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

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

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

Section III – Number of franchised and company-owned Hounds Town USA 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 Hounds Town USA franchise opportunity

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

• 2021, 2022, and 2023 net revenue for the one affiliate-owned Hounds Town USA location that had been open for at least 12 months as of December 31, 2023

• 2023 net revenue for the 36 franchised Hounds Town USA locations that had been open for at least 12 months as of December 31, 2023

• 2023 average, median, highest, and lowest net revenue for the one affiliate-owned and 36 franchised Hounds Town USA locations that had been open for at least 12 months as of December 31, 2023, grouped by maturity (open 10+ years, 5+ years, 3-5 years, 2-3 years, 1-2 years)

• 2023 average net revenue, cost of goods sold, gross profit, operating expenses, franchisee expenses, occupancy expenses, personnel expenses, and net operating income for the one affiliate-owned and 36 franchised Hounds Town USA locations that had been open for at least 12 months as of December 31, 2023, grouped by maturity (open 10+ years, 5+ years, 3-5 years, 2-3 years, 1-2 years)

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

Section I – Hounds Town USA Franchise Costs

• Initial Franchise Fee:  $49,000
• Launch Fee:  $30,000
• Pre-Opening Marketing Package:  $15,000
• Annual Reunion Fee:  $1,875 to $2,250
• Microsite and Social Media Setup:  $300
• Financial Training Access:  $300
• Training Expenses:  $3,000 to $10,000
• Pre-Opening Lease Payments:  $0 to $50,000
• Furniture, Fixtures, and Equipment:  $30,500 to $50,000
• Leasehold Improvements:  $325,000 to $675,000
• Architect Fees:  $6,500 to $15,000
• Site Survey:  $1,500
• Concept Design:  $2,500
• Security and Utility Deposits:  $7,000 to $10,000
• Opening Inventory:  $500 to $5,000
• Post-Opening Marketing:  $15,000 to $25,000
• Business Licenses and Permits:  $200 to $2,500
• Logo Gear and Uniforms:  $1,000 to $3,000
• Signage:  $3,000 to $12,000
• Insurance:  $2,100 to $4,000
• Computer Hardware:  $2,500
• POS Setup Fee:  $299
• POS Fee – 3 months:  $900
• Pre-Opening Technology Fees:  $752 to $876
• Closed Circuit Camera Systems:  $10,000 to $20,000
• Professional Fees:  $2,500 to $6,000
• Vehicle Lease, Signage, Insurance:  $0 to $5,000
• Bookkeeping Services:  $900
• Additional Funds for 3 Months:  $30,000 to $60,000
• Total Estimated Hounds Town USA Franchise Costs:  $542,126 to $1,058,825

Section II – Hounds Town USA’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $49,000 to $125,000

• Royalty:  6% of Gross Sales

• Brand Fund Contribution:  2% of Gross Sales

• Local Advertising Requirement:  the difference between the amount you spent on local advertising each month and your required local advertising expenditure, which is based on the number of months you have operated, as follows: 4-12 months in operation: $5,000 per month; 13-36 months in operation: $4,000 per month; 37+ months in operation: 2% of Gross Sales

• Advertising Cooperatives:  established by cooperative members, between 1% and 2% of Gross Sales

Section III – Number of Franchised and Company-Owned Hounds Town USA Outlets

Franchised

2021

• Outlets at the Start of the Year:  14
• Outlets at the End of the Year:  20
• Net Change:  +6

2022

• Outlets at the Start of the Year:  20
• Outlets at the End of the Year:  37
• Net Change:  +17

2023

• Outlets at the Start of the Year:  37
• Outlets at the End of the Year:  54
• Net Change:  +17

Company-Owned

2021

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  1
• Net Change:  -1

2022

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2023

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

Section IV – News Updates on the Hounds Town USA Franchise

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

• As of December 31, 2023, there were 54 franchised Hounds Town USA Businesses (“Franchised Locations”) and one affiliate-owned Hounds Town USA Business (“Affiliate Location”) for a total of 55 Hounds Town USA Businesses opened.

