Does the Bombs Away financial performance representation reflect operating expenses?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
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1/01/2023 – 12/31/2023 Financial Results
The following chart contains the January 1st, 2023 to December 31st, 2023 financial performance information for the Bombs Away! business owned by our affiliate that was open for this time period. This location is in California.
Gross Sales: $419,423
Estimated Royalty Fees: $33,554 Estimated Marketing Fund: $8,389
Notes:
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- The foregoing information shows historical financial performance.
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- There was a total of one Bombs Away! business open for this time frame which is owned by our Affiliate.
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- "Gross Sales" means total of all collected revenue in a period, not including discounts, taxes, tips/gratuity or voids.
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- The financial performance representation does not reflect 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. You should conduct an independent investigation of the costs and expenses you will incur in operating your Bombs Away business.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 31–33)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the financial performance representation provided does not reflect operating expenses. The Item 19 financial performance representation includes the gross sales of $419,423 for the period of January 1, 2023, to December 31, 2023, for a Bombs Away business owned by an affiliate in California. It also includes estimated royalty fees of $33,554 and an estimated marketing fund contribution of $8,389.
However, the FDD explicitly states that the financial performance representation does not account for costs of sales, operating expenses, or other costs that would need to be deducted to determine net income or profit. This means a prospective franchisee cannot rely solely on the gross sales figure to estimate their potential earnings. They must independently investigate all costs and expenses associated with operating a Bombs Away business.
Bombs Away suggests that potential franchisees consult current or former franchisees, listed in Item 20 of the FDD, to gather information about these costs. This is a standard practice in franchising, as operating expenses can vary significantly based on location, management style, and other factors. Therefore, it is crucial for anyone considering a Bombs Away franchise to conduct thorough due diligence and not rely solely on the provided gross sales figure.