FDD Talk 2019: uBreakiFix Franchise Review (Financial Performance Analysis, Costs, Fees, and More) (2024)

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

• Section I – Background information on the uBreakiFix franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a uBreakiFix franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a uBreakiFix franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned uBreakiFix outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of uBreakiFix’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average total revenue, cost of goods sold, gross profit, continuing royalty, miscellaneous expenses, occupancy expense, payroll expenses, promotions and advertising, sales tax, technology fee, and net income for the first, second, and third year of operation of the top 25 and bottom 25 franchisee-operated uBreakiFix stores that were 1 year or older as of December 31, 2018 and submitted their financial information to uBreakiFix

Section I – Background Information

16 Things You Need to Know About the uBreakiFix Franchise

Extends Google Partnership to Include Same-Day Repairs for Pixel 3a and 3a XL Smartphones

1. In early May 2019, uBreakiFix announced that it had extended its partnership with Google to include in-warranty and out-of-warranty walk-in repairs for Pixel 3a and 3a XL smartphone models. Customers can bring any Pixel 3a or 3a XL device to any of the more than 450 uBreakiFix stores across the U.S. for same-day repair service (if a Google Pixel device is dropped off before 3:00 p.m. local time), with no need to book an appointment. uBreakiFix also provides authorized out-of-warranty walk-in service for Pixel, Pixel 2, and Pixel 3 series devices.

2. Each uBreakiFix store is equipped with a committed team of Google-trained technicians to provide exceptional service to customers. In addition to walk-in repairs, customers who purchase Google’s preferred device protection plan can also get their phone serviced through all uBreakiFix locations when filing a claim.

3. Justin Wetherill, co-founder and president of uBreakiFix, said, “We’re thankful to work alongside Google to offer a first-class repair experience for all Pixel users. Our brand was built to provide customers value in the form of quality and convenience. At uBreakiFix, we’re committed to keeping customers connected to the things and people who matter most.”

4. Google’s Pixel smartphone first launched in October 2016 and has strengthened its foothold in the smartphone marketplace with each new iteration. Google continues to prioritize customer support, including access to convenient, high-quality repair. By working with uBreakiFix, Google provides customers with manufacturer-backed, same-day repair services using genuine OEM parts.

5. Through uBreakiFix, Pixel customers have access to special pricing offers, including Pixel 3a screen repairs for $109 and Pixel 3a XL screen repairs for $119.

Opens 30 Stores and Launches New Strategic Partnerships in 2018 Fourth Quarter

6. In January 2019, uBreakiFix announced significant growth for the fourth quarter of 2018, boasting a total of 30 new stores and bringing the brand to 478 stores across North America. The brand opened a total of 129 new stores in 2018, marking 60 percent increase in growth compared to 2017.

7. The quarter’s fastest growing market was Texas with seven new locations, bringing the state’s total footprint to 41 stores. Texas is now one of uBreakiFix’s highest volume states behind its home state of Florida, with 84 stores. uBreakiFix also marked significant growth in Ontario, Canada and Alabama, each with four new locations.

8. Twenty percent of stores added in Q4 were previously independent tech repair shops that converted to the uBreakiFix brand. uBreakiFix welcomed a total of 27 store conversions in 2018.

9. In November 2018, uBreakiFix announced a strategic partnership with TV manufacturer Element Electronics as the brand’s exclusive in and out of warranty repair provider, offering walk-in repair service for many Element Electronics TVs. With uBreakiFix, customers can enjoy television repairs in a matter of days, versus waiting several weeks for mail-in repair.

10. Justin Wetherill, co-founder and president of uBreakiFix, said, “At uBreakiFix, we’re constantly pursuing partnership opportunities that will create value for our customers. We were excited to expand our television repair offerings in Q4 and grateful for the chance to do so with a like minded brand that shares our passion for putting customers first.”

11. In the same press release, uBreakiFix said that it would continue this momentum into the first quarter of 2019. Between January 1 and March 31, uBreakiFix planned to open 30 new stores in markets across North America. The brand also plans to pursue new strategic partnerships and extend existing partnerships to better serve its customers.

12. Wetherill added, “Our company was built so that people can spend less time waiting and more time connected to the things that matter. Our growth is not only a testament to the demand for our services but to our team’s commitment to executing at the highest caliber. We are incredibly proud of all that we accomplished in 2018 and look forward to another year of strong growth in 2019.”

Company History

13. uBreakiFix was founded in 2009 by Justin Wetherill and his friends David Reiff and Eddie Trujillo in Orlando, Florida. Wetherill was inspired to start a smartphone repair business after he dropped his brand-new iPhone 3G on concrete and shattered the screen. Instead of taking the phone in for repairs, Wetherill felt that he could repair the phone himself if he had the right parts. However, Wetherill bit off more than he could chew and had to ask Reiff for help.

14. After fixing Wetherill’s phone, they realized that there was a need for high-quality smartphone repairs. Wetherill and Reiff purchased broken iPhones and practiced fixing them. Eventually, they opened an eBay storefront offering iPhone glass repairs at a flat rate of $79.99. Demand for their services grew, and Wetherill and Reiff opened the first uBreakiFix storefront in the summer of 2009 with Trujillo.

15. Within three years, uBreakiFix had grown to nearly 50 stores and Wetherill decided to start franchising the concept in 2012. Wetherill offered extraordinarily generous terms to store managers who wanted to become owners, charging them only one month’s worth of sales and financing the transaction at 0%. This helped fuel uBreakiFix’s initial franchise growth. Today, uBreakiFix has locations across the United States and Canada.

