What are some examples of 'Excluded Expenses' that are not accounted for in the FPR for a Chop5 Salad Kitchen restaurant?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
COGS do not include: (a) fixed costs; (b) overhead costs; (c) Labor Expenses, (d) Marketing Expenses or (e) Excluded Expenses.
"Excluded Expenses" means interest paid on debt, taxes, depreciation, amortization expenses and certain other expenses incurred by Qualifying Restaurants that are not accounted for in this FPR, including: 3rd party delivery charges; kitchen expenses (supplies, smallwares, etc.); payroll processing/service fees; employee uniforms; food license fees; and any other miscellaneous expenses not included in COGS, Labor Expenses or Marketing Expenses.
"FPR" means the financial performance representation set forth in Item 19 of this Disclosure Document.
"Franchised Restaurant" means any Restaurant that is owned by a franchisee.
"Gross Profit" means the financial performance metric calculated as Gross Sales minus COGS.
"Gross Sales" means total revenue from all goods and services sold less: (a) taxes; (b) customer refunds; (c) revenue from the sale of furniture, fixtures and equipment in the ordinary course of business; (d) the value of approved coupons, vouchers or similar items at the time of redemption; and (e) tips paid to and retained by staff members as a gratuity.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 45–48)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, the Financial Performance Representation (FPR) does not account for 'Excluded Expenses'. These 'Excluded Expenses' include interest paid on debt, taxes, depreciation, amortization expenses, and certain other expenses incurred by Qualifying Restaurants.
Specifically, the 'Excluded Expenses' also encompass costs like 3rd party delivery charges, various kitchen expenses such as supplies and smallwares, payroll processing or service fees, the cost of employee uniforms, food license fees, and any other miscellaneous expenses that are not already included within the Cost of Goods Sold (COGS), Labor Expenses, or Marketing Expenses.
For a prospective Chop5 Salad Kitchen franchisee, this means that the figures presented in the FPR may not give a complete picture of all potential expenses. It is important to consider these 'Excluded Expenses' when projecting potential profitability, as they can significantly impact the overall financial performance of the restaurant. Franchisees should carefully evaluate these additional costs and factor them into their financial planning to ensure a realistic assessment of their potential earnings.