In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a MilkShake Factory franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a MilkShake Factory franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned MilkShake Factory outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the MilkShake Factory franchise opportunity

Section V – Presentation and analysis of MilkShake Factory’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 average gross sales, discounts, adjusted gross sales, cost of goods sold, labor, certain other operating costs and expenses, other estimated fees (Royalties and Brand Fund), and adjusted gross sales less COGS, labor, other disclosed operating costs and expenses, and estimated fees for the 9 affiliate-owned MilkShake Factory Shops that were open and operating over the entirety of the 2023 calendar year (“Part 1 Shops”)

• percentage of gross sales that is attributable to a certain kind of menu item over the 2023 calendar year, namely (1) milkshakes, (2) chocolates, and (3) other approved products, amongst all Part 1 Shops

• 2023 total transactions, average daily transactions, and average check for each of the Part 1 Shops

• percentage of gross sales generated amongst all Part 1 Shops during the 2023 calendar year broken down by: (i) month of operation in 2023; and (ii) hour of operation amongst these Shops

Section VI – Key ratios, comparables, computations, and analyses for the MilkShake Factory franchise opportunity (exclusive content for Platinum subscribers)

Section I – MilkShake Factory Franchise Costs

• MilkShake Factory franchise costs, based on Item 7 of the company’s 2024 FDD:

• Initial Franchise Fee:  $60,000
• Initial Training Fee:  $8,500
• Training – Costs and Expenses:  $6,345 to $9,220
• Lease – Security Deposit:  $3,500 to $7,500
• Architectural and Design Services:  $18,250 to $19,750
• Real Estate and Construction Management Services:  $20,000
• Leasehold Improvements:  $134,430 to $324,819
• Furniture, Fixtures, and Equipment (“FFE”):  $157,325 to $168,152
• Signage (Exterior/Interior):  $8,475 to $17,500
• Initial Inventory (Pre-Opening):  $12,480 to $17,467
• Computer System and IT Equipment (and Any Initial Required Software Fees):  $18,600 to $20,600
• Grand Opening Marketing Spend:  $10,050 to $12,000
• Uniforms:  $1,500 to $2,000
• Professional Fees:  $500 to $6,000
• Business Permits and Licensing:  $1,000 to $3,500
• Insurance – Deposit and 3 Months of Premiums:  $750 to $2,500
• Additional Funds – 3 Months:  $15,000 to $40,000
• Total Estimated MilkShake Factory Franchise Costs:  $476,705 to $739,508

Section II – MilkShake Factory’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• MilkShake Factory’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2024 FDD:

• Initial Franchise Fee:  $60,000

• Royalty Fee:  during your first year of operations, 6% of Adjusted Gross Sales generated by your Franchised Business over the preceding reporting period. During your second year of operations, the greater of: (i) 6% of Adjusted Gross Sales generated by your Franchised Business over the preceding reporting period; or (ii) $1,200 per month. During your third and each subsequent year of operations, the greater of: (i) 6% of Adjusted Gross Sales generated by your Franchised Business over the preceding reporting period; and (ii) $1,500/month

• Brand Development Fund:  currently, 2% of Adjusted Gross Sales generated by your Franchised Business over the preceding reporting period

• Local Advertising Requirement:  currently, your minimum Local Advertising Requirement amounts to the following: (i) 2% of Adjusted Gross Sales generated by your Franchised Business during the preceding calendar month in connection with Adjusted Gross Sales generated by the Franchised Business up to $500,000 in a given calendar year of operations; and (ii) 1% of the Adjusted Gross Sales generated by your Franchised Business in excess of $500,000 in any calendar year of operations

Section III – Number of Franchised and Company-Owned MilkShake Factory Outlets

Franchised

2021

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2022

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2023

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Company-Owned

2021

• Outlets at the Start of the Year:  8
• Outlets at the End of the Year:  8
• Net Change:  0

2022

• Outlets at the Start of the Year:  8
• Outlets at the End of the Year:  9
• Net Change:  +1

2023

• Outlets at the Start of the Year:  9
• Outlets at the End of the Year:  9
• Net Change:  0

Section IV – News Updates on the MilkShake Factory Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the MilkShake Factory Franchise (Item 19, 2024 FDD)

Part 1 – Average Gross Sales and Adjusted Gross Sales Generated, as Well as Certain Operating Costs and Expenses Incurred, by the Part 1 Shops Over the 2023 Calendar Year

• Part 1 in this Item below discloses the historical Adjusted Gross Sales generated by the 9 Affiliate-Owned Shops that were open and operating over the entirety of the 2023 calendar year (each, a “Part 1 Shop”) over that 2023 calendar year (the “Part 1 Measurement Period”).

