2019 Weekly AUV / Franchisees End-Cap Strip w/Drive Thru Development. FYE December 27, 2020
| $17,000+ | $14,000—$17,000 | $11,000—$14,000 | $8,000—$11,000 | $0—$8,000 |
---|
# of Restaurants | 22 | 7 | 10 | 0 | 0 |
Total # of Restaurants | 39 | 39 | 39 | 39 | 39 |
% of Franchise Restaurants | 56.4% | 18.0% | 25.6% | 0% | 0% |
Average Unit Weekly Sales Volume | $24,325 | $15,872 | $12,681 | $0 | $0 |
Number and percentage exceeding average | 9/40.9% | 4/57% | 5/50% | 0/0% | 0/0% |
Median | $22,414 | $16,672 | $12,846 | $0 | $0 |
High | $52,691 | $16,975 | $13,714 | $0 | $0 |
Low | $17,013 | $14,218 | $11,061 | $0 | $0 |

2019 Average Sales: $739,072.75
Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
---|
$ 593,447 | 10% | $ 73,907 | 8 years |
15% | $ 110,861 | 5 years |
20% | $ 147,815 | 4 years |
Is the Company Franchise Profit Worth the Franchise Cost?
When Firehouse Subs owners sell their franchise based on the median valuation multiple for the industry of 0.31 and the average sales total from 2019 and 2020 of $734,892, the franchise would sell for $227,817. This is only about 38% of the midpoint investment of $593,447.
However, owners of multiple Firehouse Subs franchises are able to sell them at a profit. Owners of 7 Firehouse Sub franchises receiving $5,144,245 can sell their franchises at a multiple of 0.86 for $4,424,050. This is greater than their initial investment amount of $4,154,129. So, the more Firehouse Subs franchises you invest in, the greater the opportunity for profit.

Firehouse of America, LLC. Statements of Income. Years Ended December 27, 2020 and December 29, 2019
| 2020 | 2019 |
---|
| | |
Revenues: | | |
---|
Royalty Fees | $43,007,886 | 47,678,756 |
Franchise fees | $1,371,750 | $2,800,750 |
Area representative fees | $421,403 | $436,960 |
Other fees | $3,949,688 | $3,531,437 |
Total revenues | $48,750,727 | $54,447,903 |
| | |
Costs and expenses: | | |
---|
Royalty expense | $18,196,469 | $20,502,344 |
Franchise fee expense | $368,188 | $735,251 |
License fee expense | $11,200,010 | $12,725,119 |
Employee wages and benefits | $8,884,021 | $9,439,277 |
Telephone and utilities expense | $49,891 | $67,499 |
Travel and entertainment expense | $266,533 | $651,537 |
Marketing expenses | $404,216 | $736,598 |
Occupancy expense | $1,697,371 | $1,702,801 |
Area franchise development expense | $56,250 | $276,250 |
Professional fee expense | $1,953,457 | $1,907,242 |
Depreciation and amortization | $248,626 | $236,711 |
Other operating expenses | $1,536,716 | $1,976,707 |
| | |
Total costs and expenses | $44,861,748 | $50,957,336 |
| | |
Operating income | $3,888,979 | $3,490,567 |
| | |
Other income (expense) | $23 | $(152,276) |
| | |
Net income | $3,889,002 | $3,338,291 |
Firehouse Subs has been a profitable business for the franchisor Firehouse of America, with profit margins of 6% and 8% in 2019 and 2020, respectively. They were able to increase profitability from 2019 to 2020 in large part because they were able to cut costs by 12%.

How many Firehouse Subs units have opened and closed?
Over the last three years, Firehouse Subs has been growing at an average of 21 franchises a year. One franchise closed in 2020, but that is not surprising in a year that many restaurants across the country were forced to close due to the pandemic.
Units opened and closed from 2018 to 2020
Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
---|
Franchised | 2018 | 1,051 | 1,093 | +42 |
2019 | 1,093 | 1,115 | +22 |
2020 | 1,115 | 1,114 | -1 |
Company-Owned | 2018 | 37 | 37 | 0 |
2019 | 37 | 38 | +1 |
2020 | 38 | 38 | 0 |
Total Outlets | 2018 | 1,088 | 1,130 | +42 |
2019 | 1,130 | 1,153 | +23 |
2020 | 1,153 | 1,152 | -1 |
Conclusion
Firehouse Subs has seen franchise unit increases over the last three years, and average franchise revenues have increased as well. However, there are high initial costs of opening a franchise, and based on the industry multiple, it will be difficult to sell the franchise at a profit. You are more likely to make a profit if you invest in several Firehouse Subs franchises instead of just one.
While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in Food and Beverage Industry.