Entrepreneur’s Franchise 500

16. uBreakiFix ranked No. 29 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of uBreakiFix franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on uBreakiFix’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year: 143
• Outlets at the End of the Year: 257
• Net Change: +114

2017

• Outlets at the Start of the Year: 257
• Outlets at the End of the Year: 326
• Net Change: +69

2018

• Outlets at the Start of the Year: 326
• Outlets at the End of the Year: 458
• Net Change: +132

Company-Owned

2016

• Outlets at the Start of the Year: 22
• Outlets at the End of the Year: 19
• Net Change: -3

2017

• Outlets at the Start of the Year: 19
• Outlets at the End of the Year: 28
• Net Change: +9

2018

• Outlets at the Start of the Year: 28
• Outlets at the End of the Year: 18
• Net Change: -10

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• As of December 31, 2018, there were 458 franchisee-operated uBreakiFix stores in operation. To ensure there were enough months of operation to properly rank the stores included, only stores which were 1 year or older by that date (i.e., a total of 327 stores) were considered in preparing this financial performance representation (“FPR”).

• In addition, not all stores submitted financial information for all of their months of operation to uBreakiFix. Of these 327 stores, 281 stores submitted information, with the average store submitting information for 76% of their first 36 months they were in operation (i.e., 6,237 months of information for all 281 stores). Forty-six stores did not submit any data so they have been excluded.

• This FPR reflects the averages for each identified category of revenue and expense for the top and bottom 25 of these 281 reporting franchisee-operated stores during their respective first 3 years of operations, using the financial information they submitted for the five-year period from January 1, 2013 through December 31, 2018 (the “Five-Year Reporting Period”). Financial data used in preparing the FPR was limited to the Five-Year Reporting Period.

• To determine which stores fell within each top and bottom 25, uBreakiFix ranked these 281 stores based on their average monthly Gross Sales throughout the Five-Year Reporting Period (i.e., not a single year). If they failed to report Gross Sales for any month(s) during the Five-Year Reporting Period, uBreakiFix imputed the revenue for the missing month(s) by taking an average for all months that were reported by the franchisee during the Five-Year Reporting Period. The stores were then separated into top and bottom 25 and annual averages for the top and bottom 25 are presented below.

• Total Revenue is the sum of all income received from the sale of repair services and the sale of accessories. This amount also includes any Sales Tax amount collected.

• Merchant Account Fees is the sum of processing charges and fees from credit card merchant processing services.

• Parts and Materials is the sum of all expenses associated with inventory, including the purchase of accessories, parts, and the cost of shipping inventory to the business. This value is the sum of all these costs less any credits given for merchandise returned for refurbishment, and damaged or defective merchandise returned for return merchandise authorization (“RMA”).

• Total Cost of Goods Sold is the sum of all Merchant Account Fees and Parts and Materials cost.

• Gross Profit is calculated as Total Revenue less the Total Cost of Goods Sold.

• Continuing Royalty is 7% of franchisee’s Gross Sales other than Recommerce Revenue during the accounting period. In some situations, uBreakiFix charges a National Account Administrative Fee for on-boarding and managing National Accounts.

• Miscellaneous Expenses are the sum of all general and administrative expenditures related to the day-to-day operations of a uBreakiFix Store not referenced in other expense categories, including: bank service charges, insurance expense, shipping cost, accounting/professional fees, security cost, and all other miscellaneous cost. This FPR does not reflect interest, income taxes, depreciation, or amortization.

• Occupancy Expense is the sum of all business occupancy cost including: rental space cost, common area maintenance (CAM), property taxes, real estate insurance, internet and telephone cost, general store supplies, electric, water, and gas utilities.

• Payroll Expenses is the sum of all business personnel cost, including: salaries and hourly pay for both full-time and part-time employees, employee and employer contributions for FICA taxes, federal unemployment taxes, state unemployment taxes, workers’ compensation insurance, group insurance (if any), and payroll processing fees. uBreakiFix Stores generally open with 2 to 4 employees.

• Promotions and Advertising is the sum of all advertising expenses, including: online advertising, social media costs, in-store artwork and brochures, giveaways, and job advertisem*nts. Some uBreakiFix Stores were in close proximity to each other and may have combined advertising.

• Sales Tax is the sum of all state, city, and local tax collected and paid to the corresponding department.

• Technology and Customer Service Fee is 1% of franchisee’s Gross Sales during the accounting period to defray a portion of the costs and expenses incurred by the Company to support the Portal Store Operating System and the Customer Service Department.

• Total Expense is the sum of Continuing Royalty, Miscellaneous Expenses, Occupancy Expense, Payroll Expenses, Promotions and Advertising, Sales Tax, and Technology and Customer Service Fee Expense. The figures do not reflect the payment of the Advertising Fee or the Internet Referral Source Administrative Fee. (If, and when, the Advertising Fee and/or the Internet Referral Source Administrative Fee are established, you will have to pay those fees and they will therefore affect your Net Income.)

• Net Income is Total Gross Profit less Total Expense.

Part 1 – Statement of Average Revenues and Expenses for Top 25 uBreakiFix Franchisee-Operated Stores (1st, 2nd, and 3rd Years of Operation)

Year 1 (20 Stores in Sample)