Pool Scouts Franchise Review – Average Gross Revenue, Cost of Goods Sold, Wages, Rent, Other Expenses, Operating Profit (2020 FDD) | Franchise Chatter

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Pool Scouts Franchise

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

  • Section I – Background information on the Pool Scouts franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Pool Scouts franchise, based on Item 7 of the company’s 2020 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pool Scouts franchise, based on Items 5 and 6 of the company’s 2020 FDD
  • Section IV – Number of franchised and company-owned Pool Scouts outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
  • Section V – Presentation and analysis of Pool Scouts’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
  • 2019 gross revenue, cost of goods sold (technician labor, material costs), gross profit, operating expenses (royalty, marketing fee, advertising – consumer, automobile expense, fuel, credit card fees, insurance expense, other expenses, office supplies, professional fees, meals and entertainment, integrated business system fees, rent and utilities, wages and benefits), and operating profit for the VA-001 territory and the VA-002 territory (collectively, the “Combined Territories”) for the affiliate-owned Pool Scouts business in calendar year 2019, as well as the income statement information for VA-001, as a representation of a single territory
  • 2019 average, median, high, and low revenue, number of customers, and number of services for the franchised Pool Scouts territories, segmented by the year they first opened (2017, 2018, and 2019)

Section I – Background Information

26 Things You Need to Know About the Pool Scouts Franchise

Had Record Year for Growth Despite Ongoing COVID-19 Pandemic

1.  In late December 2020, Pool Scouts announced that it has had a busy year helping homeowners keep those new pools maintained and sparkling clean because it’s been a record year for residential pool construction. Despite the choppy economic waters that COVID-19 has caused, it’s turned out to be a record year for growth for the Pool Scouts franchise. In 2020, Pool Scouts has signed 14 new franchisees and added 32 new territories.

2.  Michael Wagner, president of Pool Scouts, said, “We have had a fortunate year. Most businesses have faced some pretty substantial headwinds this year. We’ve been the opposite. We’ve had some great tailwinds going with us.” Ironically, one factor helping spur Pool Scouts’ growth has been the pandemic itself, Wagner said. “People have been stuck at home, so they’ve been spending more time at their residential swimming pools than they ever have before. It’s a safe haven.”

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3.  The Centers for Disease Control agrees. The agency said that there is no evidence that properly maintained swimming pools are a conduit for the spread of COVID-19. “As a matter of fact, properly sanitized, chlorinated swimming pools kill the coronavirus,” said Wagner. Those factors have driven an unprecedented boom in residential swimming pool construction this year, which comes after more than three years of quarterly growth in new pool construction.

4.  Existing franchisees discovered 2020 was a great time to expand into new territories, even during the pandemic. In the Dallas-Fort Worth area alone, Pool Scouts experienced a 30% growth, expanding to 15 territories. That growth includes an existing Dallas-Fort Worth franchisee who expanded to reach the growing demand in the area, as well as new franchisees. Additionally, Pool Scouts also welcomed Michelle and Steve Stern in North Dallas and Park Cities; Michael Luckey and Jason Richardson in Northwest Dallas; and Curtis Boyden in North Fort Worth to their franchise family. The brand is also expanding its reach in Houston, with two new signings in the Northwest Houston and Cypress areas.

5.  With all those new pools, families need a trustworthy company to help care for their pools. That’s where Pool Scouts comes in. Deemed an essential business, pool service pros don’t even require face-to-face interaction with customers to get the job done, which has turned into a big plus this year.

6.  Wagner said, “Our business is really touchless delivery, we’re only in people’s backyards. As a matter of fact, we came up with messaging to kindly tell our customers, ‘We love you, but we don’t need to see you face to face.’” That messaging resonated well with Pool Scouts customers, and helped them feel safe and comfortable with Pool Scouts technicians being in their yard and providing service to their pool.

7.  Instead of seeing a dip in business, the company has thrived throughout the pandemic. And people looking for opportunities to own their own franchise noticed this success. During economic uncertainty, interest in owning a franchise increases as people look to secure their economic futures by investing in their own business, Wagner said.

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8.  Pool Scouts is also attracting smart, experienced multi-brand franchise owners who have leading names like Mosquito Joe, Smoothie King, and an Amazon Delivery Service Partner in their portfolios. That’s because these savvy operators know outdoor service brands like Pool Scouts had a great year, especially when compared to businesses that require a brick-and-mortar presence.

