This article is based on a video originally recorded on Vetted Biz Youtube Channel.
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.
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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 the 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.
Estimated Initial Investment. Your Estimated Initial Investment Franchise Agreement
| Type of expediture | Amount | Method of payment | When due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee | $30,000—$30,000 | Check or wire transfer | Upon signing the franchise agreement | Us |
| Rent (one month) | $4,000—$10,000 | Check | Upon signing lease | Landlord |
| Lease Security Deposit | $4,000—$10,000 | Check | Upon signing lease | Landlord |
| Utilities | $300—$2,000 | Check, debit, and/or credit | Upon ordering service | Utility providers |
| Leasehold Improvements | $90,000—$190,000 | Check, debit, and/or credit | As incurred or when billed | Contractors |
| Market Introduction Program | $5,000 to $10,000 | Check, debit, and/or credit | As incurred or when billed | Vendors |
| Golf Simulators | $330,000 to $480,000 | Wire transfer or bank check | Upon ordering | X GOLF America, Inc. |
| Furniture, Fixtures, Other Equipment | $44,000 to $75,000 | Check, debit, and/or credit | As incurred | Vendors |
| Computer Systems | $1,000 to $3,000 | Check, debit, and/or credit | As incurred | Vendors |
| Insurance (3 months) | $3,000 to $5,000 | Check | Upon Purchase | Insurance company |
| $5,000 to $10,000 | Check, debit, and/or credit | Upon ordering | Approved suppliers and vendors |
| Office Expenses | $1,000 to $2,000 | Check, debit, and/or credit | As incurred | Vendors |
| Inventory | $5,000 to $7,500 | Check, debit, and/or credit | Upon ordering | Approved suppliers and vendors |
| Licenses and Permits | $1,500 to $40,000 | Check | Upon application | Government |
| Dues and Subscriptions | $400—$1,000 | Check, debit, and/or credit | As incurred or when billed | Vendors, trade organizations |
| Professional Fees (lawyer, accountant, etc.) | $1,000—$3,000 | Check, debit, and/or credit | As incurred or when billed | Professional service firms |
| Travel, lodging and meals for initial training | $2,000—$7,500 | Check, debit, and/or credit | As incurred | Airlines, hotels, and restaurants |
| Additional funds (for first 3 months) | $20,00 to $30,000 | Varies | As incurred | Employees, suppliers, utilities |
| $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
| Range Low | Range High | Median | Mean | # (%) Above Mean | |
|---|---|---|---|---|---|
Year Opened | 2017 | 2018 | 2018 | 2018 | 4 (67%) |
| Total Income | $408,600 | $709,153 | $502,244 | $522,530 | 2 (33%) |
| Income from Simulators | 67% | 79% | 71% | 72% | 2 (33%) |
| Income from Sale of Goods | 21% | 33% | 29% | 28% | 4 (67%) |
| Cost of Goods Sold | $38,815 | $72,787 | $49,445 | $53,644 | 2 (33%) |
| Gross Profit | $369,397 | $636,366 | $450,979 | $468,886 | 1 (17%) |
Expenses | |||||
| Advertising & Marketing | $16,456 | $22,670 | $19,600 | $19,583 | $3 (50%) |
| General & Administrative | $5,840 | $17,482 | $7,875 | $9,826 | 2 (33%) |
| Insurance | $8,434 | $13,746 | $11,885 | $11,362 | 4 (67%) |
| Legal & Professional | $— | $8,457 | $3,393 | $3,903 | 3 (50%) |
| Licenses & Permits | $1,830 | $11,548 | $3,473 | $5,018 | 2 (33%) |
| Payment Authorization Fees | $9,767 | $18,693 | $12,226 | $13,233 | 2 (33%) |
| Payroll Expenses | $78,276 | $153,952 | $121,349 | $118,220 | 3 (50%) |
| Rent & Lease | $77,297 | $124,281 | $114,758 | $107,292 | 4 (67%) |
| Repairs, Maintenance, Supplies | $7,433 | $19,481 | $13,820 | $13,765 | 3 (50%) |
