In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:
Section I – Estimated initial investment (franchise costs) for a Mosquito Shield franchise, based on Item 7 of the company’s 2022 FDD
Section II – Initial franchise fee, royalty fee, and marketing fee for a Mosquito Shield franchise, based on Items 5 and 6 of the company’s 2022 FDD
Section III – Number of franchised and company-owned Mosquito Shield outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD
Section IV – News updates on the Mosquito Shield franchise opportunity
Section V – Presentation and analysis of Mosquito Shield’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:
- 2021 actual income, cost of goods sold, operating expenses, and gross revenue less disclosed expenses for one affiliate-owned Mosquito Shield business
- 2021 revenue and number of customers by service type (mosquito only, tick only, mosquito and tick, event spray, total) for one affiliate-owned Mosquito Shield business
- 2021 average, median, highest, and lowest gross sales for Mosquito Shield’s affiliate and 36 franchised outlets that have all been in operation for more than one year
- 2021 monthly installments during season, recurring customers year-over-year, average revenue per customer, pre-pay dollars and percentage for Mosquito Shield’s affiliate and franchised outlets
Section VI – Key ratios, comparables, computations, and analyses for the Mosquito Shield franchise opportunity (exclusive content for Platinum subscribers)
Section I – Mosquito Shield Franchise Costs
- Mosquito Shield franchise costs, based on Item 7 of the company’s 2022 FDD:
- Initial Franchise Fee: $49,500
- Customized Vehicle: $1,950 to $11,360
- Lease and Utility Deposits: $0 to $1,500
- Storage-Related Expenses: $0 to $1,200
- Initial Inventory: $800 to $1,600
- Office Equipment and Supplies: $500 to $1,500
- Business Operations Platforms Set-Up: $1,500
- Business Management Software: $250
- Local Advertising Expenditure: $35,000 to $50,000
- Training Expenses: $775 to $2,700
- Insurance Premiums: $675 to $900
- Professional Fees: $350 to $1,200
- Licenses and Permits: $50 to $100
- Additional Funds for 3 Months: $1,500 to $5,000
- Total Mosquito Shield Franchise Costs: $92,850 to $128,310
Section II – Mosquito Shield’s Initial Franchise Fee, Royalty Fee, and Marketing Fee
- Mosquito Shield’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:
- Royalty: 7% of actual Gross Sales or Minimum Gross Sales, whichever is greater. The required Minimum Gross Sales for a single territory ranges from $45,000 during the first 12-month period to $283,500 during the fifth (and each subsequent) 12-month period.
- Brand Fund Fee: 2% of Gross Sales
- Advertising Cooperative: currently $0. Maximum of $25,000 per calendar year, unless a greater amount is approved by two-thirds of Cooperative members.
Section III – Number of Franchised and Company-Owned Mosquito Shield Outlets
- Outlets at the Start of the Year: 57
- Outlets at the End of the Year: 53
- Net Change: -4
- Outlets at the Start of the Year: 53
- Outlets at the End of the Year: 50
- Net Change: -3
- Outlets at the Start of the Year: 50
- Outlets at the End of the Year: 87
- Net Change: +37
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 2
- Net Change: 0
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 1
- Net Change: -1
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 2
- Net Change: +1
Section IV – News Updates on the Mosquito Shield Franchise
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Mosquito Shield Franchise (Item 19, 2022 FDD)
- This Item contains a historic financial performance representation of Mosquito Shield’s affiliate-owned and franchised outlets in operation on December 31, 2021, Mosquito Shield’s fiscal year end.
Part 1 – Affiliate Performance
- On December 31, 2021, Mosquito Shield had 2 affiliate-owned outlets in operation. Mosquito Shield has excluded the performance of 1 affiliate-owned outlet because it was not actively managed and was not conforming to the requirements of Mosquito Shield’s system.
- The remaining affiliate-owned outlet operates 1 territory in substantially the same manner as Mosquito Shield’s franchised outlets; however, Mosquito Shield’s affiliate-owned outlet also acts as the training center for new franchisees and a research and development center for Mosquito Shield’s proprietary Mosquito Shield Protection Blend, other manufactured products, new equipment, and application techniques. Mosquito Shield’s affiliate-owned outlet also tests new marketing materials and channels before release system-wide.
A. Income Statement for Nicorb – Mosquito Shield (January to December 2021)
Income Mosquito Shield
- Total Sales: $874,254.00
- Sales Discounts: -$27,231.00
- Total Income: $847,023 (100.00%)
Cost of Goods Sold
- Mosquito Materials: $77,926.12 (9.2%)
- Operations Payroll: $135,090.00 (15.9%)
- Total Cost of Goods Sold: $213,016.12 (27.0%)
Gross Profit: $634,006.88 (72.9%)
- Vehicle Expense: $25,985.00 (3.07%)
- Brand Fund: $8,470.00 (1.00%)
- Royalty Expense: $59,291.00 (7.00%)
- Small Tools and Equipment: $4,579.00 (0.54%)
- Office: $859.90 (0.10%)
- Software Expense: $7,213.14 (0.85%)
- Insurance: $18,312.00 (2.16%)
- Rent and Utilities Expense: $33,600.00 (3.97%)
- Sales Center Expense: $7,200.00 (0.85%)
- Equipment Repair: $780.23 (0.09%)
- Repairs and Maintenance: $6,462.00 (0.76%)
- Licenses and Permits: $593.00 (0.07%)
- Uniforms Expense: $3,114.00 (0.37%)
- Cellphone Expense: $3,370.00 (0.40%)
- Marketing and Advertising: $45,609.00 (5.38%)
- Merchant Processing and Payroll Taxes: $60,985.66 (7.20%)
- Total Expenses: $286,423.93 (33.82%)
Revenue Less Disclosed Expenses: $347,582.95 (41.04%)
- Total Sales means the revenue billed for Mosquito and Tick control, Mosquito only, Tick only, and Event Sprays (a one-time service).
