A classic example of “creative” FDD Item #19 composition
ITEM 19: FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.
As of the Issuance Date of this Disclosure Document, there is one (1) (Franchise Outlet Name Deleted) outlets open and operating that are owned by our affiliate. This outlet is representative and is included in this disclosure. This outlet is located in Pennsylvania. This affiliate out has been in operation since 1990 and operates 12 trucks across a wide territory.
The reasonable basis for inclusion of this Financial Performance Representation is that these affiliate owned outlet is similar to the Franchise being offered under this Disclosure Document in terms of operations and services offered. The operational characteristics that make this affiliate owned outlets different is that it does not pay any Royalty Fees or Brand Fund Contributions to us, or expend any minimum amount on local advertising.
This Item 19 sets forth certain historical gross revenue, expenses and payroll information per truck for the affiliate owned outlet for 2020-2022. The gross revenue information and expense information set forth in this Item 19 is derived from the affiliate owned outlet accounting software.
Average EBIDA Per Truck 2020 – 2022
| 2022 | 2021 | 2020 | |
| Gross Revenue | $ 373,305.00(1) | $ 368,180.00 | $ 343,375.00 |
| Expenses | |||
| Advertising | $ 7,155.00 | $ 9,271.66 | $ 6,241.93 |
| Bank Service Charge | – | $ 37.00 | $ 143.38 |
| Credit Card Fees | $ 2,444.00 | $ 1,800.00 | $ 2,631.29 |
| Damage Claims | $ 2,000.00 | $ 1,750.00 | $ 1,836.00 |
| Equipment Rental | $ 1,571.00 | $ 2,035.77 | $ 2,598.75 |
| Fuel and Oil | $ 14,540.00 | $ 13,184.04 | $ 8,999.64 |
| GPS Fees | $ 275.00 | $ 275.00 | $ 275.00 |
| Insurance | $ 6,478.00 | $ 8,126.11 | $ 8,847.85 |
| Internet Expense | $ 423.00 | $ 500.00 | $ 337.70 |
| Job Materials | $ 19,768.25 | $ 15,976.18 | $ 17,777.98 |
| Chemicals | $ 12,222.75 | $ 11,845.82 | $ 13,678.03 |
| Licenses and Permits | $ 414.00 | $ 525.00 | $ 1,393.42 |
| Lodging | $ 612.00 | $ 772.38 | $ 100.00 |
| Meals and Entertainment | $ 169.00 | $ 213.57 | $ 100.00 |
| Parking | – | – | $ 100.00 |
| Office Expense | $ 967.00 | $ 900.00 | $ 900.00 |
| Payroll service fees | $ 188.00 | $ 237.51 | $ 220.00 |
| Professional Fees | $ 1,020.00 | $ 1,012.00 | $ 1,188.00 |
| Propane | $ 457.00 | $ 500.00 | $ 500.00 |
| Rent | $ 13,582.00 | $ 13,250.00 | $ 13,000.00 |
| Repairs and Maintenance | $ 2,481.00 | $ 3,145.03 | $ 2,830.46 |
| Security | $ 105.00 | $ 132.45 | – |
| Software | – | $ 59.86 | $ 73.26 |
| Telephone | $ 1,018.00 | $ 1,018.00 | $ 900.00 |
| Tolls | $ 1,960.00 | $ 1,750.00 | $ 1,619.94 |
| Truck Repairs | $ 3,996.00 | $ 1,410.98 | $ 2,160.00 |
| Utilities | $ 1,113.00 | $ 1,000.00 | $ 1,000.00 |
| Website | $ 817.00 | $ 1,035.00 | $ 3,000.00 |
| Work Site Utilities | $ 335.00 | $ 335.00 | $ 311.43 |
| Payroll Expenses Labor | $ 78,394.00 | $ 77,317.80 | $ 72,108.75 |
