Pool Scouts: $235K Average Sales vs. $87K-$109K Franchise Cost

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

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

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

Section III – Number of franchised and company-owned Pool Scouts 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 Pool Scouts franchise opportunity

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

• October 1, 2022 to September 30, 2023 revenue, cost of goods sold (technician labor, materials costs), gross profit, itemized expenses (royalty and service fee, marketing fee, wages and benefits, insurance expense, other expenses, advertising expense, vehicle expense, fuel expense, credit card fees), and operating cash flow before non-itemized expenses for the VA-001 territory and the VA-002 territory (collectively, the “Entity”) of the affiliate-owned Pool Scouts business, as well as the income statement information for VA-001, as a representation of a single territory

• October 1, 2022 to September 30, 2023 (vs. October 1, 2021 to September 30, 2022) revenue, customer count, and service count per territory for the Entity as well as for VA-001 and VA-002

• 2022 and 2021 average revenue, customer count, and service count for the 40 franchised Pool Scouts territories that have been open for 9 months or more as of December 31, 2022, segmented by the year they first opened (2017, 2018, 2019, 2020, 2021, and 2022)

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

Section I – Pool Scouts Franchise Costs

• Pool Scouts franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $35,000
• Setup Fee:  $1,000
• Mailing List Fee:  $300 to $500
• Postcard Fees:  $18,060
• Search Engine Optimization Fee:  $3,600
• Digital Marketing Fees (first 3 months):  $3,000
• Integrated Business Management Pre-Opening Fee:  $395 to $1,580
• Integrated Business Management Fee:  $1,185
• Vehicle:  $1,650 to $5,100
• Initial Training:  $1,000 to $2,000
• Insurances:  $1,800 to $3,600
• Professional Fees:  $0 to $2,000
• Licenses:  $500 to $1,500
• Additional Funds for 3 Months:  $20,000 to $30,000
• Computer, Internet Devices, Phones, Software Setup:  $0 to $1,500
• Total Estimated Pool Scouts Franchise Costs (Single Franchise):  $87,490 to $109,625

Section II – Pool Scouts’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

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

• Initial Franchise Fee:  $35,000
• Royalty and Service Fee:  8% of Net Revenue
• Marketing Fee:  2% of Net Revenue

Section III – Number of Franchised and Company-Owned Pool Scouts Outlets

Franchised

2020

• Outlets at the Start of the Year:  21
• Outlets at the End of the Year:  28
• Net Change:  +7

2021

• Outlets at the Start of the Year:  28
• Outlets at the End of the Year:  49
• Net Change:  +21

2022

• Outlets at the Start of the Year:  49
• Outlets at the End of the Year:  70
• Net Change:  +21

Company-Owned

2020

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  2
• Net Change:  -2

2021

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

2022

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

Section IV – News Updates on the Pool Scouts Franchise

• Pool Scouts Enters Swimming Pool/Spa Construction Market

• Pool Scouts Celebrates Revenue Growth and Expansion Into New Territories

• How Pool Scouts’ Recession Resistant Model Sets Franchisees Up for Success

• Pool Scouts Reports Significant Gains in 2023 So Far

• Pool Scouts Sees Impressive Start to 2023

• Pool Scouts Named a Top Low-Cost Franchise in 2023 by Franchise Business Review

• Pool Scouts Ranked No. 497 on Entrepreneur’s 2024 Franchise 500 List

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

• 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’ affiliate, Local Operations, 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: (1) pool openings; (2) pool service/maintenance; and (3) pool closings.

• The Year-Round Business market consists primarily of pool service/maintenance visits, with a relatively few pool openings or closings.

• Most franchisees perform repair work at the equipment pad, which Pool Scouts teaches and supports. Some franchisees initially 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 – PS Local Operations (Pool Scouts’ Affiliate)

• PS Local Operations 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.

• PS Local Operations consists of two territories, VA-001 (with an estimated 12,676 Targeted Households across 8 ZIP Codes) and VA-002 (with an estimated 12,236 Targeted Households across 23 ZIP Codes).

A. Income Statement for October 1, 2022 to September 30, 2023

• The Income Statement below illustrates the expenses associated with territories VA-001 and VA-002 for PS Location Operations (collectively referred to in the table below as “Entity”) for the period of October 1, 2022 through September 30, 2023.

• For comparative purposes, an income statement representation for a single territory, VA-001, is also provided, with costs and expenses allocated based on the actual revenue generated in the VA-001 territory.