• The following tables and accompanying footnotes contain historical financial performance representations for the 36 Franchised Locations and one Affiliate Location that had been open for at least 12 months as of December 31, 2023 (“Reporting Group”).

• Seventeen Franchised Locations had not been open for at least 12 months as of December 31, 2023, and have been excluded from the Reporting Group.

• One other location, Store 005, receives revenue from a partnership with a local shelter. This revenue is an anomaly and increases their revenue significantly. It does not reflect the typical Hounds Town USA business and has been excluded.

• The Affiliate Location has been open for over 20 years and benefits from brand recognition in Ronkonkoma, New York, and surrounding areas. Franchised Hounds Town USA Businesses will share many characteristics as the Affiliate Location, including the degree of competition and services and goods offered.

• The Affiliate Location pays Royalties and Brand Fund Contributions and will pay the Technology Fee and Local Advertising Management Fee once implemented, but it is not subject to the Local Advertising Requirement.

• For purposes of this Item 19, the term “Net Revenue” means the total selling price, excluding sales taxes, discounts, and promotions of all products and services sold at, from, or through the Affiliate Location whether or not sold or performed at or from the Affiliate Location, including the full redemption value of any voucher or coupon sold for use at the Hounds Town USA Business (fees retained by or paid to third-party sellers of such vouchers or coupons are not excluded from this calculation).

Part 1 – Net Revenue, Year-Over-Year Sales Growth for the Affiliate Location During Calendar Years 2021 to 2023

Store 001

• Date Open:  January 2004
• 2021 Net Revenue:  $932,858
• 2022 Net Revenue:  $957,436
• 2023 Net Revenue:  $1,079,556
• 2021 to 2022 YOY Sales Growth:  2.63%
• 2022 to 2023 YOY Sales Growth:  12.75%

Part 2 – Net Revenue for the Franchised Locations in the Reporting Group During Calendar Year 2023

Open 10+ Years (1 Franchised Location)

Open 5+ Years (3 Franchised Locations)

• Store 003:  $989,919
• Store 004:  $878,026
• Store 006:  $790,464

Open 3-5 Years (9 Franchised Locations)

• Store 007:  $1,081,507
• Store 008:  $1,355,440
• Store 009:  $585,888
• Store 010:  $572,956
• Store 011:  $553,717
• Store 012:  $603,340
• Store 013:  $544,954
• Store 014:  $691,928
• Store 015:  $813,149

Open 2-3 Years (6 Franchised Locations)

• Store 016:  $662,712
• Store 017:  $530,150
• Store 018:  $457,540
• Store 019:  $632,275
• Store 020:  $927,261
• Store 021:  $265,121

Open 1-2 Years (17 Franchised Locations)

• Store 022:  $488,120
• Store 023:  $442,240
• Store 024:  $281,700
• Store 025:  $665,263
• Store 026:  $167,424
• Store 027:  $543,123
• Store 028:  $494,381
• Store 029:  $449,093
• Store 030:  $393,970
• Store 031:  $277,477
• Store 032:  $283,203
• Store 033:  $368,832
• Store 034:  $475,432
• Store 035:  $295,426
• Store 036:  $373,342
• Store 037:  $280,087
• Store 038:  $357,224

Part 3 – Reporting Group Average and Median Net Revenue by Maturity During Calendar Year 2023

Open 10+ Years (1 Affiliate and 1 Franchised Location)

• 2023 Average Net Revenue:  $1,262,961
• 2023 Median Net Revenue:  $1,262,961
• 2023 Highest Net Revenue:  $1,446,366
• 2023 Lowest Net Revenue:  $1,079,556

Open 5+ Years (3 Franchised Locations)

• 2023 Average Net Revenue:  $886,137
• 2023 Median Net Revenue:  $878,026
• 2023 Highest Net Revenue:  $989,919
• 2023 Lowest Net Revenue:  $790,464

Open 3-5 Years (9 Franchised Locations)

• 2023 Average Net Revenue:  $755,875
• 2023 Median Net Revenue:  $603,340
• 2023 Highest Net Revenue:  $1,355,440
• 2023 Lowest Net Revenue:  $544,954

