Franchise AUV: Understanding Average Unit Volume

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Franchise AUV stands for average unit volume, which is the average sales for each location. It represents the average annual sales volume of individual franchise units within a franchise system. This figure is calculated by dividing the total sales of all units by the number of units. Understanding a franchise’s AUV is essential for investors, as it provides a snapshot of the potential revenue a single franchise unit might generate.

Learn how to find a franchise’s AUV and what other numbers to look for.

Finding a Franchise’s AUV

The primary source for finding a franchise’s AUV is the franchise disclosure document (FDD), specifically Item 19. Item 19 in the FDD is where franchisors can provide financial performance representations, including sales figures and sometimes the average unit volume. However, as the franchise experts at Internicola Law Firm explain, not all franchisors choose to disclose this information. When available, this section offers invaluable insights into the financial health and potential of the franchise.

The Value of Knowing the AUV

Knowing a franchise’s AUV helps investors gauge the potential success of their investment. A higher AUV can indicate a strong brand presence and effective business model, suggesting a potentially profitable venture. However, it is important to consider the AUV in the context of the specific market and location where one plans to operate, as these factors can significantly impact sales.

Looking Beyond the AUV

While the franchise AUV provides a valuable benchmark, it should not be the sole factor in making an investment decision. Potential investors should also consider:

  • Profit margins: Understanding the franchise’s cost structure and profit margins is crucial. High sales do not always translate to increased profits if the costs are proportionately high. So, potential franchise investors should take the total initial investment into account when comparing AUVs. For example, if the AUV is $1 million but the initial investment is close to that amount, then it does not have as significant a profit margin as a franchise with an initial investment of $500,000. According to the American Franchise Academy, the average earnings before interest, taxes, depreciation, and amortization profit for franchises is between 8% and 15%.
  • Growth trends: Analyzing whether a franchise is increasing, decreasing, or remaining steady with its AUV over time can provide insights into the brand’s market position, stability, and potential for future growth.
  • Unit-count changes: A growing or shrinking number of units can affect the AUV and indicate the overall health of the franchise system.
  • Geographical variations: Sales can vary significantly based on location. Investors should consider whether the AUV is consistent across different regions or if there are notable disparities.
  • Peer comparisons: Comparing the AUV with competitors can offer a relative understanding of the franchise’s performance in the industry.
  • Other franchisees’ experience: Learn from those in the thick of it. Potential franchise investors should ask current owners how they feel about the support system and, knowing what they know now, if they would do it again.

The AtWork Advantage

AtWork presents a compelling opportunity for those considering franchise investment. Known for its robust support system and proven business model, AtWork has established itself as a leader in the staffing industry. AtWork’s franchise average gross revenue in 2023 was $4 million, a testament to its operational excellence and market adaptability.* Beyond their high franchise AUV, AtWork’s unique benefits set the franchise apart compared to other staffing franchises’ costs.

AtWork is one of the only staffing franchises that designates its owners as Employee of Record and allows them to collect work opportunity tax credits (WOTC). On average, WOTC offsets royalty fees by 25% to 30%, significantly reducing costs. AtWork provides payroll funding and processing, which is more than double the value of AtWork’s royalty and marketing fees combined (7.5%). The total initial investment ranges from $153,500 to $210,500. After the support and benefits AtWork owners receive, the net cost to franchise owners is at least $5,500 less a month than competitors.

By investing in an AtWork franchise, investors not only tap into a lucrative market but also benefit from comprehensive training, ongoing support, and a network of experienced professionals. Potential franchise investors who want to learn more about AtWork can get started by filling out the franchise information request form on AtWork’s website.

* This is according to Item 19 in AtWork’s latest FDD. It is not a financial guarantee that franchise owners will make that amount.

 

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