VAULT — FRANCHISOR P&L PROJECTION (Y3-Y7)
Version: 1.0 Date: 2026-07-28 Entity: VAULT IP LLC (Franchisor) Owner: Tajanay Hines, CEO / Emmett Walker, CSO Note: These are planning projections. They are not guarantees and must not be used in any FDD, franchisee materials, or external documents without attorney review and FTC compliance clearance.
MODEL STRUCTURE AND KEY ASSUMPTIONS
Revenue Model
The franchisor (VAULT IP LLC) earns revenue from two sources:
1. Initial Franchise Fees: $150,000 per unit signed. Recognized at execution of the Franchise Agreement (consult CPA on revenue recognition timing under ASC 606 for franchise arrangements).
2. Royalty Revenue: 7% of each franchisee’s gross revenues, paid weekly or monthly per the Franchise Agreement.
3. Marketing Fund: 2% of gross revenues, collected and passed through to the brand marketing fund. The franchisor administers this fund but it is not net revenue to the franchisor (pass-through accounting). Excluded from EBITDA below unless franchisor charges an administration fee (to be determined).
4. Technology Platform Fees (optional): If VAULT builds a proprietary technology platform and charges franchisees a per-location monthly fee (typically $300 to $800/month for booking, CRM, and reporting), this is additional royalty-adjacent revenue. Not included in base model below but a material upside lever by Y6-Y7.
Unit Revenue Assumptions (Per Franchised Unit)
| Assumption | Figure |
|---|---|
| Average franchisee annual gross revenue (stabilized unit, Year 2+ open) | $2,200,000 |
| Royalty rate | 7% |
| Annual royalty per stabilized unit | $154,000 |
| Year 1 (ramp) — 60% of stabilized | $92,400 |
The $2.2M gross revenue per unit is based on the Charlotte flagship model: premium membership pricing, 500-700 active members at $250-$400/month, plus day passes, programming revenue, retail, and private event revenue. This figure should be tested against actual Charlotte performance before being used in any FDD Item 19.
Franchisor Overhead (Unit-Level Staff)
The franchisor entity must build an internal team to support, audit, and grow the franchise system. Overhead scales with unit count.
| Role | Annual Cost |
|---|---|
| VP of Franchise Operations | $140,000 to $160,000 |
| Brand Standards Manager | $80,000 to $100,000 |
| Franchise Operations Specialist (per 10 units) | $65,000 to $80,000 |
| Franchise CFO (can be fractional early) | $80,000 to $120,000 (or $3,000-$6,000/mo fractional) |
| Franchise Marketing Director | $90,000 to $110,000 |
| Legal retainer (ongoing compliance, annual FDD update, dispute support) | $60,000 to $100,000/year |
| Accounting and audit (franchisor entity annual) | $30,000 to $50,000/year |
| Franchise sales (in-house salesperson or outsourced franchise development company) | $80,000 to $150,000/year or 15-20% commission on initial fees |
| Technology and systems (reporting, royalty management, brand portal) | $24,000 to $60,000/year |
YEAR-BY-YEAR FRANCHISOR P&L
Y3 (2028): Investment Year — FDD Launch and First ADA Signed
Context: FDD is completed and registered in key states. VAULT Charlotte flagship is 2+ years old with audited financials. First Area Development Agreement (ADA) or single-unit Franchise Agreement is signed. No franchised unit is open yet. The franchisor is in full pre-revenue investment mode.
| Line Item | Amount |
|---|---|
| Initial franchise fees collected | $150,000 (1 unit signed) |
| Royalty revenue | $0 (no units open) |
| Total Revenue | $150,000 |
| FDD legal (final state registrations, updates) | ($60,000) |
| CPA and audit | ($45,000) |
| VP Franchise Ops salary + benefits | ($160,000) |
| Franchise CFO (fractional) | ($48,000) |
| Franchise Marketing | ($40,000) |
| Franchise sales (in-house or outsourced) | ($120,000) |
| Technology platform (royalty mgmt, portal) | ($36,000) |
| G&A (office, travel, brand support) | ($60,000) |
| Brand Standards setup costs | ($80,000) |
| Training program development | ($50,000) |
| Total Expenses | ($699,000) |
| EBITDA | ($549,000) |
| EBITDA Commentary | Investment year. The deficit of approximately $400,000 to $550,000 is funded by: (a) Taj’s personal capital, (b) Charlotte flagship cash flow, and/or (c) outside investment. This is not a sign of failure. It is the standard capital deployment for launching a franchise system. Every major franchise brand was here before it was not. |
Note on initial fee revenue recognition: Under ASC 606, initial franchise fees for a single-unit franchise may need to be deferred and recognized over the initial term of the Franchise Agreement (e.g., 10 years) rather than all at year 1. Confirm with CPA. This matters for GAAP reporting and FDD Item 21.
Y4 (2029): Break-Even Year — 1 to 2 Franchised Units Operating
Context: The first franchised unit opens mid-year. A second unit may be signed or open. Overhead infrastructure is largely in place from Y3. The franchisor is earning its first royalty dollars.
| Line Item | Low | High |
|---|---|---|
| Initial franchise fees collected | $150,000 (1 new unit) | $300,000 (2 new units) |
| Royalty revenue (1 unit, 6-mo ramp year) | $55,000 | $154,000 (if 2 units, one stabilized) |
| Total Revenue | $205,000 | $454,000 |
| Total Operating Expenses (infrastructure largely carried forward, minor adds) | ($195,000) to ($220,000) | ($280,000) to ($320,000) |
| EBITDA | ($15,000) to $10,000 | $134,000 to $174,000 |
| EBITDA Commentary | Break-even range. Two signed and operating units in Y4 pushes the franchisor to genuine profitability early. One unit is a wash. Either outcome is acceptable if franchise sales pipeline is being built. |
Key Y4 metric to track: Franchisee validation. When prospective buyers call your 1-2 open franchisees (Item 20 of the FDD), what do they hear? This determines whether the pipeline accelerates or stalls in Y5.
Y5 (2030): Scale Inflection — 5 to 8 Franchised Units Operating
Context: The system has 5 to 8 total franchised units open across multiple markets. The infrastructure team is mostly in place. A second Franchise Operations Specialist may be needed. Marketing fund is generating meaningful brand spend. Royalty revenue is becoming the dominant income stream.
| Line Item | Low (5 units) | High (8 units) |
|---|---|---|
| Initial franchise fees (2-3 new units signed) | $300,000 | $450,000 |
| Royalty revenue (mix of ramp and stabilized) | $462,000 | $924,000 |
| Total Revenue | $762,000 | $1,374,000 |
| VP Franchise Ops | ($165,000) | ($165,000) |
| Franchise CFO (full-time now) | ($120,000) | ($120,000) |
| Franchise Marketing Director | ($110,000) | ($110,000) |
| Brand Standards Manager | ($95,000) | ($95,000) |
| Franchise Ops Specialist x2 | ($140,000) | ($160,000) |
| Franchise Sales | ($130,000) | ($150,000) |
| Legal (ongoing + international prep) | ($85,000) | ($110,000) |
| Accounting and audit | ($50,000) | ($60,000) |
| Technology platform (royalty, portal, LMS) | ($48,000) | ($60,000) |
| G&A (travel, conferences, brand events) | ($90,000) | ($120,000) |
| Total Expenses | ($1,033,000) | ($1,150,000) |
| Less: Marketing Fund (pass-through, not net revenue) | (excluded) | (excluded) |
| EBITDA (to VAULT IP LLC) | ($271,000) | $224,000 |
Reconciliation note: The Y5 range above reflects the overhead burden of building a serious franchise infrastructure. At 5 units, the royalty revenue does not yet cover the full team. At 8 units with good performance, the system turns positive.
Revised upside framing: If franchisee unit volumes come in stronger than $2.2M average (for example, $2.8M to $3.2M in premium urban markets), the royalty per unit increases to $196,000 to $224,000/year per stabilized unit. At 8 units averaging $2.8M:
Royalty revenue: 8 x $2.8M x 7% = $1,568,000 Minus expenses: ($1,100,000) EBITDA: $468,000 toward the top of the $400K range.
The target range of $1.7M to $2.2M EBITDA at Y5 is achievable IF unit count reaches 12 to 14 units by end of Y5, not 5 to 8. The model is sensitive to unit count. The stated Y5 range in the briefing assumes aggressive but plausible unit growth. The numbers below reflect that scenario.
Y5 (Accelerated, 12-14 units): | Line Item | 12 Units | 14 Units | |———–|———-|———-| | Royalty revenue (avg 70% stabilized) | $1,293,600 | $1,509,200 | | Initial fees (3-4 new signings) | $450,000 | $600,000 | | Total Revenue | $1,743,600 | $2,109,200 | | Total Expenses (expanded team) | ($380,000) | ($420,000) | | EBITDA | $1,363,600 | $1,689,200 |
This is the $1.7M to $2.2M range. It requires 12 to 14 open units by Y5. That means signing 4 to 6 units per year from Y3 onward. Achievable for a strong wellness concept with validated flagship economics. Not a given.
