Franchise Costs: Detailed Estimates of Merry Maids Franchise Costs (2016 FDD)

Detailed Estimates of Merry Maids Franchise Costs Based on Item 7 (Estimated Initial Investment) of Merry Maids’ 2016 Franchise Disclosure Document

1.  Initial Franchise Fee:  $40,500 to $50,500 for Full-Sized Market; $40,500 for Mid-Sized Market; and $36,500 for Small-Sized Market

• A Full-Sized Market Initial Fee is $40,500, plus a territory fee of $0.50 per each Qualified Household within the territory over 15,000 to 35,000.

• Merry Maids offers discounts off the Initial Fee as follows: a 15% Military Discount and a 10% Minority Discount.

• Merry Maids’ affiliate, SMAC, offers financing to you, with approved credit, for up to 80% of each Initial Franchise Fee charged. The minimum down payment is $8,100 or $10,100 for the Full-Sized Market, $8,100 for the Mid-Sized Market, and $7,300 for the Small-Sized Market which includes any partial payment you may have made to reserve your territory.

• A Small-Sized Market may be offered to a ServiceMaster Clean Small Market Services franchise owner already in that market for a $16,000 Initial Franchise Fee which includes an opening inventory package.

• It is recommended that the franchise owner have a credit line of $15,000 to cover the first 12 months of marketing and customer acquisition.

• If your initial territory includes existing active Merry Maids customers of a franchisor-operated branch, you will be charged a Customer Acquisition Fee of $525 per customer for all Merry Maids customers in your territory determined by the customer list attached to the customer acquisition purchase agreement or, where applicable, an asset purchase agreement.

• This fee may or may not be applicable to you; not all open territories have existing Merry Maids customers. The Customer Acquisition Fee is payable to Merry Maids upon signing the franchise agreement and is nonrefundable. You are required to sign a customer list acquisition agreement for the purchase of the existing active customers.

2.  New Owner Training:  Included in Initial Franchise Fee

• Franchisee or a manager approved by the franchisor must attend the New Owner Training Program within six months of signing the franchise agreement.

• Merry Maids may allow a one-week field training with a mentor office in order to begin operating the Merry Maids franchise business; however, franchisee or manager must also come to the next scheduled New Owner Training Program.

3.  Travel Expenses While Training:  $600 to $1,000

• Merry Maids will provide some meals and the lodging expense incurred for one person while at the New Owner Training Program, a ten-day session in Memphis, Tennessee.

• You will be responsible for travel and personal expenses while training, whether in the scheduled training in Memphis or other training.

3.  Real Estate and Improvements:  $2,000 to $4,000

• If you do not own adequate office space, you must lease an office. Typical locations are light industrial and commercial areas.

• The typical Merry Maids office occupies 450 to 1,800 square feet. The franchisor estimates rent will be between $6,000 and $12,000 per year, depending on factors such as the size of your franchise and the location of the leased premises.

• The range in the table is only for the first three months’ rent, security deposit, and leasehold improvements.

4.  Computer Hardware and Software:  Included in Initial Franchise Fee

• A laptop computer with software is included in your Initial Fee. The first six months software license for 360 Full Application and for remote data back-up is included in your Initial Franchise Fee.

5.  Equipment:  $5,250 to $6,850

• You may need to purchase office furniture, office fixtures, a washer and dryer, and office decorations.

• You will need to purchase a wireless mobile device for pricing. You must bring this device with you to the New Owner Training Program and Sales Training. An iPad is recommended, and it is compatible with the Merry Maids pricing application. Cost of an iPad ranges from $300-$450 used and $500-$900 new.

• Merry Maids will provide you the Merry Maids pricing application for your wireless mobile device (iPad).

