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The Magic Number: What are AUVs and What Do They Mean for Franchisees?

There are a lot of numbers in franchising. But the one that every prospect is likely to check before anything else? Average Unit Volume.

When evaluating a franchise concept, there are a number of different factors for franchisees to consider. For example, does the brand provide strong support? What is the culture like? Is there room for business to grow? All of these are important questions, but one number that stands out among the rest on that lengthy Franchise Disclosure Document (FDD) is the Average Unit Volume. 

Average Unit Volume (AUV) refers to the current average annual sales that the brand is recording across all operating locations. 

Although the significance of the AUV depends on several factors, such as year-over-year growth, franchise fees and overhead, it provides a general understanding of how profitable a franchise investment may be. Some franchisors will report this number directly on their franchise development website, while for others, it can only be found by consulting the FDD. 

Why Franchisees Should Pay Attention to the AUV

According to Dan Gunderson, Senior Franchising Director at Express Employment, which has an impressive AUV of $6.1 million, this number allows franchisees to see the potential scalability of their investment. 

“The AUV shows franchisees what they can really do financially in the business,” he said. “At our initial investment level, $6.1 million is very exciting.” 

What is considered a “good” AUV will also differ across the board. That’s why it is important to pay attention to the initial investment and other fees. If you’re investing over a million dollars to start, a higher AUV does not carry the same weight as it would when investing a couple hundred thousand. 

It is also important to pay attention to whether most franchisees in a system are single-unit or multi-unit. If you’re looking to have just one location, but most of a brand’s owners have multiple, it may not be a great fit. 

“Most owners in our system can get to the income level they desire, build the wealth they want and have the lifestyle they want by owning just one territory,” noted Gunderson. “We do have multi-unit owners in our system, but the majority of our owners own just one territory and the reason why is because of the scalability of Express.” 

What a Strong AUV Says About a Franchise

One of the most important things an AUV can show potential investors is how proven the franchise model has been over time. 

“We have a 40-year history with Express,” said Gunderson. “And we wouldn't be able to get to these kinds of average numbers without having a proven system that has withstood the test of time, especially in staffing as we've gone through different economic periods.”

Gunderson added that it can also show how strong a support system is.

One of the best ways to confirm a brand’s AUV strength is by comparing it to a direct competitor and determining which numbers are most in line with what you are looking for in a business. Overall, AUVs say a lot about the franchise system as a whole and all of the franchisees who are a part of it. 

“We're proud of our AUV because of our franchisees,” said Gunderson. “They're the ones that are doing it on a daily basis.”