Open 2-3 Years (6 Franchised Locations)

• 2023 Average Net Revenue:  $579,176
• 2023 Median Net Revenue:  $581,213
• 2023 Highest Net Revenue:  $927,261
• 2023 Lowest Net Revenue:  $265,121

Open 1-2 Years (17 Franchised Location)

• 2023 Average Net Revenue:  $390,373
• 2023 Median Net Revenue:  $373,342
• 2023 Highest Net Revenue:  $665,263
• 2023 Lowest Net Revenue:  $167,424

Part 4 – Net Income for the 2023 Reporting Period Store for the Affiliate Location – Open 10 + Years

Net Revenue:  $1,079,556 (100.0%)

Less: Cost of Goods Sold:  $33,092 (3%)

Gross Profit:  $1,046,464 (97%)

Operating Expenses

• Marketing and Advertising:  $21,591 (2%)
• Direct Operating Expenses:  $94,921 (9%)

Franchisee Expenses

• Royalties:  $64,773 (6%)
• Brand Fund:  $21,591 (2%)
• Tech Fee:  $1,800 (0.2%)
• Local Advertising Management Fee:  $1,200 (0.1%)

Occupancy Expenses

• Rent:  $84,000 (8%)
• Utilities:  $23,338 (2%)
• Repairs and Maintenance:  $9,658 (1%)

Personnel Expenses

Net Operating Income:  $340,541 (32%)

Part 5 – Reporting Group Net Revenue, Expenses, and Net Operating Income for 1 Affiliate Location and 1 Franchised Location – Open 10+ Years

Net Revenue:  $1,262,961 (100%)

Less: Cost of Goods Sold:  $25,290 (2%)

Gross Profit:  $1,237,670 (98%)

Operating Expenses

• Marketing and Advertising:  $25,259 (2%)
• Direct Operating Expenses:  $74,312 (6%)

Franchisee Expenses

• Royalties:  $75,778 (6%)
• Brand Fund:  $25,259 (2%)
• Tech Fee:  $1,800 (0.1%)
• Local Advertising Management Fee:  $1,200 (0.1%)

Occupancy Expenses

• Rent:  $72,825 (6%)
• Utilities:  $23,523 (2%)
• Repairs and Maintenance:  $9,829 (1%)

Personnel Expenses

Net Operating Income:  $459,735 (36%)

Part 6 – Reporting Group Net Revenue, Expenses, and Net Operating Income for 3 Franchised Locations – Open 5+ Years

Net Revenue:  $886,137 (100%)

Less: Cost of Goods Sold:  $16,435 (2%)

Gross Profit:  $869,701 (98%)

Operating Expenses

• Marketing and Advertising:  $17,723 (2%)
• Direct Operating Expenses:  $66,291 (7%)

Franchisee Expenses

• Royalties:  $53,168 (6%)
• Brand Fund:  $17,723 (2%)
• Tech Fee:  $1,800 (0.2%)
• Local Advertising Management Fee:  $1,200 (0.1%)

Occupancy Expenses

• Rent:  $79,775 (9%)
• Utilities:  $22,649 (3%)
• Repairs and Maintenance:  $9,498 (1%)

Personnel Expenses

Net Operating Income:  $330,402 (37%)

Part 7 – Reporting Group Net Revenue, Expenses, and Net Operating Income for 9 Franchised Locations – Open 3-5 Years

Net Revenue:  $755,875 (100%)

Less: Cost of Goods Sold:  $17,123 (2%)

Gross Profit:  $738,752 (98%)

Operating Expenses

• Marketing and Advertising:  $26,034 (3%)
• Direct Operating Expenses:  $55,161 (7%)

Franchisee Expenses

• Royalties:  $45,353 (6%)
• Brand Fund:  $15,118 (2%)
• Tech Fee:  $1,800 (0.2%)
• Local Advertising Management Fee:  $1,200 (0.2%)

Occupancy Expenses

• Rent:  $57,547 (8%)
• Utilities:  $31,691 (4%)
• Repairs and Maintenance:  $7,843 (1%)

