Canopy Lawn Care: $742K Affiliate Sales vs. $80K-$215K Franchise Cost

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

Section I – Estimated initial investment (franchise costs) for a Canopy Lawn Care franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Canopy Lawn Care franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Canopy Lawn Care outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the Canopy Lawn Care franchise opportunity

Section V – Presentation and analysis of Canopy Lawn Care’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• total number of customer accounts; average and median revenue per customer account; maximum and minimum customer account revenue during the period from June 1, 2022 to May 30, 2023 for the one affiliate-owned Canopy Lawn Care business that operated for at least 12 months and that operated for the full duration of the reporting period

• revenue, cost of labor, cost of materials, gross profit, disclosed expenses, and revenue less disclosed expenses during the period from June 1, 2022 to May 30, 2023 for the one affiliate-owned Canopy Lawn Care business that operated for at least 12 months and that operated for the full duration of the reporting period

• revenue comparisons for various periods (January to December 2022 vs. June 2022 to May 2023; January to March 2022 vs. January to March 2023; January to May 2022 vs. January to May 2023) for the one affiliate-owned Canopy Lawn Care business that operated for at least 12 months and that operated for the full duration of the reporting period

• recurring revenue percent, sales conversion rate, and customer retention rate during the period from June 1, 2022 to May 30, 2023 for the one affiliate-owned Canopy Lawn Care business that operated for at least 12 months and that operated for the full duration of the reporting period

Section VI – Key ratios, comparables, computations, and analyses for the Canopy Lawn Care franchise opportunity (exclusive content for Platinum subscribers)

Section I – Canopy Lawn Care Franchise Costs

• Canopy Lawn Care franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $49,500
• Grand Opening Marketing Spend:  $5,000 to $50,000
• Service Vehicle Down Payment and Lease Payments:  $4,500 to $80,000
• Rent:  $900 to $1,200
• Construction, Leasehold Improvements, Furniture, and Fixtures:  $0
• Supplies, Uniforms, and Inventory:  $1,000 to $3,000
• Computer Systems:  $1,500 to $2,500
• Insurance Deposits and Premiums:  $900 to $1,800
• Travel and Living Expenses While Training:  $1,000 to $5,000
• Professional Fees and Business Licenses:  $500 to $1,200
• Office Equipment and Supplies:  $500 to $1,000
• Additional Funds – 3 Months:  $15,000 to $20,000
• Total Estimated Canopy Lawn Care Franchise Costs:  $80,300 to $215,200

Section II – Canopy Lawn Care’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Canopy Lawn Care’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  $49,500
• Royalty Fee:  the greater of 8% of Gross Revenue or the required Minimum Royalty (ranging from $500 per month per territory 7-12 months after opening to $3,375 per month per territory 61+ months after opening)
• Brand Fund Contribution:  currently 1% of Gross Revenues. Maximum of 2% of Gross Revenues.

Section III – Number of Franchised and Company-Owned Canopy Lawn Care Outlets

Franchised

2020

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

2021

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

2022

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

Company-Owned

2020

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

2021

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

2022

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

Section IV – News Updates on the Canopy Lawn Care Franchise

• Empower Brands Announces Joint Venture With Canopy Lawn Care

• Canopy Lawn Care, Empower Brands’ Shared Culture Was Key in Establishing Partnership

• Empower Brands Portfolio Expands for 4th Time This Year

• Canopy Lawn Care Did Not Rank on Entrepreneur’s 2024 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Canopy Lawn Care Franchise (Item 19, 2023 FDD)

• Unless otherwise explained below, these financial performance representations disclose historical information for the affiliate-owned Lawn Care Business that operated for at least 12 months and that operated for the full duration of the reporting period of June 1, 2022 to May 30, 2023 (“Reporting Period”).

• These financial performance representations are for the outlet owned and operated by Canopy Lawn Care’s affiliate in Raleigh, NC that also provides services in Charlotte, NC (“Reporting Unit”), which opened in 2016. Canopy Lawn Care did not have any franchisees as of September 30, 2022 or as of May 30, 2023.

• The Reporting Unit included in this financial performance representation offers services that you will not be authorized to offer under the terms of your Franchise Agreement. However, the franchisor has excluded data from those other services from this financial performance representation. The data included below is only for the core service and enhancement services that you will also be authorized to offer.

• The turf care services offered by the Reporting Unit is substantially similar to the Lawn Care Businesses for which Canopy Lawn Care is offering franchises in the disclosure document. The Reporting Unit is not limited by territorial boundaries, and its core business is represented by customer activity concentrated within zip codes that, when aggregated, represent four territories.

Part 1 – Revenue per Account During Reporting Period (June 1, 2022 Through May 30, 2023)

• The following table sets forth the average, median, high, and low account revenue of a customer account of the Reporting Unit during the Reporting Period.

• Total Number of Customer Accounts:  1,226
• Average Revenue per Customer Account:  $727
• Number of Customer Accounts Above Average Revenue:  279
• % of Customer Accounts Above Average:  22.8%
• Median Revenue per Customer Account:  $476
• Maximum Customer Account Revenue:  $19,580
• Minimum Customer Account Revenue:  $228

Part 2 – Revenue Less Disclosed Costs for Reporting Period (June 1, 2022 Through May 30, 2023)

• The following table presents revenues and certain operating expense information for the Reporting Unit for the reporting period June 1, 2022 through May 30, 2023. The table presents the dollar amount for each category and the various categories as a percent of Revenues.

