Woof Gang Franchise Has Amazing Returns in 2023
Written by: Parth Parth
Last Updated by
Ailen Faiad: January 20, 2023
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This article is based on its 2022 FDD.
Contents
Woof Gang Franchise claims to be the leading specialty retailer of pet food, pet supplies, and professional pet grooming in North America. As of the end of 2021, the company had 139 locations, all franchised.
How is Woof Gang Franchise Positioned in the Pet Care Industry?
Three of the biggest franchise contenders in the pet market are Pet Supply Plus, Camp Bow Bow and Woof Gang. However, none of them own more than 5% of the market share, resulting in a highly fragmented market. The industry brings in $8.4 billion in revenue annually, with profits of $952 million. It is expected to have an annual growth rate of 2.7% between 2022 and 2027. Woof Gang Bakery also competes in the Pet Care market against big brand companies such as Walmart, Petco, etc.
How Much is a Woof Gang Franchise?
The initial Woof Gang Franchise Fee is $49,900. You have to pay this upfront fee when opening a Woof Gang franchise.
Woof Gang Franchise Cost
The estimated total investment necessary to begin the operation of a Woof Gang Franchise ranges from $155,300 to $280,400. The following costs are part of the upfront costs included in the initial investment for a Woof Gang. 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 a Woof Gang franchise in 2022.
| Low Amount | High Amount | To Whom Payment is to be Made | |
|---|---|---|---|
| Initial Franchise Fee | 49,900 | 49,900 | Us |
| Opening Start-Up Package | 5,000 | 5,000 | Us |
| Travel/Expenses for Training | 1,200 | 5,000 | Third Parties |
| Leasehold Improvements / Construction | 25,000 | 80,000 | Landlord, Lender or Contractor(s) and Vendors |
| Rent | 7,500 | 25,000 | Landlord |
| Computer and Point of Sale System | 2,500 | 5,000 | Vendor |
| Equipment (Freezer, Grooming Equipment and Signage) | 11,000 | 30,000 | Vendors |
| Licenses | 500 | 2,000 | Various govemment agencies |
| Insurance | 1,500 | 3,500 | Insurance Companies |
| Legal and Professional Fees | 1,200 | 5,000 | Third-party professionals |
| Opening Inventory | 35,000 | 45,000 | Vendors |
| Working Capital | 15,000 | 25,000 | Employees, Vendors, Utilities, etc |
| Total | 155,300 | 280,400 |
Woof Gang Franchise Requirements
Woof Gang Bakery has the following criteria taken directly from its website:
A passion for people and pets
Enjoy a fast-paced and dynamic environment
Possess natural customer service skills
A willingness to follow training and operational standards
Have a genuine desire to fulfill a community need
Operate a store in your own neighborhood
Commitment to ethical business practices
$500,000 net worth / $150,000 liquidity
Ongoing Fees
Royalty: 7% of Gross Revenues
National Marketing Fee: 2% of Gross Revenues
How much do Woof Gang franchise owners make?
Average Monthly Gross Revenue
| June 1, 2021 to May 31, 2022 | |
|---|---|
| Average Monthly Gross Revenue | $55,474 |
| Median Monthly Gross Revenue | $50,841 |
| Number of Franchises (and Percentage) that Met or Exceed Average Monthly Gross Revenue | 57 (45%) |
| Average Total Gross Revenue for Time Period | $665,693 (12 Months) |
| Median Total Gross Revenue for Time Period | $610,089 (12 Months) |
| Number of Franchises (and Percentage) that Met or Exceeded Average Gross Revenue for Time Period | 57 (45%) |
2021 Woof Gang Average Franchise Sales: $665,693
| Initial Investment (midpoint) | %Profit margin of average franchise sales | Estimated Profits |
|---|---|---|
| $217,850 | 10% | $66,000 |
| 15% | $100,000 | |
| 20% | $133,000 |
Based on the median sales provided by Woof Gang’s franchise locations, at an average of a 15% profit margin it will take 2.5 to 4 years to recoup your investment. This includes roughly a year to find the location, build out the site, staff your store and pass breakeven. 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 Pet Care stores; the extent of market penetration and brand awareness that Woof Gang stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Woof Gang 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 a Woof Gang franchise based on the median multiple of .55 and AUV in 2021 of $665,693, it would sell for ~$336,000. This is higher than the midpoint investment of $217,850. Not bad to net >$100,000 on the sale as well as potentially earning ~$100,000 a year while you own your Woof Gang business.
