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X-Golf Franchise Opportunity for 2022

Written by: Owen Boyd
Last Updated: November 29, 2021
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X-Golf offers an indoor golf and entertainment outlet that centers around the use of indoor golf simulators and also serves food and beverages in a fun and upbeat environment. Customers can play at some of the world’s top golf courses and choose from numerous game formats on the simulator machines.

The first X-Golf Franchise Corporation began in 2015 and has since expanded to multiple locations across Texas, Alabama, Louisiana, Colorado, and Michigan. The current CEO is Ryan D’Arcy, who has been in that role since 2019. Previously, he served as Director of Franchise Operations and Director of Sales & Business development of both the X-Golf Franchise Corporation and its parent company, X-Golf America.

As of 2020, there were 24 franchised outlets and 0 corporate outlets.

 

How is the X Golf Franchise Positioned in the Arcade, Food, and Entertainment Industry?

X-Golf competes with other businesses in the arcade, food, and entertainment complexes industry, which recorded $1.6 billion in revenue in the past year and is projected to grow by 3.6% between 2021 and 2026. They compete most directly with other indoor and sports-related entertainment options such as sporting events, golf clubs, sports bars, and similar businesses. X-Golf’s main competitor in the golf-related entertainment space is Top Golf, which is set up as a driving range with outfield targets and serves food and beverages.

 

How Much is an X-Golf Franchise?

The initial X-Golf Franchise Fee is $30,000. You have to pay this upfront fee when opening an X-Golf franchise.

 

X-Golf Franchise Cost

 The estimated total investment necessary to begin operation of an X-Golf Franchise ranges from $547,200 to $916,000.

 

Additional Cost Breakdown

The following costs are part of the upfront costs included in the initial investment for an X-Golf franchise. Many of these are one-time fees that are needed to launch the franchise.

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Estimated Initial Investment. Your Estimated Initial Investment Franchise Agreement

Type of expeditureAmountMethod of paymentWhen dueTo whom payment is to be made
Initial Franchise Fee$30,000—$30,000Check or wire transferUpon signing the franchise agreementUs
Rent (one month)$4,000—$10,000CheckUpon signing leaseLandlord
Lease Security Deposit$4,000—$10,000CheckUpon signing leaseLandlord
Utilities$300—$2,000Check, debit, and/or creditUpon ordering serviceUtility providers
Leasehold Improvements$90,000—$190,000Check, debit, and/or creditAs incurred or when billedContractors
Market Introduction Program$5,000 to $10,000Check, debit, and/or creditAs incurred or when billedVendors
Golf Simulators$330,000 to $480,000Wire transfer or bank checkUpon orderingX GOLF America, Inc.
Furniture, Fixtures, Other Equipment$44,000 to $75,000Check, debit, and/or creditAs incurredVendors
Computer Systems$1,000 to $3,000Check, debit, and/or creditAs incurredVendors
Insurance (3 months)$3,000 to $5,000CheckUpon PurchaseInsurance company
Signage$5,000 to $10,000Check, debit, and/or creditUpon orderingApproved suppliers and vendors
Office Expenses$1,000 to $2,000Check, debit, and/or creditAs incurredVendors
Inventory$5,000 to $7,500Check, debit, and/or creditUpon orderingApproved suppliers and vendors
Licenses and Permits$1,500 to $40,000CheckUpon applicationGovernment
Dues and Subscriptions$400—$1,000Check, debit, and/or creditAs incurred or when billedVendors, trade organizations
Professional Fees (lawyer, accountant, etc.)$1,000—$3,000Check, debit, and/or creditAs incurred or when billedProfessional service firms
Travel, lodging and meals for initial training$2,000—$7,500Check, debit, and/or creditAs incurredAirlines, hotels, and restaurants
Additional funds (for first 3 months)$20,00 to $30,000VariesAs incurredEmployees, suppliers, utilities
Total$547,200 to $916,000   

X-Golf Franchise Ongoing Fees:

Royalty: 7% of gross sales

Marketing Fund Contribution: 1% of gross sales

 

How much do X-Golf franchise owners make?

