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

• Section I – Background information on the Pool Scouts franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Pool Scouts 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 Pool Scouts franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Pool Scouts 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 Pool Scouts’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• gross revenues, cost of goods sold (technician labor, material costs), gross profit, operating expenses (royalty, marketing fee, advertising – consumer, automobile expense, fuel, credit card fees, insurance expense, field supplies and safety gear, business licenses and permits, office supplies, professional fees, other expenses, computer, internet, telephone, integrated business system fees, rent, wages and benefits), and operating cash flow before owner’s compensation or designated office manager for the first half of 2018 versus the first half of 2019 for Pool Scouts’ Local Operations affiliate that provides service to the south Hampton Roads region of Virginia (predominantly the cities of Chesapeake, Norfolk, and Virginia Beach)

• 2018 average, median, high, and low revenue, number of customers, and number of services for the 16 franchised Pool Scouts locations that have been operating more than 6 months, segmented by those that have been opened more than 1 year and those that have been open from 6 to 12 months

Section I – Background Information

18 Things You Need to Know About the Pool Scouts Franchise

Enters New Charitable Partnership with the USA Swimming Foundation

1.  At the beginning of 2019, Pool Scouts announced a new corporate charitable partnership with the USA Swimming Foundation, the philanthropic arm of USA Swimming. The announcement was made via video conference during the annual Pool Scouts convention with Olympic silver medalist and USA Swimming Foundation Ambassador, Elizabeth Beisel. Established in 2004, the USA Swimming Foundation works to strengthen the sport by saving lives and building champions – in the pool and in life.

2.  Michael Wagner, president of Pool Scouts, said, “Our concept continues to grow, with 43 territories sold in our first two years. As we continue to enter new markets nationwide, it’s very important for us to ensure that our staff and franchisees are properly trained on pool cleaning and maintenance as they work locally to protect the communities we serve. This also includes sharing best practices and educating each of our customers. National Water Safety Month is a reminder of the importance around water safety education, but something we continue to highlight year-round.”

3.  For one week during National Water Safety Month in May, Pool Scouts planned to dedicate 5% of sales across 90% of locations to the USA Swimming Foundation, in an effort to help fund swim lessons for children who may not otherwise have access.

4.  Debbie Hesse, executive director of the USA Swimming Foundation, shared her appreciation: “We are thrilled to team up with Pool Scouts, which shares our vision and dedication to providing water safety education to swimmers across the country. Having these additional supporters out in the community, spreading information and gathering funds, is critical to making a lasting difference.”

5.  One of the Pool Scouts locations heavily involved in donation efforts in May was Pool Scouts of Memphis, Tennessee. Husband-and-wife duo Jake and Kinsey McCutchen are pool owners in their own right, as well as the parents of three young children. They, along with many other Pool Scouts franchisees, planned to connect with residents in their local community throughout the month to provide educational programming, share tips and advice through their social media channels, and ensure swimmers in the area understand the importance of being prepared prior to entering the water.

6.  “As parents of three young boys, in addition to being pool owners ourselves, water safety is incredibly important to us,” said Kinsey McCutchen. “The USA Swimming Foundation is planning to host events in Memphis at the end of this month and we plan to work closely with them surrounding these initiatives. In addition, we are working in conjunction with a local child water safety instructor to develop educational videos and tips for parents and swimmers.”

7.  Gwen Marsh, director of marketing for Pool Scouts, shared that there are some very simple tips everyone should be aware of surrounding water safety. “Enroll your child in formal swimming lessons at an early age,” said Marsh. “Formal swimming classes can decrease the risk of drowning for children 1-4 by as much as 88%. In terms of the pool area itself, be sure to secure it by installing structures such as fences and self-closing and latching gates that open away from the pool. Each state has different regulations, so be sure to research proper measures in order to remain compliant with state safety laws.”

Doubles Footprint in Northern Dallas and Eyes Houston, Austin, and San Antonio for Additional Growth

8.  In late March 2019, Pool Scouts said that one area in particular in which the brand has seen quite a bit of recent growth was Northern Dallas. The Northern Dallas market includes Plano/Allen, Frisco, McKinney, and Richardson, Texas – each with a sizeable population of residents who utilize pool cleaning and maintenance services. Thanks to this demand, Pool Scouts has doubled its overall footprint in the market since the start of 2018 and is looking to continue its expansion throughout Texas.

9.  At the time of the press release, Pool Scouts had franchisees in Northern Dallas, Houston, and Austin, and was looking to expand its footprint in those markets, in addition to developing in areas such as San Antonio, Corpus Christi, and El Paso.

10.  John Breton, the Pool Scouts franchisee who opened in McKinney and Prosper, Texas in May of 2018, grew up in a family of entrepreneurs. His grandfather worked in textiles, designing patterns for clothes, and his father, Maurice Breton, is the founder of Comfort One Shoes, a footwear company that now has 17 retail locations and more than 120 employees. After a successful career in marketing, working on projects for TV and radio stations, tech startup companies, Super Bowl commercials, and Disney, Breton is now continuing the family’s entrepreneurial spirit by running his own Pool Scouts in the Northern Dallas area.

11.  According to Breton, “I didn’t always envision working in the pool industry. I grew up with a pool as a kid, and loved having all the family reunions and graduation parties at our house. The pool was always the home base; because of this, I wanted to start a business I felt would help bring families together. Ensuring families have a fun and safe pool environment to enjoy those moments is what drives me and my team.”

12.  Breton knew that Pool Scouts was a great fit for the area when he first decided to join the brand, and now has his sights set on expanding in the Plano/Richardson area this spring. This new territory will bring the acquisition of another pool service truck, three new technicians, and a director of operations, Elsie Porter, who is a customer service expert, formerly with Chick-fil-A and Ritz Carlton.

