Median Membership Count:  369
• Minimum Membership Count:  264
• Count of Qualifying Centers:  8
• Number and Percent of Centers Above Average:  5 (63%)

All

• Maximum Membership Count:  900
• Average Membership Count:  535
• Median Membership Count:  498
• Minimum Membership Count:  264
• Count of Qualifying Centers:  34
• Number and Percent of Centers Above Average:  16 (44%)

• “Membership Counts” include any current member (a single canine) as of December 31, 2023 whose membership has not been cancelled either by choice of the dog parent or by the Qualfying Scenter due to failed payment.

Part 3 – Membership Counts by Quartile for First 12 Months After Opening

Top Quartile

• Count of Qualifying Centers:  8
• Month 1:  338
• Month 2:  409
• Month 3:  476
• Month 4:  537
• Month 5:  594
• Month 6:  619
• Month 7:  643
• Month 8:  670
• Month 9:  691
• Month 10:  700
• Month 11:  702
• Month 12:  716

Top-Middle Quartile

• Count of Qualifying Centers:  9
• Month 1:  259
• Month 2:  321
• Month 3:  359
• Month 4:  394
• Month 5:  418
• Month 6:  433
• Month 7:  452
• Month 8:  469
• Month 9:  495
• Month 10:  521
• Month 11:  538
• Month 12:  543

Bottom-Middle Quartile

• Count of Qualifying Centers:  9
• Month 1:  230
• Month 2:  268
• Month 3:  297
• Month 4:  332
• Month 5:  358
• Month 6:  378
• Month 7:  395
• Month 8:  411
• Month 9:  422
• Month 10:  427
• Month 11:  434
• Month 12:  442

Bottom Quartile

• Count of Qualifying Centers:  8
• Month 1:  208
• Month 2:  236
• Month 3:  261
• Month 4:  286
• Month 5:  306
• Month 6:  321
• Month 7:  327
• Month 8:  333
• Month 9:  339
• Month 10:  343
• Month 11:  342
• Month 12:  346

All

• Count of Qualifying Centers:  34
• Month 1:  258
• Month 2:  307
• Month 3:  347
• Month 4:  386
• Month 5:  417
• Month 6:  436
• Month 7:  452
• Month 8:  469
• Month 9:  485
• Month 10:  496
• Month 11:  503
• Month 12:  510

Part 4 – Sources of Gross Revenue

Average

• Member Count:  535
• Gross Revenue:  $466,535
• Membership Fees:  $237,904
• % of Gross Revenue from Membership Fees:  51%
• Other Revenue from Members:  $147,561
• Total Revenue from Members:  $385,466
• % of Revenue from Members:  83%
• Revenue from Non-Members:  $81,070
• % of Revenue from Non-Members:  17%

• “Membership Fees” are a source of Gross Revenue representing a recurring monthly amount determined by the level of services selected at the time of enrollment. There are several tiers of monthly membership programs but minimally include bath with towel-dry, ear cleaning, nail trimming, teeth brushing, and a 6-point wellness check.

• “Other Revenue from Members” are sources of Gross Revenue from member’s add-on services such as de-shedding treatments, haircuts, plaque cleanses, etc., as well as from retail product sales and miscellaneous fees.

• “Revenue from Non-Members” are sources of Gross Revenue from customers who have not joined a membership program. This revenue is from services similar to those provided by the Monthly Membership Fees and Other Revenue from Members but at higher prices on a single-transaction basis.

Part 5 – 2023 Net Operating Income Dollars

• 22 of 34 Qualifying Scenters reported the following information:

Average

Gross Revenue:  $505,215 (100.0%)

Expenses

• Payroll, Taxes, and Benefits:  $245,498 (48.6%)
• Rent:  $48,617 (9.6%)
• Other Occupancy Expenses:  $17,941 (3.6%)
• Royalty Fees:  $30,313 (6.0%)
• Technology Fee:  $8,100 (1.6%)
• Brand Fund Contributions:  $5,052 (1.0%)
• Local Advertising:  $26,207 (5.2%)
• Other Operating Expenses:  $51,742 (10.2%)

Net Operating Income:  $71,745 (14.2%)

• “Payroll, Taxes, and Benefits” includes payroll, payroll taxes, benefits, and independent contractor costs. Amounts were increased for circumstances such as franchise owners performing significant work on behalf of the Qualifying Scenter not accounted for in Payroll or other expense line items.

• Amounts were decreased to account for circumstances such as franchisees either paying themselves or their managers above-market manager rates or for adding new managers to existing locations in advance of subsequent Scenter openings. Adjusted Payroll assumes a manager salary between $40,000 and $60,000 depending on market conditions.

• “Rent” is the cost for space paid to the landlord under terms of the lease for the Qualifying Scenters.

• “Other Occupancy Expenses” include utilities, repair and maintenance costs, and business insurance for the Qualifying Scenters.

• “Royalty Fees”, “Technology Fees”, and “Brand Fund Contributions” represent actual amounts paid by the Qualifying Scenters to Scenthound in 2024.

• “Local Advertising” includes digital and non-digital marketing expenses including agency fees to promote the local Scenthound franchise.

• “Other Operating Expenses” include credit/debit card processing fees (generally ranging between 2.7% and 3.1% of Gross Revenue), grooming supplies needed to support sales (generally ranging between 2.1% and 2.9% of Gross Revenue), and other items such as recruiting expenses, uniforms, office and cleaning supplies, and other necessary expenditures to conduct business.

• Expenses of the Qualifying Scenters exclude Depreciation & Amortization, Interest Expense, expenses related to more than one Scenter owned by a single franchisee, as well as extraordinary expenses that are not standard in the operation of a Scenter such as 401(k) contributions, automobile expenses, charitable contributions (that are non-marketing expenses), and other non-business-related expenses such as meals and entertainment.

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

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