- Material Costs includes the actual cost of all control products required to complete Mosquito, Tick, and Event sprays. In return for testing, the Affiliate received a discount on their bulk order rate for Mosquito Shield’s proprietary Mosquito Protection Blend, an average savings of 2% on total material cost.
- Operations Payroll includes all costs (wages) for four full-time technicians that performed the services. These employees were paid an average wage of $782.45 per week for 25 weeks. Mosquito Shield’s affiliate-owned outlet paid its technicians a weekly based salary plus a per stop rate. This allows the technicians to make more money weekly, while reducing the labor rate for the affiliate. The Operations Payroll figure above is without manager pay and assumes the franchisee is running the day-to-day business.
- The Vehicle Expense represents the cost of the vehicles required for mosquito and tick spraying. This includes fuel and oil, and repair and maintenance. Four vehicles are currently in use.
- Insurance Expense represents the cost for insurance for vehicles, liability, and workers compensation.
- Rent is not an initial expense category for franchisees. A facility could be required as business ramps and is required for Mosquito Shield’s affiliate-owned outlet, which has four service vehicles.
B. 2021 Revenue by Service Type
- Customers: 642
- Revenue: $364,234.99
- Customers: 35
- Revenue: $13,846.50
Mosquito and Tick
- Customers: 584
- Revenue: $498,893.11
- Customers: 23
- Revenue: $3,329.99
- Customers: 1,284
- Revenue: $880,304.59
- Mosquito customers are Full Season Program customers and not one-time visits.
- Tick customers are customers that only want tick control.
- Mosquito and Tick customers are customers that have both mosquito and tick control for the full season.
- Event Sprays means a one-time spray for parties, cookouts, graduations, etc.
Part 2 – Franchisee Performance
- On December 31, 2021, Mosquito Shield had a total of 92 franchised outlets in operation.
- The first table below contains System-wide Gross Sales data for Mosquito Shield’s affiliate and 36 franchised outlets that have all been in operation for more than one year.
- The second table below contains System-wide Gross Sales data for the 42 franchised outlets that have been in operation for less than one year.
- Mosquito Shield has excluded the Gross Sales of 13 non-conforming franchisees, who did not operate in compliance with their franchise agreements and the Mosquito Shield System. Mosquito Shield has also excluded the Gross Sales of 48 of its franchised outlets because they did not operate for a full year.
- Some of Mosquito Shield’s franchisees operate multiple franchised outlets, each pursuant to a separate franchise agreement. Each multi-unit franchisee, however, provides Mosquito Shield with a combined financial report that consolidates the Gross Sales of all of their franchised outlets.
- “Gross Sales” means all revenue derived from the operation of the Mosquito Shield Business, less refunds, adjustments, discounts, credits, and allowances.
A. 2021 Gross Sales System-Wide Operating for 12+ Months
36 Franchised Outlets and 1 Affiliate-Owned Outlet
- Average Gross Sales: $471,058.70
- Number and Percentage That Met or Exceeded Average: 13 of 37 reporting outlets (35.1%)
- Median Gross Sales: $295,881.40
- Highest Gross Sales: $2,487,136.54
- Lowest Gross Sales: $14,032.82
- Locations that have not been operating for at least 12 months are not included, because their performance can vary so widely, and attempting to produce an average or median will not provide an accurate reflection of performance.
B. Recurring Revenue and Annual Retention Rates
- 2021 Total Customers: 1,284
- Monthly Installments During Season: 848
- Percentage of Customers: 66%
- Recurring Customers Year-Over-Year: 1,089
- Percentage of Customers Returning Year-Over-Year: 88%
- Average Revenue Per Customer: $685.60
- Projected Recurring Revenue Year-Over-Year: $859,601.42
- 2021 Pre-pay Dollars: $270,069.57
- 2021 Pre-pay Percentage: 44%
- 2021 Total Customers: 28,066
- Monthly Installments During Season: 21,371
- Percentage of Customers: 77%
- Recurring Customers Year-Over-Year: 16,021
- Percentage of Customers Returning Year-Over-Year: 84%
- Average Revenue Per Customer: $691.68
- Projected Recurring Revenue Year-Over-Year: $18,178,546.23
- 2021 Pre-pay Dollars: $4,075,162.82
- 2021 Pre-pay Percentage: 33%
- Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.