How is 'EBITDA (if franchised)' calculated for Beauty Bungalows?

According to Beauty Bungalows' 2025 Franchise Disclosure Document, EBITDA (if franchised) is calculated by subtracting the Total Key Operating Expenses and Estimated Franchise Operating Expenses from the Gross Revenue for each Measurement Period. The FDD specifies that this calculation excludes expenses related to taxes, interest on debt, depreciation, and amortization costs.

For a prospective Beauty Bungalows franchisee, understanding this calculation is crucial for evaluating the potential profitability of a franchise location. The EBITDA (if franchised) figure provides an estimate of earnings before considering significant expenses like taxes and debt-related costs, offering a clearer view of the location's operational efficiency. By examining the components of this calculation—Gross Revenue, Total Key Operating Expenses, and Estimated Franchise Operating Expenses—franchisees can identify areas where they might improve financial performance.

It's important to note that the Estimated Franchise Operating Expenses include Royalty Fees, Brand Fund Contributions, and Technology Fees, which are costs that the company-owned outlets did not actually pay but are included in the calculation as if they were paid under a franchise agreement. This adjustment provides a more realistic financial picture for potential franchisees. The FDD also explicitly states that the financial performance representation does not reflect all costs of sales, operating expenses, or other costs that must be deducted to obtain net income or profit, advising prospective franchisees to conduct their own independent investigation of costs and expenses.

Beauty Bungalows provides historical financial and operational results from its three company-owned outlets for the period of January 1, 2024, to December 31, 2024. These results are detailed in Parts I-III of Item 19, which include Gross Revenue, Operating Costs, and Estimated Fees. The franchisor emphasizes that the explanatory notes included with the charts are integral to fully understanding the financial performance representation. Prospective franchisees should carefully review these notes and consider consulting with financial advisors to assess the potential financial performance of a Beauty Bungalows franchise.