Did Company-Owned Outlet #3 pay Royalty Fees to Beauty Bungalows during the Measurement Period?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Estimated Franchise Operating Expenses Company-Owned Outlet #3 did not pay us Royalty Fees, Brand Fund Contributions, or Technology Fees during the Measurement Period. We have included a Royalty Fee, a Brand Fund Contribution, and a Technology Fee.
| January 1, 2024 to December 31, 2024 | |
|---|---|
| GROSS REVENUE2 | $334,405 |
| Key Operating Expenses | |
| Advertising | $25,300 |
| Cleaning Supplies | $1,157 |
| Insurance | $4,173 |
| Janitorial | $14,040 |
| Legal/Licenses | $590 |
| Manager3 | $16,400 |
| Rent/NNN/CAMS Expense | $97,319 |
| (3 months free) | |
| Repairs & Maintenance | $5,325 |
| Utilities | $16,637 |
| Bank Fees | $977 |
| Total Key Operating Expenses | $181,918 |
| Estimated Franchise Operating Expenses4 | |
| Royalty Fees (5.5%) | $18,392 |
| Brand Fund Contribution (1%) | $3,344 |
| Technology Fee | $1,800 |
| Total Franchise Expenses | $23,536 |
| EBITDA (if franchised)5 | $128,951 |
| EBITDA (IF FRANCHISED) Profit Margin6 | 39% |
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 40–45)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, Company-Owned Outlet #3, which is located in Clovis, California, did not pay Royalty Fees, Brand Fund Contributions, or Technology Fees to Beauty Bungalows during the measurement period of January 1, 2024, to December 31, 2024. Instead, the financial performance representation includes these fees as "Estimated Franchise Operating Expenses."
This means that the Item 19 presentation shows a hypothetical scenario where the company-owned outlet is treated as a franchise for illustrative purposes. The document includes a Royalty Fee of $18,392 (5.5%), a Brand Fund Contribution of $3,344 (1%), and a Technology Fee of $1,800. These estimated fees are then used to calculate an "EBITDA (if franchised)" figure of $128,951 and an "EBITDA (IF FRANCHISED) Profit Margin" of 39%.
For a prospective franchisee, this distinction is important because it highlights the difference between the actual operating expenses of a company-owned outlet and the expenses a franchisee would incur. While the company-owned outlet did not pay these fees, a franchisee would be required to pay them, impacting their potential profitability. Therefore, the "EBITDA (if franchised)" figures provide a more realistic view of what a franchisee might expect to earn.
It is important to note that these are just estimates, and a franchisee's actual financial performance may vary. Beauty Bungalows encourages prospective franchisees to conduct their own independent investigation of the costs and expenses they will incur in operating their business. They also state that the financial performance representation does not reflect certain pre-opening costs and expenses, and does not reflect all of the costs of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit.