What primarily constitutes the inventories for Bath Tune Up?

According to the 2025 Bath Tune Up FDD, the company's inventories primarily consist of supplies and materials. These supplies and materials are specifically used to provide and replenish the tune-up kits that are provided to Bath Tune Up franchisees.

For a prospective franchisee, this means that a significant portion of their initial investment and ongoing operational costs will be tied to purchasing and maintaining an adequate supply of these materials. The FDD also specifies that the inventory is recorded at the lower of cost or net realizable value, utilizing the first-in, first-out (FIFO) method. This accounting method assumes that the first units purchased are the first ones sold.

The use of the FIFO method can impact a franchisee's profitability, especially in times of fluctuating supply costs. If prices are rising, FIFO can result in a higher reported profit, but it may also lead to higher tax liabilities. Conversely, if prices are falling, it could result in a lower reported profit. Therefore, understanding inventory management and its financial implications is crucial for any potential Bath Tune Up franchisee.