How is '4-Wall EBITDAR' calculated for a Lees Famous Recipe restaurant?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
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- "4-Wall EBITDAR" is the amount that remains when all expenses listed in the Franchise Adjusted Income Statement are subtracted from Gross Sales. "EBITDAR" means Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent.
We have not included depreciation, amortization, income tax, and debt service related to the remodel or build-out or operation of the location. We have not included rent as some franchisees may lease or choose to own the location and rent expense may vary by market and type of location. Franchisees may have depreciation or amortization deductions from certain equipment or costs to acquire a location. We have not made any provisions for debt service related to these or other items. We do not include an allowance for above store general and administrative costs such as accounting, bookkeeping, and general administration as franchisees may personally perform some or all of these services.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 59–66)
What This Means (2025 FDD)
According to the 2025 Lees Famous Recipe Franchise Disclosure Document, '4-Wall EBITDAR' is calculated by subtracting all expenses listed in the Franchise Adjusted Income Statement from Gross Sales. The FDD specifies that EBITDAR means Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent.
The expenses subtracted from Gross Sales to arrive at 4-Wall EBITDAR include Cost of Goods Sold (COGS), labor costs, bank and transaction fees, miscellaneous variable expenses, marketing costs (Brand Cooperative Advertising Fund Fees), occupancy costs (excluding rent), utilities, insurance, and royalty fees. These expenses are adjusted to reflect costs a franchisee would typically incur.
It's important to note that the calculation of 4-Wall EBITDAR does not include certain costs such as depreciation, amortization, income tax, debt service related to remodel or build-out, or rent. Additionally, the calculation does not include an allowance for above-store general and administrative costs like accounting, bookkeeping, and general administration. Prospective franchisees should consider these additional expenses when evaluating the potential profitability of a Lees Famous Recipe franchise.
For example, the 2024 Adjusted Income Statement for Affiliate Owned Stores shows an average 4-Wall EBITDAR of $413,177, representing 19.0% of Gross Sales, and a median 4-Wall EBITDAR of $356,351, representing 18.0% of Gross Sales. These figures are based on the performance of 16 affiliate-owned locations and have been adjusted to reflect incremental operating costs to a franchisee, such as royalty fees and advertising fund fees.