• Of the 9 total Affiliate-Owned Shops that were open and operating as of December 31, 2023, Part 1 excludes one Shop – which is located in Southside area of Pittsburgh, PA in a non-traditional venue – because this affiliate’s operations, menu, and Premises are not substantially similar to the other Affiliate-Owned Shops or the Franchised Business being offered in the Disclosure Document (the “Excluded Shop”) – which is also not accounted for in Item 20 of the Disclosure Document below.

Averages of the 9 Part 1 Shops

Gross Sales:  $771,412 (104.2%)

Less Discounts:  $31,367 (4.2%)

Adjusted Gross Sales:  $740,045 (100.0%)

Primary Operating Costs

• COGS:  $228,852 (30.9%)
• Labor:  $148,321 (20.0%)

Adjusted Gross Sales Less COGS and Labor:  $362,872 (49.0%)

Certain Other Operating Costs and Expenses

• Occupancy-Related Costs:  $68,236 (9.2%)
• Bank Fees:  $28,971 (3.9%)
• Cleaning Supplies:  $11,389 (1.5%)
• Maintenance/Repairs/Equipment:  $8,002 (1.1%)
• IT-Related Fees and Costs:  $5,674 (0.8%)
• Utilities:  $17,357 (2.3%)
• Other:  $5,532 (0.7%)
• Estimated Local Advertising:  $11,571 (1.6%)
• Total of Certain Other Operating Costs and Expenses Incurred in Operations:  $156,732 (21.1%)

Other Estimated Fees

• Royalties:  $46,285 (6.3%)
• Brand Fund:  $15,428 (2.1%)

Adjusted Gross Sales Less COGS, Labor, Other Disclosed Operating Costs/Expenses, and Estimated Fees:  $144,427 (19.5%)

• Gross Sales means all gross receipts, less tips and sales tax.

• Discounts means any approved coupon, discounts, and promotion. You will be able to deduct only approved coupons, discounts, and promotions from Gross Sales. This figure excludes any free milkshakes to employees pursuant to optional employee meal policies.

• Adjusted Gross Sales means Gross Sales less Discounts, and represents the amount upon which you will base your Royalty Fee, Local Advertising Requirement, and Fund Contribution under your Franchise Agreement with MilkShake Factory.

• COGS means all variable cost inputs to facilitate customer sales, including all food items, cups, lids, and other paper goods.

• Labor means all hourly and salaried labor, such as shift leads and assistant general managers, including base wages, payroll taxes, and benefits. This definition excludes the cost of multi-unit managers and general managers.

• Adjusted Gross Sales less COGS and Labor means Adjusted Gross Sales less COGS and Labor.

• Occupancy-Related Costs means base rent and all related NNN (triple net) costs, including common area maintenance, insurance, and tax-related obligations under the lease.

• Bank Fees means all credit card processing fees and other special processing fees.

• Cleaning Supplies means all cleaning and janitorial supplies to operate the store.

• Maintenance/Repairs/Equipment means all standard maintenance items, such as floor mat replacement services and HVAC maintenance, necessary repair items, and any equipment replacement.

• IT-Related Fees and Costs means all store level expenses for Point-of-Sale, Restaurant Management Software, Gift Cards, Panther Funds, and Security Camera services.

• Utilities means the following utility expenses: electric, water, power, internet, and phone.

• Other means general and administrative expenses that could not be categorized into another itemized category.

• Certain Other Operating Costs and Expenses Incurred in Operations means a certain license fee, uniforms, employee morale events, charitable contributions, licenses, permits, fees, parking leases, and travel. This range does not include or account for any other operating costs or expenses that are not specifically identified in this Explanatory Note.

• Estimated Local Advertising means the calculated estimated local marketing expenditures a location would have been required to pay had it been a franchise operating pursuant to the Franchise Disclosure Document.

• Total of Other Operating Costs and Expenses means the sum of Occupancy-Related Costs, Bank Fees, Cleaning Supplies, Maintenance/Repairs/Equipment, IT-Related Fees and Costs, Utilities, Certain Other Operating Costs and Expenses Incurred in Operations, and Estimated Local Advertising.

