Wild Birds Unlimited

We're doing a franchise review, a profitability review of Wild Birds Unlimited. It is a franchise that deals with supplies for birds, bird seed, cages, etc. Now if you recall, the purpose of this video is to see using just information found in the franchise to disclosure doc If this operation, this franchise, can pay the median owner, the guy who owns that franchise in the middle, a 10% or a 20% rate of return on their investment. 10% I choose because of the Dow Jones Industrial Average, which is average about 9. 9% or 10% since 1926. And if you can't make more than 10% then the idea is just to put your money into a Dow Jones Industrial Average Talk Fund and don't worry about the hassle and issue of buying a franchise. So, looking at the franchise disclosure doc So item 7 of the franchise disclosure doc We're going to have to pay technology fees of $350 a month. So over the space of the 10 year of that franchise investment, you're going to input $344,789 that you will need to get your return out of. So a 10% return or 10% return over 10 years on that investment will bring you $533,625. The 20% return means that you need to pull out $2,306,322. And this is, of course, ass So over 10 years that effectively means you'll get 10% rate of return. You need to pull about $53,343 every year out of your investment. So 20% rate of return, you need to pull $230,632 out of your investment. So can this franchise do it? So that's the next step in the analysis. The medi 56. They only charge a 4% royalty on this. So that comes out to about $30,338. They charge 5% in marketing and advertising support, which is $38,672. So one of the few franchises I've seen where you actually pay more in marketing and advertising than you do in royalty, which is actually a positive sign. There's a $400 convention fee that you have to pay every year. So the total for those three, and just three franchise fees is $74,211 or about 9. 59% of total sales for that medi So that means it's at which you have remaining after you pay the franchiser. Remember, So after you have that, after you pay them, you have $699,244 left to pay yourself and through run the franchise. So we've already done the analysis on how much you need to pay yourself. So the next step is to pay yourself first. We are capitalists after all. We're not people to whom we just want to just guess at what we're supposed to earn. We know that we need to pay ourselves for a 10% rate of return at $53,463. So that leaves you, if you pay yourself to 10%, $645,886 to run a franchise business that generates $773,000 in revenue. Because about $1 for every dollar that you spend, you need to earn about $1. 19 in revenue in order to pay the franchiser and to pay yourself that 10%. Now, if you want that 20% rate of return, $230,000, you need to pay yourself. That means that at the end of that, that $773,000 medi Now that comes to $1 for every dollar you spend on operations. You need to earn $1. 53 in revenue. Can that be done? Well, that's what the other information in the franchise disclosure doc You have to call your franchisees and find out if they're doing so. So effectively, I will say that of all these franchise disclosures, reviews that I've done, this one is the franchise disclosure doc It's pretty good. It's very detailed, especially in your item 19 representations. But again, the devil is in the details. And that's it for Wild Birds Unlimited. Thank you very much. Now, review bookkeeping for franchises at bookkeepersa. com. Feel free to come to our website, check out our YouTube channel, and just give me a call or email me at john at bookkeepersa. com. All right, thank you so much. Bye.