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.
For 5+ Woof Gang locations the valuation could be as much as double the single unit valuation.
Woof Gang (Franchisor) Income Statement Key Insights:
Woof Gang Bakery, Inc. Consolidated Statements of Operations Years Ended December 31, 2021, 2020 and 2019
| 2021 | 2020 | 2019 | |
|---|---|---|---|
| Royalties | $4,419,688 | $3,262,850 | $2,716,488 |
| Retatil Sales | 7,099 | 53,344 | 233,638 |
| Franchise Salds | 60,380 | 215,813 | 227,291 |
| Build out Sales | 79,683 | 183,220 | 168,067 |
| Product Sales | 32,950 | 96,896 | 74,795 |
| Transfer of franchise, net | 58,820 | 30,000 | 37,500 |
| Corporate marketing | 40,093 | 53,494 | 49,573 |
| Other income | 41,160 | 21,228 | – |
| Total Revenue | 4,739,873 | 3,916,845 | 3,507,352 |
| Cost of sales | 255,251 | 347,960 | 415,587 |
| Gross profit | 4,484,622 | 3,568,885 | 3,091,765 |
| Operating expenses | |||
| Salaries and wages | 1,414,926 | 1,029,766 | 813,701 |
| Comissions | 1,200,259 | 697,513 | 733,631 |
| Rent | 190,967 | 270,321 | 401,445 |
| Materials and supplies | 33,128 | 5,206 | 7,366 |
| Advertising | 41,059 | 78,041 | 67,762 |
| Travel | 94,933 | 52,058 | 79,431 |
| Subcontract labor | 5,168 | 22,444 | 19,435 |
| Office expense | 33,446 | 81,534 | 61,422 |
| Insurance | 67,893 | 50,953 | 55,654 |
| Meals and entertainment | 57,355 | 36,508 | 50,456 |
| Utilities | 60,529 | 39,256 | 35,109 |
| Vehicle Lease | 74,193 | 62,464 | 39,134 |
| Repairs and maintenance | 11,249 | 5,026 | 11,773 |
| Licenses | 3,337 | 681 | 1,100 |
| Printing | 8,994 | 3,143 | 1,726 |
| Depreciation and amortization | 24,116 | 28,507 | 29,866 |
| Franchise expenses | 388,944 | 390,727 | 367,293 |
| Professional fees | 68,292 | 217,279 | 275,828 |
| Show and exposition | 86,153 | 69,374 | 119,290 |
| Training | 2,434 | 3,419 | 5,159 |
| Charitable donations | 24,605 | 7,530 | 4,139 |
| Bank Charges | 2,432 | 2,653 | 3,958 |
| Other operating | 43,037 | 29,842 | 11,411 |
| Total operating expenses | 3,937,539 | 3,184,245 | 3,196,089 |
| Income (loss) from operations | 547,083 | 384,640 | (104,324) |
Woof Gang is a very profitable business for the franchisor with retained earnings of $547,083 in 2021 compared to a loss of $104.324 in 2019. This is a good indication of high growth as a company overall.
How many Woof Gang 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 | 2019 | 97 | 111 | 14 |
| 2020 | 114 | 124 | 13 | |
| 2021 | 124 | 139 | 15 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets | 2019 | 97 | 111 | 14 |
| 2020 | 111 | 124 | 13 | |
| 2021 | 124 | 139 | 15 |
Over the last three years, the company has been expanding. Franchised units have steadily increased. Over the last three years, franchises have opened at a rate of 14 units a year. This is an indicator that these stores are performing well. Between the start of 2019 and the end of 2021, the company grew from 97 to 139 locations which is a growth of 43%. The map below shows territories where Woof Gang already has locations. They are, however, always looking to expand.
Conclusion
Woof Gang offers people the opportunity to be a part of a business that is not going to die anytime soon. Pet ownership has drastically increased during the pandemic, leading to a dramatic increase in the need for pet grooming and retail services.
Furthermore, during the past couple years, disposable income spending has increased, leading to more money on non-essential activities like pet grooming. Very few franchise opportunities offer a payback period of 2.5 to 4 years including the expenses for a general manager. Most franchises with a payback period under 4 years, assume the owner will be working in the business full-time.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Pet Care Industry.
