What are 'Operating Costs' in the context of the Beauty Bungalows financial performance representation?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
The financial performance representation in this Item 19 is historic based upon our existing Company-Owned Outlets. It includes the historical financial and operational results from our 3 existing Company-Owned Outlets during the period beginning January 1, 2024 and ending December 31, 2024 (the "Measurement Period"). We do not have any franchise outlets in operation as of the issuance date of this Disclosure Document. We have a reasonable basis for the financial performance information disclosed in this Item 19 and written substantiation for the financial performance representation will be made available to the prospective franchisee upon reasonable request.
Beauty Bungalows Franchising, LLC Parts I - III of this Item 19 details the Gross Revenue generated by the Company-Owned Outlets during the Measurement Period along with (a) the costs and expenses associated with operating each Company-Owned Outlet (collectively, the "Operating Costs"); and (b) the estimated fees that would have been incurred by each Company-Owned Outlet in connection with the Royalty Fees, Marketing Fees (excluding those the Company-Owned Outlet also pays), if it were a franchise outlet governed by our current form of franchise
agreement (collectively, the "Estimated Fees") over the Measurement Period. Any differences between the operations of a Company-Owned Outlet and the operations of our franchised outlets are described in the footnotes to each table. The Company-Owned Outlet's fiscal year follows the calendar year ending December 31.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 40–45)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, the financial performance representation in Item 19 details the Gross Revenue generated by the Company-Owned Outlets during the Measurement Period along with the costs and expenses associated with operating each Company-Owned Outlet (collectively, the "Operating Costs"), and the estimated fees that would have been incurred by each Company-Owned Outlet in connection with the Royalty Fees, Marketing Fees (excluding those the Company-Owned Outlet also pays), if it were a franchise outlet governed by their current form of franchise agreement (collectively, the "Estimated Fees") over the Measurement Period. These operating costs are specific to each of the three company-owned outlets and are presented for the period between January 1, 2024, and December 31, 2024.
For example, the Item 19 notes that Company-Owned Outlet #1 had total key operating expenses of $175,561, which included advertising ($412), cleaning supplies ($609), insurance ($735), janitorial ($7,280), legal/licenses ($284), rent/NNN/CAMS expense ($146,654), repairs & maintenance ($7,920), utilities ($11,429), and bank fees ($238). Similarly, Company-Owned Outlet #2 had total key operating expenses of $176,581, and Company-Owned Outlet #3 had total key operating expenses of $310,987. These figures provide a detailed breakdown of the expenses Beauty Bungalows considers necessary for running the business.
It is important to note that these figures are based on the historical performance of company-owned outlets and may not reflect the costs a franchisee will incur. The FDD explicitly states that pre-opening costs and other expenses are not reflected in Item 19. Prospective franchisees should conduct their own independent investigation of the costs and expenses they will incur in operating their Beauty Bungalows business, and consult with existing or former franchisees to gather more information.