Highlights of Lawn Doctor’s Item 19 Financial Performance Representations (2012 FDD) – Part 3
Table C – Statement of 2010 Gross Profit Margin Results as a Percentage of Gross Sales for 174 of the 211 Strategic Partners That Operated Lawn Doctor Businesses for One Full Year or More as of December 31, 2010
- Table C comprises gross profit information. The franchisor compiled this information from 2010 year-end financial statements submitted by 174 of the 211 Strategic Partners that operated Lawn Doctor businesses for at least one full year as of December 31, 2010.
- The franchisor does not know whether the inclusion of such data, if available, would have a material effect on the gross profit margin percentages.
- The franchisor compiled these Gross Sales and expense figures from the year-end income statements that its Strategic Partners provided. Some Strategic Partners prepare their financial statements using cash basis accounting, and some use accrual basis accounting. Similarly, some Strategic Partners prepare their Statements in accordance with generally accepted accounting principles and some do not.
- Direct Labor Costs include compensation (excluding payroll taxes, medical insurance, and fringe benefits) for employees who perform lawn, tree, and shrub care, and pest control services, and exclude compensation for Strategic Partners and other administrative and office personnel.
- The franchisor obtained the stated Gross Profit Margin percentage by subtracting Material Costs and Direct Labor Costs from Gross Sales.
- The required ongoing Royalty Fee is 10% of Net Revenues.
- All Strategic Partners are required to spend at least 10% of its Net Revenues for local marketing and promotion of its Lawn Doctor Business. Some Strategic Partners have elected to spend a greater amount.
- During the normal course of business, Strategic Partners will have other expenses that will be taken out of Gross Profit dollars. This will include: fuel, vehicle and equipment maintenance, equipment leases, payroll taxes, business and vehicle insurance, administrative expenses.