9.  Wagner added, “We saw a lot of really high-quality candidates come into our franchise system.” He also noted that the company has had better-than-ever conversion rates of franchise candidates to owners. “We saw better than ever conversion rates, despite the fact that our franchise development process usually culminates with what we call a Meet The Team Day at company headquarters in Virginia Beach, Virginia.”

10.  This year, in-person meet-and-greets with potential franchisees were replaced by virtual meetings. “It makes it a lot easier, a lot quicker, and a lot cheaper. But most importantly, it works.” Pool Scouts also supports existing franchises by providing video presentations and operational materials to support franchisees with day to day operations.

11.  It’s not just new franchisees who are helping to expand the system. Existing franchisees are also doing well in this environment, said Wagner. “Our first franchisee was Tiffiny Consoli, who is based in Raleigh, North Carolina. She started her business in August 2016. During 2020, she has grown 55%. When you look at a business that’s four years old and is growing at a rate of 55%, that’s a really good indicator of the opportunity.”

12.  With a goal of awarding 36 new franchises to 18 new franchisees in 2021, Wagner predicts that Pool Scouts’ momentum will only increase over the next year. He’s adding a second operations manager to help franchisees succeed and keep their business running smoothly.

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13.  Ultimately, Wagner said that the brand’s growth rate comes down to a few key questions: “Are franchisees happy from a financial perspective? Are they happy from a support perspective? Are they telling you about the brand, with the same level of excitement that I have?” If they are, then, man, we’re gonna get a lot more franchisees in the future.”

Parent Company Signs First Multi-Brand Franchisee in Atlanta

14.  In late July 2020, Buzz Franchise Brands, parent company of Pool Scouts, announced that private equity firm FranBridge Capital, the owners of several Atlanta-area businesses in the home services sector, recently expanded its portfolio by signing a 10-unit deal with Buzz Franchise Brands, including a six-unit deal with Home Clean Heroes and four Pool Scouts territories, to serve the Greater Atlanta area, with plans to launch Pool Scouts in August and Home Clean Heroes in October.

15.  This is the first multi-brand franchisee for Buzz Franchise Brands and Home Clean Heroes’ second-ever franchisee. Since the start of the year, Pool Scouts has signed six deals for 17 territories (including the recent Atlanta signings) and opened four locations.

16.  Led by CEO Jon Ostenson, Chairman Allan Young, and Operating Partner Christian Pillat, FranBridge Capital brings years of entrepreneurship, corporate leadership, and franchise experience to the venture. The three entrepreneurs all met each other through mutual acquaintances.

17.  “I’ve always had the idea to create a collection of home service companies that utilize data, similar customer demographics and technology to our advantage,” said Pillat. “At the same time, Jon and Allan were approaching the same problem from another angle, so we thought it would be best to join forces.”

18.  Based on their backgrounds, Pillat, Young, and Ostenson knew there was a strong opportunity to be a strategic private equity firm in the franchise industry. The trio debates and bounces ideas off each other in order to create a three-way partnership that leverages their experience as franchisors, franchisees, vendors, and consultants.

19.  Ostenson said, “We provide a different avenue of capital and equity for new franchisees. Our model allows investors to participate in franchising without having to operate a store or put all of their eggs in one basket.”

20.  Now, the firm is excited to join Buzz Franchise Brands as the first multi-brand franchisee. “When we met with the Buzz Franchise Brands team, their leadership was very impressive,” said Pillat. “We have a tremendous amount of respect for their Chairman and CEO Kevin Wilson and his previous experience in the franchising space. The leadership of a franchise brand is a team you’ll spend the next 10 years working with, and you have to be comfortable with their expertise and decision-making.”

21.  According to Wilson, the excitement is mutual. “FranBridge Capital is the perfect partner for Buzz Franchise Brands, and as the first multi-brand franchisee, they will usher in a new era of growth for the company,” he said.

22.  Joe Delatte, president of Home Clean Heroes, notes that this is a huge step for the brand. “FranBridge Capital observed that people are spending less on vacations and travel and spending more money and time in their homes,” said Delatte. “Because FranBridge has some experience in home services already, they will be able to quickly adopt and take advantage of our highly efficient systems, operating tools and marketing to make Home Clean Heroes a household name in Atlanta. We look forward to working with their local team to support continued growth in the years ahead.”

