FDD Talk 2019: Merry Maids Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Merry Maids franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Merry Maids franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Merry Maids franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Merry Maids outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Merry Maids’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• average, median, high, and low annual gross sales during the 3-year period 2016-2018, by quartile, for all Ownership Groups who reported sales for at least 3 years

Section I – Background Information

14 Things You Need to Know About the Merry Maids Franchise

Now Offering Home Organization Services Nationwide

1.  Near the end of May 2019, Merry Maids announced that it would be launching home organizational services this fall. The Memphis-based company is redefining new customer service industry standards by helping customers streamline their daily lives so they can spend more time doing the things they love.

2.  Hagan Kappler, president of Merry Maids, said, “We spend 6 million hours every year in our customers’ homes, bringing serenity to their lives through our cleaning services. Our customers are now asking for more ideas to help declutter and simplify their homes, so being able to offer organizing services is a natural step and we have a proven, customized process to meet each customer’s unique needs when it comes to simplifying spaces.”

3.  Some of the new organizational services include:

• Decluttering and help deciding what to keep and what to donate or recycle;
• Organizing spaces for comfort and use;
• Creating easy and effective labeling systems;
• Identifying reputable donation or recycling services.

4.  ServiceMaster, parent company of Merry Maids, hopes this new offering will inspire franchisees to tap into the company’s established customer base in order to grow into adjacent services. “We are committed to investing in these incredible opportunities because our mission is to create cleaner, safer and healthier environments for our customers wherever they are – at home, work or play,” said Nik Varty, CEO of ServiceMaster.

Promotes Spring Cleaning Services

5.  At the beginning of May 2019, Merry Maids happily kicked off its favorite time of the year, spring cleaning. According to Hagan Kappler, president of Merry Maids, “Our teams book up weeks in advance during the annual spring cleaning season, so if you’re among the many who could use some help with these household chores, let us help take the chore out of coming home.”

6.  Kappler added, “Whether you need help simply tidying your home or you require a deep, thorough clean, our Merry Maids teams are ready to help. We think of ourselves as more than a cleaning company. Our team members provide their clients with peace of mind. We give customers back their time – time to enjoy a beautiful spring day, time to relax a little more on the weekend, and time to spend with their families.”

7.  Merry Maids also listed the top reasons why people should consider calling in the pros this year:

• Deep Cleaning Done Right: Merry Maids teams have a system for ensuring a customer’s home gets, and stays, in tip-top shape for as long as possible.

• Hosting Made Easy: May is one of the busiest times of the year, besides the holidays, for hosting parties or family gatherings. Merry Maids is here to help give kitchens the extra cleaning they need for this busy season. Merry Maids expertly cleans everything from your cooktop and cabinets, to your oven and refrigerator. All customers have to do is specify which areas of their home need the most attention and the job is done.

• Finding a Place for Everything: Most Merry Maids teams organize a home as they go, but are also happy to get started with organization from the beginning. (Since this press release, Merry Maids has officially launched home organization services).

Parent Company Names New President of ServiceMaster Brands

8.  In mid-May 2019, ServiceMaster, parent company of Merry Maids and several other home service brands, announced that Aster Angagaw had joined the company as president of ServiceMaster Brands.

9.  Nik Varty, CEO of ServiceMaster, said, “A few months ago, we launched a bold strategy revamping our Franchise Services Group into ServiceMaster Brands by redirecting our focus in creating two strong differentiated businesses in the restoration and cleaning space. Today we are bringing on board a strong leader to spearhead the execution of that strategy.”

10.  Varty added, “Aster brings decades of strong leadership experience in highly reputable, global service companies. She understands what it takes to deliver exceptional customer experiences and I am confident she will energize our network and unlock additional value in our important cleaning and restoration businesses. She is the perfect fit to execute on our strategy for growth in ServiceMaster Brands as we focus our attention on high-value verticals, including healthcare cleaning and disinfection, commercial restoration, and national accounts.”

11.  Angagaw joins ServiceMaster from Sodexo, a global integrated food and facilities management company, where she was chief executive officer of the North American Healthcare division, a business with more than 6,000 employees across the U.S. and Canada, and member of the company’s Healthcare Global Executive Committee. During her 18-year career with Sodexo, Angagaw delivered a successful record of accomplishment in operations, global sales and business development, organizational transformation, and customer retention. Angagaw was also an active member of the company’s African-American Leadership Forum and Women’s Network Group.

Company History

12.  Merry Maids was founded in 1979 by Dallen Peterson in Omaha, Nebraska. Peterson worked with his family to create the Merry Maids system and develop a franchising program, which was launched in 1980. After growing for nearly a decade, Merry Maids was acquired by ServiceMaster from the Petersons in 1988.

13.  All ServiceMaster companies specialize in home services. Merry Maids’ sister brands include: Amerispec, Furniture Medic, Terminix, ServiceMaster Restore, and ServiceMaster Clean. Today, Merry Maids has locations across the United States, Canada, and the United Kingdom.

Entrepreneur’s Franchise 500

14. Merry Maids ranked No. 38 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Merry Maids franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Merry Maids’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  886
• Outlets at the End of the Year:  989
• Net Change:  +103

2017

• Outlets at the Start of the Year:  989
• Outlets at the End of the Year:  998
• Net Change:  +9

2018

• Outlets at the Start of the Year:  998
• Outlets at the End of the Year:  1,010
• Net Change:  +12

Company-Owned

2016

• Outlets at the Start of the Year:  103
• Outlets at the End of the Year:  3
• Net Change:  -100

2017

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

2018

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• The following financial performance representation consists of historical data for Merry Maids franchised branches who have reported revenue for residential cleaning services in the United States of America for at least 3 years. The franchisor has not included data from similar franchises in Canada or any other foreign country or territory.

• Many franchisees have more than one franchise agreement related to their business. Franchisees with multiple franchises typically do not have separate operations for each franchise agreement. Therefore, the franchisor has aggregated data based on “Ownership Groups” to more accurately reflect a franchisee’s business.

• The tables below include 315 Ownership Groups. Of the 315 Ownership Groups, 296 Ownership Groups have revenue for Residential Cleaning Services in 2016, 2017, and 2018. There were 2 Ownership Groups that ceased operations and did not report revenue in 2018 and 17 Ownership Groups that were too new and reported revenue for 2 years or less during this 3-year period.

• The franchisor compiled this information from the reported gross sales from franchisees during the last three years, January 2016 through December 2018.

• During this period, the franchisor divested all except one of its company-owned branch territories to franchised businesses. Revenue from company-owned branches during this 3-year period was not included. Revenue from franchised outlets that were formerly company-owned branches was included in the reported franchisee gross sales for this 3-year period.

• The franchisor has not independently verified the information received from franchisees. These financial statements were not prepared in accordance with Generally Accepted Accounting Principles (GAAP), but are believed to be reliable.

Average Annual Gross Sales During the 3-Year Period 2016-2018, by Quartile, for All Ownership Groups Who Reported Sales for at Least 3 Calendar Years

First Quartile