factual

What does 'Insurance' represent in the context of Lees Famous Recipe's financial performance?

Q: What does 'Insurance' represent in the context of Lees Famous Recipe's financial performance?

- 9) "Insurance" is the estimated cost of a franchisees insurance policies, including general liability and property insurance. - 10) "Royalty" is the total Royalty fee contributions paid by franchisees under the Franchise Agreement, and were in fact paid by the affiliate-owned stores reflected in the above chart last year. - 11) "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. Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 59–66)

Lees_Famous_Recipe Franchise · 2025 FDD

Answer from 2025 FDD Document

1. "Insurance" is the estimated cost of a franchisees insurance policies, including general liability and property insurance.
1. "Royalty" is the total Royalty fee contributions paid by franchisees under the Franchise Agreement, and were in fact paid by the affiliate-owned stores reflected in the above chart last year.
1. "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.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 59–66)

What This Means (2025 FDD)

According to Lees Famous Recipe's 2025 Franchise Disclosure Document, 'Insurance' represents the estimated cost of a franchisee's insurance policies, specifically including general liability and property insurance. This figure is part of the financial performance representation based on data from affiliate-owned stores. The provided data includes an adjusted income statement reflecting incremental operating costs to a franchisee. These adjustments include items like royalty fees, advertising fees, payroll processing fees, and insurance costs.

For a prospective Lees Famous Recipe franchisee, understanding the estimated insurance costs is crucial for budgeting and financial planning. The FDD indicates that the average insurance cost for affiliate-owned stores was $10,000, representing 0.5% of gross sales. This provides a benchmark, though actual insurance costs may vary based on location, coverage levels, and other factors. It is important to note that this is just an estimate, and franchisees should obtain their own insurance quotes to determine their actual costs.

The inclusion of insurance as a line item in the financial performance representation allows potential franchisees to see how this expense impacts the overall profitability of a Lees Famous Recipe location. By providing this information, Lees Famous Recipe aims to give franchisees a clearer picture of the potential financial performance of their business. However, the FDD also cautions that individual results may differ due to various factors such as demographics, competition, and economic conditions. Therefore, prospective franchisees should conduct their own independent investigation of costs and expenses.

Overall, the 'Insurance' figure in Lees Famous Recipe's financial performance data serves as an estimated cost for general liability and property insurance, offering a reference point for franchisees to estimate their potential expenses. While this provides a helpful starting point, franchisees must conduct thorough due diligence to determine their actual insurance needs and costs, considering the specific circumstances of their location and business operations.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.

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