What do the 'Royalty/Marketing Fees' reflect for a Bombs Away outlet?

According to Bombs Away's 2024 Franchise Disclosure Document, the 'Royalty/Marketing Fees' reflect the combined 8% royalty fee and the 2% System Marketing Contribution that franchised outlets would pay. This information is based on the financial performance of a Bombs Away business owned by an affiliate in California during the period from January 1, 2023, to December 31, 2023. During this period, the gross sales for the affiliate-owned location were $419,423, which would have resulted in estimated royalty fees of $33,554 and an estimated marketing fund contribution of $8,389 if the location were franchised.

For a prospective Bombs Away franchisee, understanding these fees is crucial for financial planning. The 8% royalty and 2% marketing contribution are calculated as percentages of gross sales, meaning that as sales increase, so do these fees. It is important to note that these figures are based on the performance of a single affiliate-owned location and that individual results may vary. The FDD explicitly states that there is no assurance that a franchisee will achieve similar sales figures.

It is also important to recognize that the financial performance representation provided does not include costs of sales, operating expenses, or other costs that would need to be deducted to determine net income or profit. Therefore, a prospective franchisee should conduct their own independent investigation of all costs and expenses associated with operating a Bombs Away business. This could include consulting with current or former franchisees listed in Item 20 of the FDD to gain a more comprehensive understanding of the potential financial performance of a Bombs Away franchise.