13.  “10 months out of the year, Texans can enjoy their backyard, barbecues and pools, so it’s the perfect state to start a Pool Scouts franchise,” said Breton. “Outdoor living spaces are huge here, and it’s rewarding to be able to make sure families can enjoy that time together with peace of mind that their pool is clean and safe to use.”

13.  Breton isn’t the only one who felt the Northern Dallas area was a great fit for the business. Mike Blake spent four years as an independent business owner of a pool cleaning and maintenance company before deciding to tap into the support of a franchise system with Pool Scouts. Blake purchased three territories including Frisco, which opened in March of 2018, and North Plano/Allen.

14.  According to Blake, “I grew my pool cleaning and maintenance business, Sapphire Pools, to the best of my abilities, but I wanted to scale the business and I wasn’t sure how to do that. That’s when I started looking for opportunities in franchising and when I discovered Pool Scouts, I knew they’d be the right partner for me.”

15.  Timothy Holadia, director of franchise development for Pool Scouts, added, “It’s an exciting time for Pool Scouts’ growth, and Texas is one of our key targets for expansion, with 470,000 households with pools throughout the state. We plan to expand to another 15 territories in Texas in the next two years, with 16 territories still available in Dallas, another 14 in Houston and two in Austin. Each territory could bring anywhere from five to seven jobs apiece, meaning 170-plus new jobs in those three cities alone. Residents of Texas are hardworking and dedicated to great customer service, and the state as a whole is very business-friendly. We are excited to see what this year has in store for Pool Scouts.”

Company History

16.  Pool Scouts was founded in January 2016 by parent company Buzz Franchise Brands, which immediately started franchising the Pool Scouts concept. Buzz Franchise Brands as well as Pool Scouts is based out of Virginia Beach, Virginia. Pool Scouts specializes in pool cleaning, maintenance, and minor repair services.

17.  Over the past few years, Pool Scouts has been growing steadily and there are now locations across nine states. Buzz Franchise Brands is also the parent company of Home Clean Heroes and British Swim School.

Entrepreneur’s Franchise 500

18.  Pool Scouts did not rank on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Pool Scouts 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 Pool Scouts’ 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:  0
• Outlets at the End of the Year:  2
• Net Change:  +2

2017

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  5
• Net Change:  +3

2018

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  18
• Net Change:  +13

Company-Owned

2016

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  2
• Net Change:  +1

2017

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2018

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  3
• Net Change:  +1

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

• Pool Scouts began offering franchises on February 23, 2016. As of December 31, 2018, Pool Scouts had 16 Franchised Business owners operating 18 franchised locations. 16 of the 18 open locations had been in operation more than six months as of December 31, 2018. Detailed information for these 16 locations is provided below.

• Pool Scouts considers the pool service and maintenance industry (“Industry”) to be segmented into seasonal and year-round business models. Pool Scouts believes the Industry to be predominantly seasonal in the northern two-thirds of the United States (“Seasonal Business”).

• The locations operated by Pool Scouts’ Local Operations affiliate are Seasonal Businesses, running predominantly from mid-March to mid-November.

• Pool Scouts believes the Industry to be predominantly year-round in the remaining warmer climate states (“Year-Round Business”).

• In the Seasonal Business market, Pool Scouts segments the services provided into three distinct categories: pool openings, pool service/management, and pool closings.

• The Year-Round Business in the warmer climate states consists primarily of pool service/maintenance visits, with a relatively few pool openings or closings.

• Note that this segmentation of the Industry does not include repair services (beyond minor repairs), which are present in both business models (Seasonal Business and Year-Round Business).

• Pool Scouts expects franchisees initially to use third-party service providers to perform such repair services. Over time, Pool Scouts expects that most or all franchisees will obtain the appropriate technical training, experience, and any certification or licensure (as required by applicable state law), to offer repair services directly to their customers.

Part 1 – Pool Scouts Local Operations, LLC (“Local Operations”)

• Pool Scouts’ Local Operations affiliate commenced business operations in January 2016, following the acquisition of the service arm of a Virginia Beach, Virginia-based pool construction firm (“Acquisition”). The Acquisition consisted of 31 service customers, 2 service vehicles, and an experienced pool service professional.

• Upon launch of business operations, Pool Scouts provided service to the south Hampton Roads region of Virginia (predominantly the cities of Chesapeake, Norfolk, and Virginia Beach).

• Though Pool Scouts serviced the entire region, its focus in its first two years was primarily on Virginia Beach and Norfolk, in the territories known as VA-001 (consisting of 7,197 Targeted Households across 8 ZIP Codes) and VA-002 (consisting of estimated 7,179 Targeted Households across 22 ZIP Codes).

• Recognizing that its geographic area had multiple established competitors, Pool Scouts went to market with an aggressive advertising program in its first two years as it sought to establish its brand and to scale the business rapidly.

• The results of this effort can be seen in the growth of customers, services, and revenue over the timeframe 2016-2018, as illustrated in the tables below.

• In 2018, Pool Scouts officially launched its third territory, VA-003, consisting of 6,248 Targeted Households across 13 ZIP codes predominantly in the city of Chesapeake.

A. Detailed Income Statement, First 6 Months of 2018 vs. First Six Months of 2019

• A year-over-year profit and loss comparison for the first half of 2018 versus the first half of 2019 provides the most recent representation of the current performance of Local Operations available as of the effective date of this franchise offering.

• This table illustrates solid year-over-year revenue growth but more importantly it demonstrates the significant Gross Margin and Net Profit Margin improvements realized through the application of refined pricing for both service and chemical sales, efficient routing, the incorporation of onsite, charged estimates for repair work, and stronger emphasis on business efficiencies.

2018