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The Biggest Franchise You’ve Never Heard Of: Advanced Fresh Concepts
Written by: Parth Parth
Last Updated by
Ailen Faiad: November 10, 2022
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This article is based on its 2022 FDD.
Advanced Fresh Concepts franchises offer prepared sushi and other Asian-style foods from (i) AFC food service counters at a grocery store, retail center or other locations (ii) Wild Blue Counters at a university or other select locations
How is Advanced Fresh Concepts Franchise Positioned in the Food and Beverage Industry?
The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people get employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x.
Advanced Fresh Concepts competes in the Asian market against companies such as Panda Express.
Advanced Fresh Concepts Franchise Cost
The estimated initial investment for one new full-time food service counter or part-time food service counter located in a grocery store or other location owned by a third party ranges from $39,339 – $136,939. The following costs are part of the upfront costs included in the initial investment for Advanced Fresh Concepts. Many of these are one-time fees that are needed to launch the franchise.
Review the chart below to see how much it costs to buy an Advanced Fresh Concepts franchise in 2022.
| Item | Amount | To Whom Payment Is To Be Made |
|---|---|---|
| Initial Fee | $4,500 | AFC |
| Credit and Background Check Fee | $85 | AFC |
| Tuberculosis, Drug Testing and Criminal Background Checks | $100-$2,000 | AFC |
| Training Fee | $1,000-$4,600 | AFC |
| Training Fee for your managers | $0-$2,300 | AFC |
| ServSafe Food Protection Manager Training, Testing and Certification | $275-$550 | AFC |
| ServSafe Allergen Awareness Training and Testing | $10-$30 | ServSafe |
| Travel and Living Expenses while Training | $1600-$11,500 | Airline, hotel, restaurant |
| Operating Manual/SSOP/Sushi Recipe Guide/Wild Blue Recipe Guide/Steam Table Manual Fee | $300-$600 | AFC |
| Purchase of already existing AFC Operated Food Service Counter from us | $1000-$100,000 | AFC |
| Opening Food Inventory | $8000-$24,000 | AFC |
| Signage | $0-$1,000 | AFC |
| Opening Assistance | $0-$1,800 | AFC |
| Labeling Machine and Inventory Scanner | $900-$2,000 | AFC |
| Warranty service for labeling machine | $99 | AFC |
| Data and Web Access Fee for Tablet | $120-$225 | AFC |
| Equipment and Small Wares | $14,700-$46,000 | ACF or suppliers |
| Insurance per location | $700-$5,000 | Insurance company/AFC if we obtain the insurance on your behalf |
| Additional Uniforms | $0-$350 | AFC |
| Licenses & Permits | $300-$2,000 | Government Agencies/AFC |
| Computer and Internet Access | $150-$800 | Third Parties |
| Additional Funds – 3 months | $5,500 – $25,000 | Employees, suppliers, utilities and AFC |
| Professional Advisor | $1,000 – $2,000 | Your Professional Advisors |
| Account Broker Fee | $0-$500 | AFC |
| Total for a new full-time or part time Food Service Counter Franchise | $39,339-$136,939 $40,339 – $236,939 |
Owning a Advanced Fresh Concepts Franchise Requires Ongoing Fees
Compensation to Franchisor: Typically 25% to 27% of Gross Sales to the store or other facility where you are located, and 8% to 11% of Gross Sales to AFC
How much do Advanced Fresh Concepts franchise owners make?
AFC earned $377 million from 4,000 locations in 2021. We estimate from those numbers that the AUV for an AFC franchise is around $942,500.
2021 Advanced Fresh Concepts Median Franchise Sales: $942,500
| Initial investment (midpoint) | %Profit margin of average franchise sales | Estimated profits | Time to recoup investment |
|---|---|---|---|
| $2,542,500 | 10% | $126,800 | 21.5 years |
| 15% | $190,200 | 15 years | |
| 20% | $253,600 | 11.5 |
Based on the median sales provided by Advanced Fresh Concepts’s franchise locations, at an average of a 10% profit margin it will take around 3 years to recoup your investment. This is shorter than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Food and Beverage stores; the extent of market penetration and brand awareness that Advanced Fresh Concepts stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Advanced Fresh Concepts Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Advanced Fresh Concepts franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.55
When you go to sell an Advanced Fresh Concepts franchise based on the median multiple of .55 and net sales in 2021 of $942,500, it would sell for around $500,000. This is significantly higher than the midpoint investment of $138,639.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Advanced Fresh Concepts (Franchisor) Income Statement Key Insights:
Years Ended March 31, 2022, 2021 and 2020
| 2022 | 2021 | 2020 | |
|---|---|---|---|
| Revenues | |||
| Franchise Revenue | $377,991,889 | $272,274,159 | $257,003,032 |
| Product Revenue | $191,180,414 | $144,995,576 | $144,909,404 |
| Retail Revenue | $19,073,738 | $14,365,473 | $14,559,631 |
| Total Revenues | $588,246,041 | $431,635,208 | $416,472,067 |
| Costs and expenses | |||
| Direct contract costs | $198,762,058 | $149,788,110 | $151,534,213 |
| Operating expenses | $370,759,020 | $272,834,464 | $258,456,929 |
| Total costs and expenses | $569,521,078 | $422,622,574 | $409,991,142 |
| Income from operations | $18,724,963 | $9,012,634 | $6,480,925 |
| Financial Income (expense) | |||
| Interest Income | $46,975 | $40,860 | $230,061 |
| Interest Expense | $(1,500) | $(2870) | $(4,723) |
| Net financial income | $45,475 | $37,990 | $225,338 |
| Income before provision for income taxes | $18,770,438 | $9,050,624 | $6,706,263 |
| Provision for income taxes | $4,441,212 | $2,038,646 | $2,009,686 |
| Net income | $14,329,226 | $7,011,978 | $4,696,577 |
| Other comprehensive income (loss) | |||
| Foreign currency translation adjustment | $32,155 | $484,457 | (37,124) |
| Total comprehensive income | $14,361,381 | $7,496,435 | $4,659,453 |
Advanced Fresh Concepts is a very profitable business for the franchisor with retained earnings of $14.36 million in 2022. Compared to $4.65 million in 2020, they saw an increase of 208% from 2020 to 2022. This is a good indication of high growth as a company overall.
How many Advanced Fresh Concepts units have opened and closed?
System-wide Outlet Summary
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2020 | 3,849 | 3,973 | +124 |
| 2021 | 3,973 | 3,973 | 0 | |
| 2022 | 3,973 | 4,020 | +47 | |
| Company-Owned | 2020 | 172 | 158 | -14 |
| 2021 | 158 | 143 | -15 | |
| 2022 | 143 | 150 | +7 | |
| Total Outlets | 2020 | 4,021 | 4,131 | +110 |
| 2021 | 4,131 | 4,116 | -15 | |
| 2022 | 4,116 | 4,170 | +54 |
Over the last three years, the company has been expanding. Over the last three years, franchises have opened at a rate of around 50 units a year. This is an indicator that these stores might be performing very well.
Conclusion
Advanced Fresh Concepts offers people the opportunity to be a part of a business that is rapidly evolving and expanding and has good opportunities. The payback period is short and the resale value is insanely high.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Food and Beverage Industry.