X-Golf Franchise Sales Figures

Sales Figures

 Range LowRange HighMedianMean# (%) Above Mean
Year Opened20172018201820184 (67%)
      
Total Income$408,600$709,153$502,244$522,5302 (33%)
Income from Simulators67%79%71%72%2 (33%)
Income from Sale of Goods21%33%29%28%4 (67%)
      
Cost of Goods Sold$38,815$72,787$49,445$53,6442 (33%)
      
Gross Profit$369,397$636,366$450,979$468,8861 (17%)
      
Expenses     
Advertising & Marketing$16,456$22,670$19,600$19,583$3 (50%)
General & Administrative$5,840$17,482$7,875$9,8262 (33%)
Insurance$8,434$13,746$11,885$11,3624 (67%)
Legal & Professional$—$8,457$3,393$3,9033 (50%)
Licenses & Permits$1,830$11,548$3,473$5,0182 (33%)
Payment Authorization Fees$9,767$18,693$12,226$13,2332 (33%)
Payroll Expenses$78,276$153,952$121,349$118,2203 (50%)
Rent & Lease$77,297$124,281$114,758$107,2924 (67%)
Repairs, Maintenance, Supplies$7,433$19,481$13,820$13,7653 (50%)
Royalty Fees$24,516$42,549$30,135$31,3522 (33%)
Travel$—$5,125$1,061$1,9112 (33%)
Utilities$13,902$18,829$17,166$16,5084 (67%)
Operating Profit (EBITDA)$68,338$266,853$89,682$116,9142 (33%)

 

2018 X-Golf Median Operating Profit:

$116,914

Based on a midpoint investment of $731,600 with estimated profits of 116,914 ( 15.9% profit margin) it would take about 7 years to recoup your investment.

Data Summary by Line Item (b/)

Data Summary by Line Item (b/)Range LowRange HighMedianMean# (%) Above Mean
Year Opened20172019201920198 (50%)
Location Size (sq. ft.)4,6397,2005,5605,7137 (44%)
Number of Simulators67663 (19%)
      
Total Rent incl. CAM (NNN) (per sq. ft.)$15.50$28.60$21.95$21.779 (56%)
      
Total Cost of Buildout$542,583$952,250$698,144$713,7058 (50%)
Tenant Improvement Allowance$—$284,000$96,189$112,8617 (44%)
Net Buildout Costs$427,583$751,875$615,728$600,8448 (50%)
      
Total Income$228,168$668,959$352,988$405,1687 (44%)
Income from Simulators65%78%72%72%7 (44%)
Income from Goods22%35%28%28%7 (44%)
      
Cost of Sales$19,469$104,269$41,157$50,9277 (44%)
      
Gross Profit$174,065$567,016$323,103$354,2417 (44%)
      
Expenses     
Advertising & Marketing$3,191$47,113$21,158$22,0038 (50%)
General & Administrative$1,447$31,414$ 5,741$7,5265 (31%)
Insurance$561$26,288$9,445$10,6675 (31%)
Legal & Professional$500$12,445$3,137$4,0176 (38%)
Licenses & Permits$531$11,908$1,542$2,2593 (19%)
Payment Autdorization Fees$2,597$16,857$8,901$9,8665 (31%)
Payroll Expenses$62,202$250,742$96,898$112,0826 (38%)
Rent & Lease$59,857$130,020$108,961$108,1138 (50%)
Repairs, Maintenance, Supplies$2,851$33,163$14,969$16,0547 (44%)
Royalty Fees$13,690$40,138$21,179$24,3107 (44%)
Travel$—$3,350$206$4254 (25%)
Utilities$10,940$34,696$15,998$17,5177 (44%)
Operating Profit (EBITDA)$(159,422)$191,903$26,771$19,4039 (56%)
Impact of COVID-19 relief programs (i.e. CARES Act) includes funds received via PPP (forgiven or expected to be forgiven), EIDL, SBA Loan Payments, and other small business grants. (c/)$24,800$145,976$79,401$76,08311 (69%)

 

2019 X-Golf Median Operating Profit:

$19,403

Based on a midpoint investment of $731,600 with profits of $19,403 (2.7% profit margin) it would take about 38 years to recoup your investment.