| Royalty Fees | $24,516 | $42,549 | $30,135 | $31,352 | 2 (33%) |
| Travel | $— | $5,125 | $1,061 | $1,911 | 2 (33%) |
| Utilities | $13,902 | $18,829 | $17,166 | $16,508 | 4 (67%) |
| $68,338 | $266,853 | $89,682 | $116,914 | 2 (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 Low | Range High | Median | Mean | # (%) Above Mean |
|---|---|---|---|---|---|
Year Opened | 2017 | 2019 | 2019 | 2019 | 8 (50%) |
| Location Size (sq. ft.) | 4,639 | 7,200 | 5,560 | 5,713 | 7 (44%) |
| Number of Simulators | 6 | 7 | 6 | 6 | 3 (19%) |
| Total Rent incl. CAM (NNN) (per sq. ft.) | $15.50 | $28.60 | $21.95 | $21.77 | 9 (56%) |
| Total Cost of Buildout | $542,583 | $952,250 | $698,144 | $713,705 | 8 (50%) |
| Tenant Improvement Allowance | $— | $284,000 | $96,189 | $112,861 | 7 (44%) |
| Net Buildout Costs | $427,583 | $751,875 | $615,728 | $600,844 | 8 (50%) |
| Total Income | $228,168 | $668,959 | $352,988 | $405,168 | 7 (44%) |
| Income from Simulators | 65% | 78% | 72% | 72% | 7 (44%) |
| Income from Goods | 22% | 35% | 28% | 28% | 7 (44%) |
| Cost of Sales | $19,469 | $104,269 | $41,157 | $50,927 | 7 (44%) |
| Gross Profit | $174,065 | $567,016 | $323,103 | $354,241 | 7 (44%) |
Expenses | |||||
| Advertising & Marketing | $3,191 | $47,113 | $21,158 | $22,003 | 8 (50%) |
| General & Administrative | $1,447 | $31,414 | $ 5,741 | $7,526 | 5 (31%) |
| Insurance | $561 | $26,288 | $9,445 | $10,667 | 5 (31%) |
| Legal & Professional | $500 | $12,445 | $3,137 | $4,017 | 6 (38%) |
| Licenses & Permits | $531 | $11,908 | $1,542 | $2,259 | 3 (19%) |
| Payment Autdorization Fees | $2,597 | $16,857 | $8,901 | $9,866 | 5 (31%) |
| Payroll Expenses | $62,202 | $250,742 | $96,898 | $112,082 | 6 (38%) |
| Rent & Lease | $59,857 | $130,020 | $108,961 | $108,113 | 8 (50%) |
| Repairs, Maintenance, Supplies | $2,851 | $33,163 | $14,969 | $16,054 | 7 (44%) |
| Royalty Fees | $13,690 | $40,138 | $21,179 | $24,310 | 7 (44%) |
| Travel | $— | $3,350 | $206 | $425 | 4 (25%) |
| Utilities | $10,940 | $34,696 | $15,998 | $17,517 | 7 (44%) |
| Operating Profit (EBITDA) | $(159,422) | $191,903 | $26,771 | $19,403 | 9 (56%) |
| $24,800 | $145,976 | $79,401 | $76,083 | 11 (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 STATEMENTS OF INCOME. For the years ended December 31,
| 2020 | 2019 — As restated | 2018 | ||||
|---|---|---|---|---|---|---|
| Amount | Percent of Revenues | Amount | Percent of Revenues | Amount | Percent of Revenues | |
| Revenues | ||||||
| Franchise fee revenue | $90,473 | 15.7% | $112,500 | 27.6% | $110,000 | 45.2% |
| Royalty revenue | $484,009 | 84.3% | $294,550 | 72.4% | $133,394 | 54.8% |
| Total revenues | $574,482 | 100.0% | $407,050 | 100.0% | $243,394 | 100.0% |
| Operating expenses | $356,549 | 62.1% | $296,194 | 72.8% | $188,762 | 77.6% |
| Income before income taxes | $217,933 | 37.9% | $110,856 | 27.2% | $54,632 | 22.4% |
| Income taxes | $61,874 | 10.8% | $31,194 | 7.7% | $15,317 | 6.3% |
| Net income | $156,059 | 27.1% | $79,662 | 19.5% | $39,315 | 16.1% |
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 Franchise Corporation STATEMENTS OF CASH FLOWS. For the years ended December 31,
| 2020 | 2019 — As restated | 2018 | |
|---|---|---|---|
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.
How many X-Golf 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 | 2018 | 9 | 11 | +2 |
| 2019 | 11 | 20 | +9 | |
| 2020 | 20 | 24 | +4 | |
| Company-Owned | 2018 | 0 | 0 | 0 |
| 2019 | 0 | 0 | 0 | |
| 2020 | 0 | 0 | 0 | |
| Total Outlets | 2018 | 9 | 11 | +2 |
| 2019 | 11 | 20 | +9 | |
| 2020 | 20 | 24 | +4 |
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.
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.