Entity

Revenue:  $1,186,919 (100.0%)

Cost of Goods Sold

• Technician Labor:  $299,126 (25%)
• Materials Costs:  $208,299 (18%)
• Total Cost of Goods Sold:  $507,425 (43%)

Gross Profit:  $679,494 (57%)

Itemized Expenses

• Royalty and Service Fee:  $94,954 (8%)
• Marketing Fee:  $23,738 (2%)
• Wages and Benefits:  $44,931 (4%)
• Insurance Expense:  $25,500 (2%)
• Other Expenses:  $28,978 (2%)
• Advertising Expense:  $59,909 (5%)
• Vehicle Expense:  $46,747 (4%)
• Fuel Expense:  $23,074 (2%)
• Credit Card Fees:  $39,194 (3%)
• Total Itemized Expenses:  $387,025 (33%)

Operating Cash Flow Before Non-Itemized Expenses:  $292,469 (25%)

VA-001

Revenue:  $661,623 (100.0%)

Cost of Goods Sold

• Technician Labor:  $167,511 (25%)
• Materials Costs:  $116,647 (18%)
• Total Cost of Goods Sold:  $284,158 (43%)

Gross Profit:  $380,517 (57%)

Itemized Expenses

• Royalty and Service Fee:  $53,174 (8%)
• Marketing Fee:  $13,293 (2%)
• Wages and Benefits:  $25,161 (4%)
• Insurance Expense:  $14,280 (2%)
• Other Expenses:  $16,228 (2%)
• Advertising Expense:  $33,549 (5%)
• Vehicle Expense:  $26,178 (4%)
• Fuel Expense:  $12,921 (2%)
• Credit Card Fees:  $21,949 (3%)
• Total Itemized Expenses:  $216,734 (33%)

Operating Cash Flow Before Non-Itemized Expenses:  $163,783 (25%)

• The information set forth in the Income Statement summarizes financial performance for PS Local Operations in its entirety and for the VA-001 territory, from October 1, 2022 through September 30, 2023.

• “Total Revenue” means the revenue billed for pool openings, recurring customer services, pool closings, and one-time services and repairs.

• “Technician Labor” includes all costs (wages, taxes, etc.) for the technicians that performed the services.

• “Materials Costs” includes the actual cost of chemical products, parts, and consumables required to complete the total services for the period.

• PS Local Operations did not pay Pool Scouts any royalty fees or marketing fees during this timeframe. Pool Scouts supplemented the PS Local Operations Income Statement to include a “Royalty and Service Fee” entry to reflect the Royalty and Service Fee of 8%, and the “Marketing Fee” entry to reflect the Marketing Fee of 2%, that you will have to pay.

• You will be required to pay to Pool Scouts, its affiliates, or its designated suppliers all of the fees described in the disclosure document. Other than the Royalty and Service Fee, Local Operations incurs the same costs for these items as Pool Scouts’ franchisees will incur.

• The above information is stated as Operating Cash Flow Before Non-Itemized Expenses. Non-Itemized Expenses may include but are not limited to (a) rent and utilities should you decide to operate the business from a commercial location, (b) additional wages and benefits should you decide to hire an office manager to run the business instead of running it yourself, (c) professional expenses such as accounting services should you decide to outsource this function, and (d) discretionary expenses such as office supplies, meals and entertainment, professional dues/subscriptions, or charitable contributions.

B. Revenue, Customer, and Service Metrics

Local Operations Revenue by Territory

10/1/21-9/30/22

• VA-001:  $547,672
• VA-002:  $390,971
• Entity:  $938,643

10/1/22-9/30/23

• VA-001:  $661,623
• VA-002:  $525,296
• Entity:  $1,186,919

Local Operations Customer Count by Territory

10/1/21-9/30/22

• VA-001:  571
• VA-002:  422
• Entity:  993

10/1/22-9/30/23

• VA-001:  546
• VA-002:  380
• Entity:  926

Local Operations Service Count by Territory

10/1/21-9/30/22

• VA-001:  4,266
• VA-002:  2,947
• Entity:  7,213

10/1/22-9/30/23

• VA-001:  4,546
• VA-002:  3,481
• Entity:  8,027

C. October 1, 2022 to September 20, 2023 PS Local Operations Business Performance Metrics

• The following are based on Pool Scouts’ CRM data for Local Operations.

• Customer Acquisition Cost:  PS Local Operations recruited 371 new customers from 10/1/22-9/30/23 on a local marketing spend of $59,909 for an average acquisition cost of $161 per customer. The median cost to acquire a customer was $182.

• Technician Cost:  PS Local Operations technicians do not receive benefits and are paid on an hourly basis. The average hourly rate from 10/1/22-9/30/23 was $17.72/hour. The range was $15.50/hour to $25/hour. The median wage from 10/1/22-9/30/23 for technicians was $16.90/hour.

• Services Per Customer:  PS Local Operations provided 8,027 services to 926 unique customers from 10/1/22-9/30/23 for an average of 9 services per customer. The range of services per customer was 1 to 52. The median services per customer was 4.

• Revenue Per Truck:  PS Local Operations averaged 7 trucks during the season and generated approximately $168,191 per vehicle.

• Customers Per Truck:  The number of customers that a single truck can service will depend on the geographic market in which you operate, the density of your customer base, the efficiency of your routing, and the type of service being provided. During the 2023 summer months, PS Local Operations was able to provide recurring service to 8-14 customers per truck per day, with one or two technicians. For opening and closing services, two technicians were able to service 4-5 customers per truck per day.

• Revenue Per Customer:  PS Local Operations’ average revenue per customer from 10/1/22-9/30/23 was $1,271. The median revenue per customer from 10/1/22-9/30/23 was $766.

