What expenses are excluded from 'Direct Cost of Goods Sold' for a Deer Solution business?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Direct Cost of Goods Sold means 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.
Direct Cost of Goods Sold does not include 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.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 45–52)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, the Direct Cost of Goods Sold (COGS) for a Deer Solution business does not include several categories of expenses. Understanding these exclusions is crucial for a prospective franchisee to accurately assess their potential profitability.
Specifically, Direct COGS excludes Direct Labor Cost, which covers wages, payroll taxes, worker's compensation, and employee benefits for those directly providing services. It also excludes managerial and administrative labor and expenses. Additionally, Service Vehicle Costs, which include vehicle payments, fuel, maintenance, and insurance, are not included in Direct COGS.
Furthermore, Deer Solution excludes other operational and overhead costs from Direct COGS. These include marketing expenses, insurance expenses, operating expenses, and general expenses such as interest, taxes, depreciation, amortization, and Franchise Related Expenses (Royalty Fees, Brand Development Fund Fees, Technology Fees, and Sales and Support Center Fees). By excluding these costs from Direct COGS, Deer Solution provides a more focused view of the cost of materials used in providing services. This allows franchisees to better understand and manage their expenses related to labor, vehicle costs, and other overhead, which are accounted for separately in the financial performance representation.