What costs are included in 'Direct Cost of Goods Sold' for a Deer Solution outlet?

According to Deer Solution's 2025 Franchise Disclosure Document, Direct Cost of Goods Sold is defined as the direct non-managerial and non-administrative cost of goods sold by an Outlet in directly providing the Approved Services and Products, comprised of the cost of materials. This specifically excludes Direct Labor Cost, managerial labor and expenses, administrative labor and expenses, Service Vehicle Cost, marketing expenses, insurance expenses, operating expenses, general expenses including, but not limited to interest, taxes, depreciation, amortization, and Franchise Related Expenses.

For a prospective Deer Solution franchisee, understanding what constitutes Direct Cost of Goods Sold is crucial for accurately assessing potential profitability. By excluding labor and other operational expenses, this metric provides a focused view on the cost of the physical goods used in providing services. This allows franchisees to better manage their inventory and negotiate with suppliers to optimize their cost of goods sold.

The FDD also presents financial performance data for a Company Owned Outlet, including its Direct Cost of Goods Sold. In 2024, the Direct Cost of Goods Sold for the Company Owned Outlet was $282,770, representing 9.8% of gross sales. While this data is from a company-owned outlet and may not be directly comparable to a franchised location due to factors like managerial skill and brand recognition, it offers a benchmark for understanding the potential scale of these costs.

It is important for potential franchisees to recognize that the Direct Cost of Goods Sold is only one component of the overall cost structure. Other significant expenses, such as Direct Labor Cost and Service Vehicle Cost, are accounted for separately. A comprehensive understanding of all these costs is essential for developing a realistic financial model and assessing the viability of a Deer Solution franchise.