• Estimated Royalties (calculated at 6% of Adjusted Gross Sales) means the calculated estimated Royalty Fees a location would have been required to pay had it been a franchise operating pursuant to the Franchise Disclosure Document.

• Estimated Brand Fund Contribution (calculated at 2% of Adjusted Gross Sales) means the calculated estimated Brand Fund expenditures a location would have been required to pay had it been a franchise operating pursuant to the Franchise Disclosure Document.

Part 2 – Gross Revenue Generated by Product Category Amongst Total Revenues Generated by Part 1 Locations and Recent Location Over the 2023 Calendar Year

• Part 2 of this Item discloses the percentage of Gross Sales that is attributable to a certain kind of menu item (or type of Approved Product) over the 2023 calendar year, namely (1) milkshakes, (2) chocolates, and (3) other Approved Products, amongst all Part 1 Shops.

• Shakes and Sundaes:  84% of Adjusted Gross Sales Generated in 2023
• Chocolate (Retail):  14% of Adjusted Gross Sales Generated in 2023
• Other Products:  2% of Adjusted Gross Sales Generated in 2023
• Total:  100% of Adjusted Gross Sales Generated in 2023

Part 3 – Total Check/Transaction Information Generated by Each Disclosed Affiliate-Owned Location

• Part 3 of this Item discloses the total number of transactions generated by the Part 1 Shops over the 2022 calendar year, along with the average number of transactions generated by each such Shop per business day that Shop was open and actively operating.

Affiliate Shop 1

• Total Transactions:  74,412
• Average Daily Transactions:  207
• Average Check:  $13.26

Affiliate Shop 2

• Total Transactions:  38,500
• Average Daily Transactions:  107
• Average Check:  $12.61

Affiliate Shop 3

• Total Transactions:  74,746
• Average Daily Transactions:  208
• Average Check:  $10.75

Affiliate Shop 4

• Total Transactions:  52,261
• Average Daily Transactions:  145
• Average Check:  $14.36

Affiliate Shop 5

• Total Transactions:  61,941
• Average Daily Transactions:  172
• Average Check:  $15.97

Affiliate Shop 6

• Total Transactions:  41,493
• Average Daily Transactions:  115
• Average Check:  $15.36

Affiliate Shop 7

• Total Transactions:  47,909
• Average Daily Transactions:  133
• Average Check:  $14.94

Affiliate Shop 8

• Total Transactions:  39,466
• Average Daily Transactions:  110
• Average Check:  $14.79

Affiliate Shop 9

• Total Transactions:  36,327
• Average Daily Transactions:  125
• Average Check:  $15.63

Total

• Total Transactions:  467,055
• Average Daily Transactions:  147

Part 4 – Percentage of Total Transactions Generated in Terms of Month/Seasonality and Business Day/Hour

• Part 4 of this Item discloses the percentage of Gross Sales generated amongst all Part 1 Shops during the 2023 calendar year broken down by: (i) month of operation in 2023; and (ii) each business day and each hour of operation amongst these Shops over the typical and recommended operational hours MilkShake Factory recommends in its current Manuals (12 pm EST to 10 pm EST) over that period.

By Month

• January:  8.5%
• February:  9.0%
• March:  10.1%
• April:  9.7%
• May:  8.5%
• June:  8.1%
• July:  8.5%
• August:  7.9%
• September:  7.6%
• October:  7.3%
• November:  7.0%
• December:  7.7%

By Hour of Operation

• Noon to 1pm:  4.6%
• 1 to 2pm:  5.5%
• 2 to 3pm:  6.8%
• 3 to 4pm:  7.9%
• 4 to 5pm:  7.7%
• 5 to 6pm:  8.3%
• 6 to 7pm:  11.4%
• 7 to 8pm:  15.5%
• 8 to 9pm:  16.3%
• 9 to 10pm:  12.4%
• Total:  96.4%

• The remaining 3.6% of revenue generated by all Disclosed Affiliate Locations was generated after MilkShake Factory’s System-recommended (and expected) hours of operation noted in the Chart above, and was generated by a few of the Affiliate Locations that have typical operating hours outside the 10-hour period of operations disclosed above.

• The information and data provided in this Item is historical in nature and was provided/reported to MilkShake Factory by the affiliate owners of the Part 1 Shops and Recent Shop for the measurement period(s) discussed above.

• Some affiliate outlets sold these amounts. Your individual results may vary. There is no assurance
  that you will sell as much.

Section VI – MilkShake Factory Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️