What is the estimated proportion of required purchases compared to all purchases for a Gokhale Method business?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
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We will derive revenue from your purchase of required items. We estimate that the total amount that you will pay us for required purchases, including continuing education fees, will be between $2,081 and $3,332 during your first year of operation.
During our fiscal year ended December 31, 2023, our total revenue was $81,612. Total sales of required items was $28,368, or 35 percent of our total revenue. The total estimated proportion of all required purchases and leases in relation to all purchases and leases you will make in establishing the business is less than 25%. The total estimated proportion of all required purchases and leases in relation to all purchases and leases you will make in operating the business during your first year of operation is less t
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 15–17)
What This Means (2024 FDD)
According to Gokhale Method's 2024 Franchise Disclosure Document, the estimated proportion of required purchases is less than 25% of all purchases a franchisee will make when establishing their business. It is also estimated that required purchases will be less than 25% of all purchases made during the first year of operating the Gokhale Method business. This means that the majority of purchases a franchisee makes, both initially and during the first year, are not required to be from Gokhale Method itself.
Gokhale Method does require franchisees to purchase certain proprietary items from them, such as the Gokhale® Roller, Gokhale Pain-Free™ Chair, Stretchsit® Cushions, Gokhale® Wedges, Gokhale® Head Cushions, copies of 8 Steps to a Pain-Free Back, and shirts or uniforms. However, franchisees have the flexibility to source other equipment and supplies from alternative suppliers, provided these items meet Gokhale Method's specifications. This can potentially allow franchisees to manage costs by seeking competitive pricing for non-proprietary items.
It's important for prospective franchisees to understand that while the initial and first-year required purchases are estimated to be less than 25% of total purchases, Gokhale Method reserves the right to require franchisees to purchase additional equipment or supplies from them in the future. This could potentially alter the proportion of required purchases over time. Franchisees should also be aware that Gokhale Method derives revenue from these required purchases, and during the fiscal year ended December 31, 2023, sales of required items accounted for 35% of Gokhale Method's total revenue.