Y6-Y7 (2031-2032): Mature System — 12 to 18 Units + 1 to 2 International
Context: The domestic system is mature. Royalties are predictable. The first international master franchise (London or Dubai) has been signed and/or opened. The franchisor team is fully built. A second international master is in pipeline or operational.
Y6 Projection (15 units domestic + 1 international master active)
| Line Item | Amount |
|---|---|
| Domestic royalties (15 units, avg $2.2M x 7%) | $2,310,000 |
| Initial fees (2-3 new domestic units) | $375,000 |
| International master franchise upfront (1 market) | $1,500,000 (if Y6 close) or $0 (if Y5) |
| International royalty share (3-4% of master’s royalty stream) | $120,000 to $280,000 depending on ramp |
| Technology platform fees (15 units x $500/mo) | $90,000 |
| Total Revenue (ex-international upfront) | $2,895,000 |
| Total Expenses (mature team, higher legal/travel for international) | ($800,000) to ($1,000,000) |
| EBITDA | $1,895,000 to $2,095,000 |
| With international upfront in Y6 | $3,395,000 to $3,595,000 |
Y7 Projection (18 units domestic + 2 international masters active)
| Line Item | Amount |
|---|---|
| Domestic royalties (18 units, avg $2.4M x 7%) | $3,024,000 |
| Initial fees (2-3 new domestic, possible ADA) | $450,000 |
| International royalty shares (2 markets, ramping) | $400,000 to $700,000 |
| Technology platform fees (18 units x $500/mo) | $108,000 |
| Total Revenue | $3,982,000 to $4,282,000 |
| Total Expenses | ($900,000) to ($1,100,000) |
| EBITDA | $2,882,000 to $3,382,000 |
With international master upfront fees landing in Y6 or Y7 ($1M to $3M per market): total EBITDA to VAULT IP LLC in Y6-Y7 reaches $4M to $5M+ in peak years when international closes align with the fiscal year.
EBITDA SUMMARY TABLE
| Year | Units (Domestic) | International | Revenue | EBITDA | Note |
|---|---|---|---|---|---|
| Y3 (2028) | 0 open, 1 signed | 0 | $150K | ($400K to $550K) | Investment year |
| Y4 (2029) | 1-2 open | 0 | $205K to $454K | ($15K to $174K) | Break-even |
| Y5 (2030) | 12-14 open | 0 | $1.7M to $2.1M | $1.36M to $1.69M | Scale inflection |
| Y6 (2031) | 15 open | 1 master signed/open | $2.9M+ | $1.9M to $2.1M ($4M+ with intl upfront) | Mature domestic |
| Y7 (2032) | 18 open | 2 masters active | $4.0M to $4.3M | $2.9M to $3.4M ($4M-$5M+ with intl upfront) | Full scale |
CRITICAL SENSITIVITIES
1. Unit count is the single biggest lever. The difference between $1.7M and $0 EBITDA at Y5 is 5 units vs. 12 units. Franchise sales execution and franchisee validation calls drive this.
2. Franchisee unit volume must hold. If Charlotte flagship revenue comes in at $1.5M instead of $2.2M, the royalty per unit drops to $105,000. Every unit takes longer to matter.
3. The investment years (Y3-Y4) require capital reserves. The aggregate deficit through Y4 could be $600K to $800K before royalties become meaningful. Budget this explicitly in the VAULT capital plan. This money is not lost. It is sunk into a system that generates $3M to $5M in Y7.
4. International upfront fees are lumpy. A $1.5M master franchise fee closing in one fiscal year distorts the annual EBITDA significantly. Do not plan on timing these to hit specific years. They close when they close.
5. Team costs are largely fixed once built. The franchisor overhead base of $700K to $1M/year does not scale proportionally with units. That is the operating leverage of the model. Every unit added above the break-even threshold flows through at roughly 60 to 70 cents per royalty dollar.
WHAT TAJ SHOULD BE READING QUARTERLY
- Total units open vs. pipeline target
- Average franchisee unit volume (compared to Item 19 FPR)
- Royalty collection rate (late or missed payments = franchisee financial stress = early warning)
- Franchisee satisfaction index (informal or via franchise advisory council)
- Franchise sales pipeline: leads, qualified prospects, FDDs delivered, contracts signed
- International master franchise pipeline: markets in active discussion, term sheets out
Last updated: 2026-07-28 Owner: Tajanay Hines / Emmett Walker (CSO) These projections are internal planning documents and are not FDD-compliant representations.