Why was the franchised outlet's earnings not presented in the All States M.E.D. historical financial performance representation?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
In 2023, we had one affiliate company store outlet which operated for the entire 2023 yeear. We also had one franchised outlet as of December 31, 2023, but it opened part way through the year and so we do not present its earnings here.
Below, we set forth the Gross Revenues of this one affiliated company store outlet for the revenue earned by it, both online and at the physical outlet, as to a territory size of 1,4441,861 persons around the store, during the time period January 1, 2023 – December 31, 2023.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 39–42)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the historical financial performance representation for 2023 does not include the earnings of the franchised outlet because it opened part way through the year. The FDD states that the one franchised outlet was open as of December 31, 2023, but because it did not operate for the entire year, its financial results were excluded from the historical financial performance representation. Instead, the financial performance representation focuses on the gross revenues of the one affiliated company store outlet. This revenue reflects both online and physical outlet sales within a territory size of 1,4441,861 persons around the store, during the period from January 1, 2023, to December 31, 2023.
All States M.E.D. presents the gross revenues of the affiliated company store outlet to give prospective franchisees an idea of potential earnings. However, the FDD explicitly states that individual results may vary, and there is no assurance that a franchisee will earn as much. The financial performance representation is based on the company-owned store's performance within a specific territory size, and it's important to note that a franchisee's territory would be approximately 1.5 million people around their store. Additionally, the franchisor would credit franchisees for internet sales originating from their respective territories.
It is important for potential franchisees to understand the distinction between the company-owned store's performance and what they might expect to achieve with a franchised outlet. The FDD also clarifies that the financial performance representation does not reflect the costs of sales, operating expenses, or other costs that must be deducted to determine net income or profit. Therefore, prospective franchisees should conduct their own independent investigation of the costs and expenses they will incur in operating their All States M.E.D. franchise. Speaking with current or former franchisees, whose contact information is listed in the Franchise Disclosure Document, may provide valuable insights into the financial realities of running an All States M.E.D. franchise.