Did the Company-Owned Outlet #1 of Beauty Bungalows pay Royalty Fees during the Measurement Periods?

According to Beauty Bungalows' 2025 Franchise Disclosure Document, Company-Owned Outlet #1, located in Huntington Beach, California, did not pay Royalty Fees, Brand Fund Contributions, or Technology Fees during the measurement period of January 1, 2024, to December 31, 2024. However, for the purposes of the financial performance representation, Beauty Bungalows included these fees in the tables as if the outlet had paid them, as required by the Franchise Agreement. This provides prospective franchisees with a more realistic view of potential expenses they would incur as franchisees.

This approach is a common practice in franchise FDDs, where franchisors often present pro forma financials that include expenses a company-owned location might not actually pay but that a franchisee would. This allows potential franchisees to assess the financial performance of the location under the standard franchise agreement terms. In the case of Beauty Bungalows, this includes Royalty Fees at 5.5% of gross revenue, Brand Fund Contributions at 1% of gross revenue, and a Technology Fee of $1,800.

It is important for prospective Beauty Bungalows franchisees to understand that the financial performance of Company-Owned Outlet #1 is presented with and without these fees. While the actual historical performance did not include these expenses, the 'EBITDA (if franchised)' figures do account for them, providing a more accurate representation of what a franchisee's earnings might look like. Franchisees should carefully review these figures and consider them in their financial projections.