Personnel Expenses

Net Operating Income:  $232,176 (31%)

Part 8 – Reporting Group Net Revenue, Expenses, and Net Operating Income for 6 Franchised Locations – Open 2-3 Years

Net Revenue:  $579,176 (100%)

Less: Cost of Goods Sold:  $10,238 (2%)

Gross Profit:  $568,939 (98%)

Operating Expenses

• Marketing and Advertising:  $37,385 (6%)
• Direct Operating Expenses:  $42,247 (7%)

Franchisee Expenses

• Royalties:  $34,751 (6%)
• Brand Fund:  $11,584 (2%)
• Tech Fee:  $1,800 (0.3%)
• Local Advertising Management Fee:  $1,200 (0.2%)

Occupancy Expenses

• Rent:  $83,384 (14%)
• Utilities:  $14,011 (2%)
• Repairs and Maintenance:  $3,421 (1%)

Personnel Expenses

Net Operating Income:  $134,581 (23%)

Part 9 – Reporting Group Net Revenue, Expenses, and Net Operating Income for 16 Franchised Locations – Open 1-2 Years

Net Revenue:  $397,071 (100%)

Less: Cost of Goods Sold:  $7,031 (2%)

Gross Profit:  $390,040 (98%)

Operating Expenses

• Marketing and Advertising:  $41,326 (10%)
• Direct Operating Expenses:  $33,471 (8%)

Franchisee Expenses

• Royalties:  $23,824 (6%)
• Brand Fund:  $7,941 (2%)
• Tech Fee:  $1,800 (0.4%)
• Local Advertising Management Fee:  $1,200 (0.3%)

Occupancy Expenses

• Rent:  $77,412 (19%)
• Utilities:  $14,999 (4%)
• Repairs and Maintenance:  $2,825 (0.7%)

Personnel Expenses

Net Operating Income:  $49,402 (12%)

• “COGS” (Costs of Goods Sold) means cost of goods sold, and includes the cost of retail items, pet food, shampoo, and related items.

• “Gross Profit” means Net Revenue less COGS.

• “Marketing & Advertising” refers to the expenses to market locally in the trade area.

• “Direct Operating Expenses” refers to the following expenses: credit card processing; bank fees; computer & software; office supplies; dues & subscriptions; taxes, permits, licenses; professional services; equipment rental, insurance, professional services, uniforms, and training for team members reported by the Reporting Group.

• Insurance expenses include workers’ compensation, general liability, and other insurance expenses.

• Professional services expenses include accounting, legal, payroll processing, contract services, and other expenses to professional outside vendors.

• The Operating Expenses included for the Affiliate Location are those actually reported by the Affiliate Location except for the imputing of Franchise Expenses (as defined below).

• The Operating Expenses included for Franchised Locations are those actually reported by each Franchised Location in the Reporting Group, except that adjustments were made to the Franchise Expenses.

• Franchise Expenses. Current franchisees pay a 6% Royalty Fee, a 2% Brand Fund Contribution, a Technology Fee, and a Local Advertising Management Fee. Franchised Locations paid different Franchisee Fees based on when they signed their Franchise Agreement.

• Hounds Town USA inputted a 6% royalty, a 2% Brand Fund contribution, a Technology Fee of $150 a month, and a Local Advertising Management Fee of $100 a month for the Affiliate Location and all Franchised Locations.

• “Rent” refers to rent, insurance, and common area maintenance paid.

• “Utilities” refers to utilities, including telephone and internet.

• “Repairs and Maintenance” refers to the facility’s repairs and maintenance. It does not include upgrades to the facility.

• “Labor” refers to wages and payroll tax. Labor rates vary across the country and you should do an independent investigation of the labor rates in your area. Payroll taxes vary across the country, state, and local counties. You should do an independent investigation of the payroll taxes in your area.

• “Net Operating Income” means Gross Profit less Operating Expenses. Net Operating Income does not include the deduction of other non-operating expenses, including interest, depreciation, amortization, taxes, or owners’ draw or owners’ compensation.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

Section VI – Hounds Town USA Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️