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FDD Talk 2019: Mr. Handyman Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

  • Section I – Background information on the Mr. Handyman franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Mr. Handyman franchise, based on Item 7 of the company’s 2019 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Mr. Handyman franchise, based on Items 5 and 6 of the company’s 2019 FDD
  • Section IV – Number of franchised and company-owned Mr. Handyman outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
  • Section V – Presentation and analysis of Mr. Handyman’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
  • 2017 average revenue (labor revenue, material revenue, miscellaneous revenue), cost of material, advertising, tech wages, office wages, insurance, royalty and ad fund, general and administrative, total office expenses, total van, total other, total expenses, and available to owner for the 68 Mr. Handyman operators who submitted their year-end profit and loss statements to Mr. Handyman by March 15, 2018, grouped by quartile
  • 2016, 2017, and 2018 average and median annual sales for all established Mr. Handyman operators that started operation on or before December 31, 2015
  • 2016, 2017, and 2018 average and median project size for all active Mr. Handyman operators open at any time during the years 2016 to 2018
  • 2016, 2017, and 2018 average and median percent of sales from repeat customers for all established Mr. Handyman operators that started operation on or before December 31, 2013
  • 2018 average and median percent growth for all established Mr. Handyman operators that started operation on or before December 31, 2015
  • 2016, 2017, and 2018 average and median commercial sales for all established Mr. Handyman operators that started operation on or before December 31, 2015
  • 2016, 2017, and 2018 number of internet contacts from online service request forms, calls directed through the national Mr. Handyman phone routing system, as well as contacts made through Mr. Handyman’s mobile website for Mr. Handyman operators active in each of the years listed

Section I – Background Information

13 Things You Need to Know About the Mr. Handyman Franchise

Rolls Out Third Annual “My ‘Pet’ Peeves” Photo Contest

1.  At the beginning of May 2019, Mr. Handyman celebrated National Pet Month with its third annual “My ‘Pet’ Peeves” photo contest. To enter the contest, applicants needed to visit Mr. Handyman’s Facebook page and submit a photo of their pet causing mayhem around their house. Ideas include a pet’s yard damage, annihilated shoes, in-home destruction, getting into the snack drawer, or just their cute faces.

2.  The contest was open until May 31 and basically any pets – such as dogs, cats, horses, hamsters, reptiles, bunnies, and turtles – were welcome to be entered into the contest. Mr. Handyman will reward five random winners with a $250 PetSmart gift card.

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3.  J.B. Sassano, president of Mr. Handyman, said, “Pet companions are a great part of life, but sometimes that joy can be overridden by the effects they have on our homes. Our professional Mr. Handyman technicians understand the importance of pets in so many people’s lives and have helped homeowners nationwide install pet doors, repair floors and replace trim and screens to help make pet ownership that much easier. We’re thrilled to bring back this photo contest for the third time during National Pet Month to allow pet owners everywhere to share photos and be entertained by each other’s pets’ crazy antics.”

4.  In the same press release, Mr. Handyman offered tips to assist pet owners with common pet problems, including:

  • Repairing Chewed Drywall – To fix drywall that may have been gnawed at by a puppy or anxious dog, scrape loose debris from holes or dents and cover with fast-drying spackle. Let dry for at least 24 hours and conceal repairs with a bit of touch-up paint. While small bite holes are easy to camouflage, years of covering damage can eventually lead to uneven drywall.
  • Protecting Floors – Pets can damage hardwood floors simply by walking on it. Protect hardwood by maintaining claw length and keeping area rugs around the house for pets to lie on. Fix minor scratches with floor cleaner and protective finish. Clean the scratch with a damp cloth, scrub the cleaner over the scratch, and repeat with a clean cloth to rinse away hardwood cleaner.
  • Safeguarding Wood – Wood is often a target for pets who chew or scratch. The easiest protection plan is to add plastic sheeting or PVC tubing around table and chair legs to prevent claw and bite marks. Save doors by adding clear, plastic sheeting.

Franchisee Donates Custom Swing Set to Local Autistic Man

5.  Around the 2018 holiday season, Allen Ellison, owner of Mr. Handyman of West Knoxville, and his team stepped up to help a local autistic man named Cobey Thomas when no other handyman or contractor would. Thomas, who has nonverbal autism, had always loved to swing, but grew too big for regular swings at school and the park. However, Thomas continued to use his school’s swings until he graduated in 2018.