 

X Golf Franchise Corporation Income Statement:

STATEMENTS OF INCOME. For the years ended December 31,

 20202019 — As restated2018
 AmountPercent of RevenuesAmountPercent of RevenuesAmountPercent of Revenues
Revenues      
Franchise fee revenue$90,47315.7%$112,50027.6%$110,00045.2%
Royalty revenue$484,00984.3%$294,55072.4%$133,39454.8%
Total revenues$574,482100.0%$407,050100.0%$243,394100.0%
Operating expenses $356,54962.1%$296,19472.8%$188,76277.6%
Income before income taxes$217,93337.9%$110,85627.2%$54,63222.4%
Income taxes$61,87410.8%$31,1947.7%$15,3176.3%
Net income$156,05927.1%$79,66219.5%$39,31516.1%

 

X-Golf Franchise Corporation Income Statement Key Insights:

The X-Golf Franchise Corporation was profitable in 2020 with a net income of $156,059. This is up from $79,662 and $39,315 in 2019 and 2018, respectively. Net income has also increased as a percentage of total revenues in each of those years, reaching 27% of total revenue by 2020. The X-Golf Franchise Corporation has also seen a relative decrease in costs across this time period, getting down to 62% of total revenue.

x-golf-logo

 

X-Golf Franchise Corporation Cash Flow Statement:

STATEMENTS OF CASH FLOWS. For the years ended December 31,

 20202019 — As restated2018
OPERATING ACTIVITIES   
Net income$156,059$79,662$39,315
Adjustments to reconcile net income to net cash flows from operating activities:   
Deferred income taxes$(51,238)$(86,823)$(857)
Changes in:   
Accounts receivable$(56,972)$(86,423)$759
Due from parent$(136,063)$(99,108)$—
Contract costs$(71,879)$—$—
Accrued expenses$40,908$—$—
Due to parent$—$(12,803)$(85,779)
Income taxes payable$(67,941)$108,824$14,938
Deferred revenue$209,527$287,500$—
    
Net cash provided by (used in) operating activities$22,401$190,829$(31,624)
NET CHANGE IN CASH$22,401$190,829$(31,624)
CASH, Beginning$203,853$13,024$44,648
CASH, Ending$226,254$203,853$13,024

 

X-Golf Franchise Corporation Cash Flow Statement Key Insights:

In 2020, the X-Golf Franchise Corporation had a net income of $156,059, but their cash totaled $226,254, which is a 10% increase from the amount of cash they started the year with. However, net cash provided by operating activities decreased in 2020 to $22,401 from $190,829 in 2019.

 

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How many X-Golf units have opened and closed?

System-wide Outlet Summary

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised2018911+2
20191120+9
20202024+4
Company-Owned2018000
2019000
2020000
Total Outlets2018911+2
20191120+9
20202024+4

 

Over the last three years, 15 new X-Golf franchises have opened for an average of 5 new locations a year. There was slower growth in 2020 than the previous year, but that is not surprising given the difficulties the arcade, food, and entertainment complexes industry faced in 2020.

 

 

Is it worth investing in an X-Golf franchise?

X-Golf has seen franchise unit increases in each of the last three years, and the franchises on average have been profitable in recent years. However, the growth in new franchises has slowed and franchise profits decreased significantly in the most recent period. So while X-Golf franchises have been profitable in the past, the potential for the negative impacts of the pandemic on the arcade, food, and entertainment complexes industry to continue makes the outlook for the future for X-Golf franchises uncertain.

While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz.

 

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