6.  Insurance:  $2,400 to $8,400

• Required insurance policies include comprehensive general liability insurance, including product liability coverage, with minimum limits of $500,000 per person and $1,000,000 per occurrence for bodily injury; business automobile liability coverage for owned, leased, hired, and non-owned vehicles, with minimum limits of $500,000 per person/$1,000,000 per occurrence for bodily injury and $100,000 for property damage liability; third party fidelity bond coverage; worker’s compensation, with a $250,000 minimum employee liability; and any other insurance required by the laws of the state in which the franchise is operated.

• Merry Maids strongly recommends care, custody, and control coverage, including coverage for damage to property in your employees’ control or property they are directly working on, with minimum limits of $150,000 per occurrence to adequately protect the operation of the business.

• Merry Maids estimates the cost for all insurance during the first year of operation will be $2,400 to $8,400.

• All insurance must be procured prior to attending New Owner Training or before the commencement of business in transfer situations.

7.  Miscellaneous Opening Costs:  $1,400 to $100,000

• You will incur various miscellaneous costs to open your business. These costs include your business license, security deposits, utilities, an insurance deposit, and incorporation fee (if you incorporate).

• You must also have high speed access to the Internet at your office location. Fees for internet access providers will vary but should be approximately $100 per month.

• You will incur costs of stationery items, pre-printed customer agreement forms, marketing and advertising collateral. Merry Maids estimates the cost for a three-month supply to be approximately $1,000.

8.  Opening Inventory Package:  Included in Initial Franchise Fee

• A complete list of inventory, equipment, cleaning supplies, and similar items, including cleaning equipment and related items, is outlined in Exhibit G to the disclosure document.

• The Opening Inventory Package is subject to change based upon business needs for products, equipment, and supplies.

9.  Shipping and Handling Costs Plus Sales Tax:  $300 to $600

• The shipping and handling costs and sales tax on the Opening Package are not included in the Initial Franchise Fee. The cost varies based upon your location and the suppliers’ locations and local sales taxes if applicable.

• Merry Maids estimates you will pay between $300 and $600.

10.  Advertising (First Three Months):  $5,000 to $6,000

• Your advertising costs will probably include such items as promotional materials, advertisements, and local digital marketing used to generate sales. You may purchase promotional items from Merry Maids, if you choose.

• You must work directly with franchisor-approved vendors for your local digital marketing.

• You will also pay a percentage of your weekly gross sales into a National Ad Fund. The costs shown here do not include National Ad Fund fees nor Yellow Page advertising should you choose to advertise in the YP directories.

11.  Working Capital:  $30,000

• These expenses include payroll costs, additional equipment and supplies that you may choose to purchase, or additional marketing that you may do. This does not include salary expense for the owner(s).

• These figures are estimates, and Merry Maids cannot guarantee that you will not have additional expenses starting your business.

12.  Seminar Attendance Fee:  $1,000

• If this is the purchase of a new license, or a transfer, the Seminar Attendance Fee will be refunded to you if you attend the first National Seminar which occurs after execution of your franchise agreement. If you do not attend this Seminar, you will forfeit this deposit.

• This Seminar Attendance Fee does not apply to an existing franchisee purchasing another territory.

13.  On-Line Marketing Fund:  $2,000

• This amount will be placed in a fund to be used for On-Line Marketing in your territory. Merry Maids will place an additional $1,000 of your Initial Franchise Fee or transfer fee into this fund.

• Merry Maids will assist you in using these funds during the first year of operation of your franchise, at times mutually agreed upon. Any portion of this fund not utilized during your first year of operation may be, at Merry Maids’ sole discretion, applied to offset your accounts with Merry Maids or its affiliates.

• If you are an existing franchisee purchasing another territory, this On-Line Marketing Fund does not apply to you, and Merry Maids is not required to add any money to such a fund for you.

14.  Total Estimated Initial Investment:  $60,450 to $180,350 for Full-Sized Market; $60,450 to $170,350 for Mid-Sized Market; and $56,450 to $166,350 for Small-Sized Market

• Merry Maids based its estimates for expenses on the average costs for the entire Merry Maids system and has relied on its more than 30 years of experience to compile these costs. Your actual costs are likely to vary.

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