6.  After Thomas’s mother, Jenifer, noticed that he had outgrown typical swing sets and began developing welts, she told him that he was not allowed to swing anymore. Due to his autism, Thomas does not do well with change and losing his swing time caused behavioral problems.

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7.  Jenifer knew she had to do something and began calling every local handyman and contractor. However, when she told them that her son was 6’10”, weighed 200 pounds, and “functions on maybe a 3-year old level,” they all turned her down.

8.  Finally, Jenifer’s friend recommended Adam Ellis who works at Mr. Handyman of West Knoxville. The team at Mr. Handyman of West Knoxville designed and built the swing specifically for Thomas. Mr. Handyman of West Knoxville also surprised Jenifer by telling her that the swing was a Christmas gift.

9.  On Mr. Handyman’s national blog, the West Knoxville team shared their list of materials they used along with a sketch of Thomas’s swing. After Thomas’s story was first shared by a local TV segment, Mr. Handyman’s generosity went viral as the story was shared across Facebook and other social media channels.

Company History

10.  Mr. Handyman was founded in 1996 by David Lavelle in Chelmsford, Massachusetts. The brand offers a wide range of home maintenance and repair services. According to Mr. Handyman, all of its technicians are highly-skilled craftsmen with an average of 10 years’ experience in the trades. Additionally, all Mr. Handyman technicians arrive in uniform in branded vans with the tools to complete the job right.

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11.  After growing Mr. Handyman for a few years, Lavelle sold the company to Service Brands International, a Michigan-based franchisor, in 2000. Service Brands International began franchising the Mr. Handyman concept that same year. In 2015, Service Brands International and its affiliated franchises were acquired by the Dwyer Group.

12.  To reflect its umbrella of home service brands, the Dwyer Group changed its name to Neighborly and in addition to Mr. Handyman, Neighborly is the parent company of Drain Doctor Plumbing, Molly Maid, Mosquito Joe, Mr. Rooter, Window Genie, and several other brands. Today, there are Mr. Handyman locations across the United States and Canada.

Entrepreneur’s Franchise 500

13.  Mr. Handyman ranked No. 494 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Mr. Handyman franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Mr. Handyman’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

  • Outlets at the Start of the Year:  195
  • Outlets at the End of the Year:  197
  • Net Change:  +2

2017

  • Outlets at the Start of the Year:  197
  • Outlets at the End of the Year:  203
  • Net Change:  +6

2018

  • Outlets at the Start of the Year:  203
  • Outlets at the End of the Year:  215
  • Net Change:  +12

Company-Owned

2016

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

2017

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

2018

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

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

  • As of December 31, 2018, there were 215 Mr. Handyman Franchised Businesses operating in the United States. These franchises were owned and operated by 142 franchise owners (collectively, “Operators”), who consolidated their sales for the purpose of reporting.
  • Of these 142 Operators, 34 Operators operated 2 units, 15 Operators operated 3 units, 8 Operators operated 4 units, 1 Operator operated 5 units, and 1 Operator operated 6 units.
  • Mr. Handyman did not operate any company stores. Neither Mr. Handyman nor its independent certified public accountants have audited or verified any of the sales figures reported to it. Operators are not required to use generally accepted accounting principles when reporting these figures.
  • Unless otherwise noted, all results exclude Operators that ceased operation on or before December 31, 2018. Sixteen of the excluded franchised businesses closed during the 2018 fiscal year. Of the 16 businesses that closed during the fiscal year 2018, 2 businesses closed after being open for less than 12 months.
  • The representations below consist of both single and multiple unit Operators.
  • For purposes of the representations below, “Gross Sales” means the total revenues and receipts from whatever source (whether in the form of cash, credit, agreement to pay, barter, trade, or other consideration) that arise, directly or indirectly, from the operation of, or in connection with, the Business, whether under any of the Marks or otherwise.
  • Gross Sales exclude sales taxes collected from customers and paid to the appropriate taxing authority and any other bona fide refunds, rebates, or discounts that Mr. Handyman authorizes in writing. Gross Sales also exclude sales from any Excluded Services (as defined in a mutually executed Excluded Services Addendum).

Part 1 – Profit and Loss Statements for the Year Ending 2017

  • The following four “quartile” charts show the average and median profit and loss for the year 2017 achieved by 68 Operators who submitted their year-end profit and loss statements to Mr. Handyman by March 15, 2018.
  • The quartile charts were derived by taking these 68 Operators and dividing them into four even groups based on their Gross Sales.

Quartile 1

  • Quartile 1 represents 17 Operators, 14 of which operated multiple units.

Revenue

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