American Home Shield 2015 Annual Report Download - page 29

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Service Marks, Trademarks and Trade Names
We hold various service marks, trademarks and trade names, such as ServiceMaster, Terminix, American Home Shield,
ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec, that we deem particularly important to
the advertising activities conducted by each of our reportable segments as well as the franchising activities conducted by certain
reportable segments. As of December 31, 2015, we had marks that were protected by registration (either by direct registration or by
treaty) in the United States and approximately 95 other countries.
Franchises
Franchises are important to the Terminix, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and
AmeriSpec businesses. In 2015, 2014 and 2013, total franchise fees (monthly royalty fees as well as initial fees from sales of
franchises and licenses) were $132 million, $132 million and $130 million, respectively, related franchise operating expenses were
$57 million, $61 million and $62 million, respectively, and total profits from our franchised operations were $75 million, $71 million
and $68 million, respectively. Nearly all of the franchise fees received by our Franchise Services Group segment are derived from the
ServiceMaster Restore, ServiceMaster Clean and Merry Maids businesses. Franchise fees from our Terminix franchisees represented
less than one percent of Terminix revenue for each of those years. We evaluate the performance of our franchise businesses based
primarily on operating profit before corporate general and administrative expenses, interest expense and amortization of intangible
assets. Franchise agreements entered into in the course of these businesses are generally for a term of five to 10 years. The majority of
these franchise agreements are renewed prior to expiration. Internationally, we have license agreements, whereby licensees provide
services under our brand names that would ordinarily be provided by franchisees in the United States. The majority of international
licenses are for 10-year terms.
Customers and Geographies
We have no single customer that accounts for more than two percent of our consolidated revenue. Additionally, no reportable
segment has a single customer that accounts for more than five percent of its revenue. None of our reportable segments is dependent
on a single customer or a few customers, the loss of which would have a material adverse effect on the segment.
A significant percentage of our revenue is concentrated in the southern and western regions of the United States. In our
Terminix and American Home Shield segments, California, Texas and Florida collectively accounted for approximately one-third of
the revenue in 2015.
Competition
We compete in residential and commercial services industries, focusing on termite and pest control, home warranties, disaster
restoration, janitorial, residential cleaning, furniture repair and home inspection. We compete with many other companies in the sale
of our services, franchises and products. The principal methods of competition in our businesses include quality and speed of service,
name recognition and reputation, customer satisfaction, brand awareness, pricing and promotions, professional sales forces and
referrals. While we compete with a broad range of competitors in each discrete segment, we do not believe that any of our competitors
provides all of the services we provide in all of the market segments we serve. All of the primary segments in which we operate are
highly fragmented.
Termite and Pest Control
Competition in the segment for professional termite and pest control services in the United States comes primarily from
smaller regional and local, independently-owned firms, as well as from Orkin, Inc. (a subsidiary of Rollins, Inc.), Ecolab, Inc. and
Rentokil Initial, plc., all of which compete nationally.
Home Warranties
Competition for home warranties that cover household systems and appliances comes mainly from regional providers. Our
two largest competitors are First American Financial Corporation and Old Republic International Corporation.
Disaster Restoration, Emergency Response and Related Services
Competition in the markets for disaster restoration, emergency response and related services comes mainly from local,
independently-owned firms and a few national professional cleaning companies, such as Servpro Industries, Inc., Belfor, a subsidiary
of Belfor Europe GmbH, BMS CAT, Inc. and Stanley Steemer International, Inc.
Janitorial
Competition in the market for janitorial services comes mainly from local, independently-owned firms and a few national
professional janitorial firms such as ABM Industries Incorporated, Jani-King International, Inc., Aramark and Jan-Pro. Franchise
International, Inc.
Residential Cleaning
Competition in the market segment for residential cleaning services comes mainly from local, independently-owned firms,
and from a few national companies such as The Maids International, Inc., Molly Maid, Inc. and The Cleaning Authority, LLC.
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