Highlights of Handyman Connection’s Item 19 Financial Performance Representations (2013 FDD) – Part 3

Explanatory Notes on Part 3 – Gross Margin on Service Revenue

This table presents the Percentage Gross Margin on Service Revenue reported to the franchisor by 36 of the 45 U.S. franchisees, plus one corporate store, that had been in operation for more than 12 months as of December 31, 2012 and for whom it received an unaudited Profit and Loss Statement for 2012 (“GM Reporting Businesses”).

This table excludes franchisees that had not been in operation for a full 12 months as of December 31, 2012 and those for whom Gross Margin data was not provided in a timely fashion in response to the franchisor’s request.

The following table presents the high, low, average, and median percentage of Gross Margin on Service Revenue for the 37 GM Reporting Businesses.

Gross Margin is defined as Total Revenue – (Labor Cost + Material Cost) and Percentage Margin is defined as Total Revenue – (Labor Cost + Material Cost) / Total Revenue.

Total Revenue is defined as revenue from labor and materials.

Requests for unaudited Profit and Loss Statements were sent to 44 U.S. franchisees that were open and operating for more than 12 months as of December 31, 2012. The franchisor received 36 unaudited Profit and Loss Statements in response to that request. These Statements have not been independently verified.

The number of GM Reporting Businesses includes one company-owned store.

Part 3 – Gross Margin on Service Revenue

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