What costs are included in the 'Solution as a Percent of Revenue' calculation for Chem Dry franchises?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
r Franchise" reflects the median of the total annual revenue that the Responding Franchise Owners reported.
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- "Solution as a Percent of Revenue" is the average cost of all cleaning solutions bought from CDI as a percent of reported revenue by the Responding Franchise Owners for each of their Responding Franchises. This is a variable cost. We have no information about the labor cost, supplies, automotive costs and other costs that vary with the number of jobs performed and the distance traveled by technicians performing the jobs.
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- "Average Years Operating" reflects the average length of time in years that the Responding Franchise Owners have been operating their Chem-Dry business.
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Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 55–59)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, the 'Solution as a Percent of Revenue' calculation includes the average cost of all cleaning solutions bought from CDI (Chem-Dry, Inc.) as a percentage of reported revenue by the Responding Franchise Owners for each of their Responding Franchises. This is considered a variable cost for Chem-Dry franchises.
It is important to note that this calculation does not include other variable costs such as labor, supplies, and automotive costs, nor does it include fixed operating expenses. These additional costs can vary significantly depending on the number of jobs performed and the distance traveled by technicians. Therefore, the 'Solution as a Percent of Revenue' provides only a partial view of a Chem-Dry franchisee's expenses.
A prospective Chem-Dry franchisee should consider the limitations of this metric when evaluating potential profitability. While the cost of cleaning solutions is a factor, other significant expenses must be accounted for to get a complete financial picture. It would be prudent to ask Chem-Dry for more detailed information on typical operating expenses and to conduct thorough market research to estimate labor and other variable costs in their specific area.