What costs are NOT 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 does not include several variable costs. This financial performance representation only considers the cost of cleaning solutions as a percentage of revenue.
Specifically, the Item 19 notes that the calculation excludes labor costs, supplies, automotive costs, and other expenses that fluctuate based on the number of jobs completed and the distance traveled by technicians. These are significant costs for a service-based franchise like Chem Dry, as they directly relate to the day-to-day operations and service delivery.
For a prospective Chem Dry franchisee, this means that the 'Solution as a Percent of Revenue' figure provides only a partial view of variable expenses. It is essential to consider these additional variable costs, along with fixed operating expenses, to accurately project net income or profit. A potential franchisee should carefully analyze and estimate these omitted costs to develop a comprehensive financial model for their Chem Dry business.