| Royalty Fee (2) | $ 29,864.40 | $ 29,454.40 | $ 27,470.00 |
| Brand Fund Contribution (3) | $ 7,466.10 | $ 7,363.60 | $ 6,867.50 |
| Other Franchisee Related FEES (4)
|
$ 14,303.88 |
$ 14,303.88 |
$ 14,303.88 |
| Total Expenses (5) | $ 226,139.38 | $ 220,538.04 | $ 213,514.19 |
| EBITDA | $ 147,165.62 | $ 147,641.96 | $ 129,860.81 |
| EBITDA % | 39% | 40% | 38% |
Overall EBITDA 2020- 2022
| 2022 | 2021 | 2020 | |
| Gross Revenue | $ 2,204,679.85 | $ 1,999,180.46 | $ 1,586,756.50 |
| Expenses | |||
| Advertising | $ 51,555.39 | $ 50,389.43 | $ 28,897.82 |
| Bank Service Charge | $ 122.00 | $ 262.00 | $ 663.80 |
| Credit Card Fees | $ 16,957.63 | $ 10,081.77 | $ 12,181.92 |
| Damage Claims | $ 10,000.00 | $ 9,500.00 | $ 8,500.00 |
| Equipment Rental | $ 23,082.45 | $ 11,063.96 | $ 12,031.26 |
| Fuel and Oil | $ 95,314.73 | $ 1,652.37 | $ 41,665.00 |
| Fire Safety | $ 101.76 | – | – |
| GPS Fees | $ 1,567.41 | $ 1,942.10 | $ 2,115.10 |
| Insurance | $ 46,274.02 | $ 44,163.64 | $ 40,962.26 |
| Internet Expense | $ 1,751.80 | $ 2,978.73 | $ 1,563.42 |
| Job Materials | $ 60,167.05 | $ 86,827.09 | $ 82,305.47 |
| Chemicals | $ 71,999.65 | $ 4,379.44 | $ 63,324.22 |
| Licenses and Permits | $ 1,616.00 | $ 2,914.50 | $ 6,451.00 |
| Lodging | $ 1,400.00 | $ 4,197.70 | $ 124.26 |
| Meals and Entertainment | $ 4,000.00 | $ 1,186.50 | $ 181.15 |
| Parking | $ 549.00 | – | $ 458.50 |
| Office Expense | $ 4,117.26 | $ 3,555.73 | $ 4,278.26 |
| Payroll service fees | $ 1,449.00 | $ 1,319.50 | $ 1,041.25 |
| Professional Fees | $ 6,000.00 | $ 5,500.00 | $ 5,500.00 |
| Propane | $ 2,241.02 | $ 3,217.55 | $ 2,093.57 |
| Rent | $ 60,000.00 | $ 60,000.00 | $ 42,379.33 |
| Repairs and Maintenance | $ 7,989.31 | $ 17,472.38 | $ 13,104.00 |
| Security | $ 1,281.50 | $ 735.85 | – |
| Software | $ 2,017.47 | $ 332.58 | $ 339.17 |
| Telephone | $ 4,459.37 | $ 4,169.67 | $ 4,008.46 |
| Tolls | $ 8,550.83 | $ 7,603.36 | $ 7,499.70 |
| Truck Repairs | $ 16,791.77 | $ 25,140.64 | $ 10,000.00 |
| Utilities | $ 7,653.63 | $ 7,838.76 | $ 5,345.36 |
| Website | $ 1,200.00 | $ 5,750.00 | $ 10,150.00 |
| Work Site Utilities | $ 1,799.26 | $ 2,356.62 | $ 1,441.80 |
| Payroll Expenses Labor | $ 462,982.77 | $ 419,827.90 | $ 333,218.87 |
| Payroll Expenses Office
and Management |
$ 176,374.39 |
$ 159,934.44 |
$ 126,940.52 |
| Royalty (2) | $ 176,374.39 | $ 159,934.44 | $ 126,940.52 |
| Brand Fund (3) | $ 44,093.60 | $ 39,983.61 | $ 31,735.13 |
| Other Franchisee Related
Fees (4) |
$ 14,303.88 |
$ 14,303.88 |
$ 14,303.88 |
| Total Expenses (5) | $ 1,386,138.34 | $ 1,300,516.14 | $ 1,041,745.00 |
| EBITDA (6) | $ 818,541.52 | $ 698,664.32 | $ 545,011.50 |
| EBITDA% (7) | 37% | 35% | 34% |
Average Job Size
The following is a chart of the average job size for both commercial and residential jobs for 2020 – 2022. This chart is broken into upper, lower, and middle averages along with the median job size.