23.  Michael Wagner, president of Pool Scouts, also agrees that this is a great opportunity. “We are very excited to welcome FranBridge Capital to the Pool Scouts team and we look forward to working with their team to bring our expertise and high-quality pool maintenance to homes in the Atlanta area.”

Company History

24.  Pool Scouts was founded in January 2016 by parent company Buzz Franchise Brands, which is based out of Virginia Beach, Virginia. Buzz Franchise Brands started franchising Pool Scouts right away. The brand specializes in pool cleaning, maintenance, and minor repair services.

25.  Buzz Franchise Brands started Pool Scouts after its research showed that the pool cleaning industry was in dire need of a better and more professional solution. Today, Pool Scouts has locations in more than eight states.

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26.  Pool Scouts did not rank on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Pool Scouts franchise costs, based on Item 7 of the company’s 2020 FDD.

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

  • Please click here for detailed information on Pool Scouts’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  5
  • Net Change:  +3

2018

  • Outlets at the Start of the Year:  5
  • Outlets at the End of the Year:  18
  • Net Change:  +13

2019

  • Outlets at the Start of the Year:  18
  • Outlets at the End of the Year:  23
  • Net Change:  +5

Company-Owned

2017

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  2
  • Net Change:  0

2018

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  2
  • Net Change:  0

2019

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  4
  • Net Change:  +2

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

  • Pool Scouts began offering franchises on February 23, 2016. As of December 31, 2019, Pool Scouts had 15 franchisees operating 23 Franchised Businesses. Detailed information for these 23 Franchised Businesses is provided below.
  • Pool Scouts considers the pool service and maintenance industry (“Industry”) to be segmented into seasonal and year-round business models. Pool Scouts believes the Industry to be predominantly seasonal in the northern two-thirds of the United States (“Seasonal Business”).
  • The locations operated by Pool Scouts’ affiliate, Local Operations, are Seasonal Businesses, running predominantly from mid-March to mid-November.
  • Pool Scouts believes the Industry to be predominantly year-round in the remaining warmer climate states (“Year-Round Business”).
  • In the Seasonal Business market, Pool Scouts segments the services provided into three distinct categories: pool openings, pool service/maintenance, and pool closings.
  • The Year-Round Business in the warmer climate states consists primarily of pool service/maintenance visits, with a relatively few pool openings or closings.
  • Note that this segmentation of the Industry does not include repair services (beyond minor repairs), which are present in both business models (Seasonal Business and Year-Round Business).
  • Pool Scouts expects franchisees initially to use third-party service providers to perform such repair services. Over time, Pool Scouts expects that most or all franchisees will obtain the appropriate technical training, experience, and any certification or licensure (as required by applicable state law), to offer repair services directly to their customers.
  • Some franchisees (i.e., those franchisees with sufficient experience providing pool repair services) may be permitted to offer repair services immediately, but Pool Scouts expects that most new franchisees will not.

Part 1 – Local Operations (Pool Scouts’ Affiliate)

  • Local Operations commenced business operations in January 2016, following the acquisition of the service arm of a Virginia Beach, Virginia-based pool construction firm (“Acquisition”). The Acquisition consisted of 31 service customers, 2 service vehicles, and an experienced pool service professional.
  • Upon launch of business operations, Pool Scouts provided service to the south Hampton Roads region of Virginia.
  • Although Local Operations serviced the entire region, its focus in its first two years was primarily on northern Virginia Beach and Norfolk, in the territory known as VA-001 (consisting of 10,447 Targeted Households across 8 ZIP Codes). In 2018, Local Operations began servicing southern Virginia Beach and Chesapeake, the territory known as VA-002 (consisting of an estimated 9,182 Targeted Households across 23 ZIP Codes).
  • Recognizing that Local Operations’ geographic area had multiple established competitors, Pool Scouts went to market with an aggressive advertising program in its first two years as it sought to establish its brand and to scale the business rapidly.
  • The results of this effort can be seen in the growth of customers, services, and revenue between calendar year 2016 and calendar year 2019, as illustrated in the tables below.

A. Detailed Income Statement for Calendar Year 2019

  • The Income Statement below illustrates the revenue, cost of goods sold, and operating expenses for the VA-001 territory and the VA-002 territory (collectively, the “Combined Territories”) for calendar year 2019. It also includes income statement information for VA-001, as a representation of a single territory.

Combined Territories

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