• Revenue Per Pool Opening:  PS Local Operations’ average revenue per pool opening from 10/1/22-9/30/23 was approximately $358. The median net revenue per pool opening from 10/1/22-9/30/23 was $357.

• Revenue Per Service Visit:  PS Local Operations’ average revenue per visit from 10/1/22-9/30/23 was $147 per visit. The median net revenue per visit from 10/1/22-9/30/23 was $118 per visit.

• Revenue Per Pool Closing:  PS Local Operations’ average revenue per pool closing from 10/1/22-9/30/23 was $317 per service. The median net revenue per pool closing from 10/1/22-9/30/23 was $335.

Part 2 – Pools Scouts Franchised Businesses

• Unless otherwise noted, the following tables are based on the results of the 40 territories which have been open and operating for 9 months or more as of December 31, 2022.

Class of 2017

• Number of Territories:  1

• 2022 Average Revenue:  $1,155,937
• 2021 Average Revenue:  $809,992
• Year-Over-Year Growth (2021-2022):  43%

• 2022 Average Number of Customers:  714
• 2021 Average Number of Customers:  611
• Year-Over-Year Growth (2021-2022):  17%

• 2022 Average Number of Services:  10,206
• 2021 Average Number of Services:  7,443
• Year-Over-Year Growth (2021-2022):  37%

Class of 2018

• Number of Territories:  4

• 2022 Average Revenue:  $595,882
• 2021 Average Revenue:  $451,692
• Year-Over-Year Growth (2021-2022):  32%

• 2022 Average Number of Customers:  320
• 2021 Average Number of Customers:  289
• Year-Over-Year Growth (2021-2022):  11%

• 2022 Average Number of Services:  7,905
• 2021 Average Number of Services:  5,713
• Year-Over-Year Growth (2021-2022):  38%

Class of 2019

• Number of Territories:  8

• 2022 Average Revenue:  $211,055
• 2021 Average Revenue:  $160,217
• Year-Over-Year Growth (2021-2022):  32%

• 2022 Average Number of Customers:  152
• 2021 Average Number of Customers:  148
• Year-Over-Year Growth (2021-2022):  3%

• 2022 Average Number of Services:  4,254
• 2021 Average Number of Services:  3,612
• Year-Over-Year Growth (2021-2022):  18%

Class of 2020

• Number of Territories:  2

• 2022 Average Revenue:  $254,265
• 2021 Average Revenue:  $113,505
• Year-Over-Year Growth (2021-2022):  124%

• 2022 Average Number of Customers:  217
• 2021 Average Number of Customers:  239
• Year-Over-Year Growth (2021-2022):  -9%

• 2022 Average Number of Services:  3,409
• 2021 Average Number of Services:  1,696
• Year-Over-Year Growth (2021-2022):  101%

Class of 2021

• Number of Territories:  11

• 2022 Average Revenue:  $175,463
• 2021 Average Revenue:  $117,340
• Year-Over-Year Growth (2021-2022):  50%

• 2022 Average Number of Customers:  117
• 2021 Average Number of Customers:  95
• Year-Over-Year Growth (2021-2022):  23%

• 2022 Average Number of Services:  2,390
• 2021 Average Number of Services:  1,485
• Year-Over-Year Growth (2021-2022):  61%

Class of 2022

• Number of Territories:  14

• 2022 Average Revenue:  $151,547
• 2021 Average Revenue:  –
• Year-Over-Year Growth (2021-2022):  –

• 2022 Average Number of Customers:  122
• 2021 Average Number of Customers:  –
• Year-Over-Year Growth (2021-2022):  –

• 2022 Average Number of Services:  1,845
• 2021 Average Number of Services:  –
• Year-Over-Year Growth (2021-2022):  –

All Territories

• Number of Territories:  40

• 2022 Average Revenue:  $235,690
• 2021 Average Revenue:  $201,598
• Year-Over-Year Growth (2021-2022):  17%

• 2022 Average Number of Customers:  162
• 2021 Average Number of Customers:  128
• Year-Over-Year Growth (2021-2022):  27%

• 2022 Average Number of Services:  3,248
• 2021 Average Number of Services:  2,262
• Year-Over-Year Growth (2021-2022):  44%

• The growth rate represents the change in location performance in revenue for calendar years 2021 and 2022.

• Revenue from out of territory zip codes is included in the table for all franchise locations.

• Revenue from repair (services and parts) for the franchise system was 17% of total revenue in calendar year 2021 and 13% in calendar year 2022.

Part 3 – 2022 Franchise System Business Performance Metrics

• Pool Scouts provided 200,582 services to 11,134 unique customers in 2022 for an average of 18 services per customer. The range of services per customer was 2 to 48. The median services per customer was 16.

• Pool Scouts averaged $1,302 per customer in 2022. The median revenue per customer was $1,116.

• Pool Scouts acquired 6,509 new customers in 2022 for an average cost of $244. The median cost to acquire a customer was $253.

• System-wide revenue grew 68% in 2022.

• System-wide customer counts grew 39% in 2022.

Section VI – Pool Scouts Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️