Average Commercial Job Size8
| 2022 | 2021 | 2020 | |
| Top 1/3 | $13,047.33 | $14,640.04 | $8,119.20 |
| Middle 1/3 | $3,425.58 | $3,319.08 | $1,832.58 |
| Bottom 1/3 | $706.23 | $718.94 | $459.96 |
| Median | $3,537.50 | $3,180.00 | $1,590.00 |
| AVERAGE | $5,782 | $6,165.21 | $3,457.68 |
Average Residential Job Size9
| 2022 | 2021 | 2020 | |
| Top 1/3 | $788.99 | $736.03 | $691.39 |
| Middle 1/3 | $418.47 | $403.36 | $378.98 |
| Bottom 1/3 | $292.14 | $281.58 | $269.53 |
| Median | $424.00 | $397.50 | $371.00 |
| AVERAGE | $505.00 | $473.92 | $447.81 |
- Average truck per working day does $1,821 in Of the twelve trucks in operation, there are five that operate full time. This chart represents the average numbers from the five trucks that operate on a full-time basis.
- The Royalty Fee of 8% was not incurred by our affiliate location. It is included here for informational purposes
- The Brand Fund Contribution of 2% was not incurred by our affiliate location. It is included here for informational purposes
- Other Franchisee Related Expenses includes: Technology Fee, Business Phone, Call Center Fee, Website Management Fee, and Bookkeeping Services Fee (“Other Franchisee Related Expenses”). These costs are estimated based on the currently charged monthly fee multiplied by twelve to represent a year of Franchisee related expenses not incurred by our affiliate Other Franchisee Related Expenses is not intended to be inclusive of all other costs or fees a franchisee may incur.
- Total Expenses here includes the amounts listed for Royalty Fee, Brand Fund Contribution, and Other Franchisee Related Expenses that were not incurred by our affiliate
- The EBITDA here includes Royalty Fee, Brand Fund Contribution, and Other Franchisee Related The Royalty Fee, Brand Fund Contribution, and Other Franchisee Related Expenses were not incurred by our affiliate location.
- The EBITDA % here includes Royalty Fee, Brand Fund Contribution, and Other Franchisee Related Expenses. The Royalty Fee, Brand Fund Contribution, and Other Franchisee Related Expenses were not incurred by our affiliate
- In 2022, commercial revenue was $1,081,215.20 in work completing 187 jobs and accounted for 54% of revenue. In 2021, commercial revenue was $955,608.26 in work completing 155 jobs and accounted for 47.8% of revenue. In 2020, commercial revenue was $529,024.62 in work completing 153 jobs and accounted for 33.34% of revenue. Commercial job size varies greatly, in 2022-2020, from $300 to $60,000.
- In 2022, Residential revenue was $913,646.79 in work completing 1,808 jobs and accounted for 46% of revenue. In 2021, Residential revenue was $1,043,572.20 in work completing 2202 jobs and accounted for 2% of revenue. In 2020, Residential revenue was $1,057,731.88 in work completing 2,362 jobs and accounted for 66.66% of revenue.
- These results are unaudited
- These results represent sales of products and services which will be available for franchisees to sell.
Our affiliate outlets have earned this much. Your individual results may differ. There is no assurance that you’ll earn as much.
Written substantiation for the financial performance representation will be made available to prospective franchisees upon reasonable request.
Other than the preceding information, we do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting (Name of contact Deleted by KGP)
Typical Fees for this franchise are as follows:
AKA – FEE’D to DEATH
Royalty 8% of Gross Revenue
Advertising 4% or $2000 Per Month (Whichever is greater)
Brand Fund 2% of Gross Revenue
Tech Fee $356 to $500 per Month
Business Phone Fee $36.00 per Month
Call Center $250.00 per month or then current fee $10 to $20 per booking
Website Management $150.00 Per Month or then current
Bookkeeping Services $400.00 per Month
Annual Convention Then current fee, $699.00 per person
Regional Meeting Up to $500.00 per event
Transfer Fee 25% of then current fee or $10,000 whichever greater
Minimum Gross Revenue. If you fail to achieve the minimum level of monthly gross revenue we may collect a Royalty Fee equal to what you would have been assessed had you achieve the minimum level of gross revenue.
You must maintain minimum gross revenue as follows (“Minimum Gross Revenue”):
Months since beginning operations Minimum Gross Revenue
0 – 12 $0
13 – 24 $10,000
25 – 36 $16,666
37 – 48 $19,900
48-60 $25,000
60-72 $27,500
72-84 $29,900
84-96 $33,500
96-108 $36,600
108-120 $39,500
