What does the Azal Coffee FDD state that gross sales do not reflect?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
Gross sales do not reflect the actual potential income of a Store and should not be relied on in calculating profitability. There are a number of fixed and variable costs associated with a Store, not all of which are reflected in the information above and that vary among individual Stores. These expenses, which are likely to be significant, include, but are not limited to, the following: the certain costs listed above, costs described in Items 6 and 7 of this disclosure document, including the royalty fee; marketing fund fees, interest or finance charges if you finance some or all of the cost of the franchise; depreciation on property and equipment; occupancy costs (including rent, maintenance, insurance and utilities); store supplies; credit card fees; worker's compensation and general liability insurance; taxes; technology fees; accounting and legal fees and general administrative expenses; any preopening or amortization of organization costs; costs you incur during training; costs
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 47–48)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the gross sales figures presented do not reflect the actual potential income of a store and should not be used to calculate profitability. This is because gross sales do not account for the numerous fixed and variable costs associated with operating an Azal Coffee store. These costs can vary significantly among different locations and individual stores.
The FDD specifies that these unreflected expenses include, but are not limited to, certain initial and ongoing costs outlined in Items 6 and 7, such as the royalty fee and marketing fund fees. Additional costs not factored into gross sales include interest or finance charges if the franchisee finances the franchise, depreciation on property and equipment, occupancy costs (rent, maintenance, insurance, and utilities), store supplies, credit card fees, worker's compensation and general liability insurance, taxes, technology fees, accounting and legal fees, general administrative expenses, pre-opening or amortization of organization costs, training costs, regulatory compliance costs, management costs, fringe benefits, and certain repairs and maintenance.
Azal Coffee strongly encourages prospective franchisees to consult with financial advisors to review the provided financial information and to estimate the additional expenses they will incur in establishing and operating a store. This consultation is crucial for developing a realistic financial projection and understanding the true profitability potential of an Azal Coffee franchise, as gross sales alone provide an incomplete picture.