Does the financial performance representation for Chocolate Fish Coffee reflect operating expenses?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
rvices less sales tax, discounts, and returns.
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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 Chocolate Fish Coffee Roasters business. Franchisees or former franchisees, listed in Item 20 of this Franchise Disclosure Document, may be one source of this information.
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- Our Affiliates do not pay royalties or marketing fees to us; however, we have shown the estimated expenditures (6% Royalty, 1% Brand Fund) for each Affiliate had they incurred those expenses.
- 5. Some outlets have sold and earned this amount. Your individual results may differ. There is no assurance that you'll sell or earn as much.
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- Written substantiation of the information contained in this Item 19 will be made available to prospective franchisees upon reasonable request.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 37–38)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the financial performance representation does not reflect operating expenses. The document specifies that the financial performance representation does not include costs of sales, operating expenses, or other costs that would be deducted from gross revenue to determine net income or profit.
The Item 19 data includes gross sales figures from three company-owned locations between September 1, 2022, and September 30, 2023. For example, one location had gross sales of $850,850.75, another had $531,854.48, and a third had $828,545.45. The document also includes estimated royalty fees and brand fund contributions, calculated as percentages of gross sales. For the location with $850,850.75 in gross sales, the estimated royalty fees are $51,051.05 and the estimated brand fund is $8,508.51. For the location with $531,854.48 in gross sales, the estimated royalty fees are $31,911.27 and the estimated brand fund is $5,318.54. For the location with $828,545.45 in gross sales, the estimated royalty fees are $49,712.73 and the estimated brand fund is $8,285.45.
This means a prospective Chocolate Fish Coffee franchisee needs to independently investigate all potential operating expenses to determine potential profitability. The FDD suggests consulting current or former franchisees listed in Item 20 for more information on these costs. The financial performance representations provided are simply gross sales figures with estimated royalty and brand fund fees, not a complete profit and loss statement.