Revenue:  $742,396 (100.0%)

Cost of Goods Sold

• Cost of Materials:  $174,553 (23.5%)
• Cost of Labor:  $175,970 (23.7%)
• Total Cost of Goods Sold:  $350,523 (47.2%)

Gross Profit:  $391,874 (52.8%)

Disclosed Costs

• Advertising and Marketing:  $43,813 (5.9%)
• Vehicle Expenses:  $66,145 (8.9%)
• Equipment Expenses:  $2,963 (0.4%)
• Insurance:  $17,312 (2.3%)
• Mobile Phones and Internet:  $3,801 (0.5%)
• Merchant Services:  $7,069 (1.0%)
• Software Licenses:  $4,897 (0.7%)
• Professional Fees:  $4,800 (0.6%)
• Uniforms and Operating Supplies:  $3,260 (0.4%)

• Royalty:  $59,392 (8.0%)
• Technology Fee:  $14,848 (2.0%)
• Brand Fund Contribution:  $7,424 (1.0%)
• Total Disclosed Expenses:  $235,723 (31.8%)

Revenue Less Disclosed Expenses:  $156,151 (21.0%)

• “Revenue” includes all amounts derived from all products or services sold from or through the Reporting Unit during the Reporting Period, including any sale of products or services made for cash or credit, or partly for cash and partly for credit, net of refunds to customers.

• “Cost of Materials” includes lawn care products, such as fertilizer, herbicides, pesticides, grass seed, soil, etc.

• “Cost of Labor” includes wages and payroll taxes for lawn care technicians.

• “Advertising and Marketing” reflects the amount that the Reporting Unit actually invested in advertising and marketing during the Reporting Period, which was only $43,813. Franchisees will be required to invest the greater of $30,000 or 10% of gross revenues for local marketing.

• “Vehicle Expenses” include fuel, tolls, vehicle lease expenses, vehicle registration, and repairs and maintenance expenses.

• “Equipment Expenses” include equipment rental, replacement, repairs, and maintenance.

• “Insurance Expenses” include commercial policy, workers compensation, and auto policies.

• “Mobile Phones and Internet Expenses” include cell phones and other mobile devices and internet services.

• “Software Licenses” include telephony (voice-over-IP subscription), GPS vehicle tracking, accounting and payroll (QuickBooks), human resources, and recruiting software services.

• “Professional Fees” include bookkeeping, tax preparation, and recruiting services.

• “Uniforms and Operating Supplies” include technician uniforms and other miscellaneous operating expenses.

• “Royalty” includes a royalty fee equal to 8% of Gross Revenue that the Reporting Unit would have paid.

• “Technology Fee” covers the proprietary technology systems to efficiently gain customers and communicate with customers, deliver work, and receive payments. This system currently includes: website hosting and local presence optimization, automated lawn measurement using artificial intelligence, dynamic pricing table, automated quote generation and distribution to prospects, automated sales follow-ups to prospects, SMS messaging, online sales and payment collection, scheduling tool, automated invoicing and payment collection, telephony integration, lead tracking, marketing integrations, and email accounts.

• “Brand Fund Contribution” includes a brand fund contribution equal to 1% of Gross Revenue that the Reporting Unit would have paid.

• Certain expenses have been excluded that a franchise operator may incur. Excluded expenses include facility rent and utilities, cost of a full-time manager, and employee benefits.

Part 3 – Revenue Comparisons for Various Periods from January 1, 2022 Through May 30, 2023

• The following table sets forth the Revenues achieved by the Reporting Unit during various periods in 2022 and 2023. The table includes a Revenue comparison of the full 2022 calendar year of January 1, 2022 to December 31, 2022, compared to a more recent 12-month period of June 1, 2022 through May 30, 2023.

• A comparison is also provided between the first 2022 calendar quarter (January 1, 2022 through March 31, 2022) and the first 2023 calendar quarter (January 1, 2023 through March 2023).

• Finally, a comparison is provided between the first 5 calendar months of 2022 (January 1, 2022 through May 30, 2022) and the first 5 calendar months of 2023 (January 1, 2023 through May 30, 2023).

Gross Sales

• January to December 2022 (12 months):  $651,667
• June 2022 to May 2023 (12 months):  $743,191
• Percent Change:  14.0%

• January to March 2022 (3 months):  $107,351
• January to March 2023 (3 months):  $156,154
• Percent Change:  45.5%

• January to May 2022 (5 months):  $223,807
• January to May 2023 (5 months):  $315,331
• Percent Change:  40.9%

Part 4 – Recurring Revenue Percent, Sales Conversion Rate, and Customer Retention Rate for Reporting Period (June 2022 through May 2023)

• Recurring Revenue Percent:  91.3%
• Sales Conversion Rate:  36.0%
• Customer Retention Rate:  82.7%

• “Recurring Revenue” is calculated by measuring the dollars of revenues earned from recurring revenue contracts (monthly or quarterly or annual renewal contracts) earned over the reporting period ($677,583) divided by the total Revenue earned over the Reporting Period ($742,396).

• “Sales Conversion Rate” is calculated by dividing the number of new customers signing a new service contract (296) divided by the total number of prospective customers that received a quote for services (823) during the Reporting Period. Canopy’s automated proposal system generates a proposal for all prospects who complete a webform on the company’s website. All website leads receive a proposal, as do all qualified leads via phone and email.

• The “Customer Retention Rate” is calculated by dividing the number of customers signing a renewal contract (253) during the Reporting Period (June 1, 2022 to May 30, 2023) that also had a contract during the 12 months preceding the Reporting Period (June 1, 2021 to May 30, 2022) by the total number of customers that had contracts in the 12 months preceding the Reporting Period (306).

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

Section VI – Canopy Lawn Care Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️