American Home Shield 2006 Annual Report Download - page 10

REGULATORY COMPLIANCE
Government Regulations
ServiceMaster's operating segments are subject to various federal, state and local laws and regulations, compliance with which
increases ServiceMaster's operating costs, limits or restricts the services provided by ServiceMaster's operating segments or the
methods by which ServiceMaster's operating segments sell those services or conduct their respective businesses, or subjects
ServiceMaster and its operating segments to the possibility of regulatory actions or proceedings.
These federal and state laws include laws relating to consumer protection, wage and hour regulations, permit and license
requirements, workers' safety (e.g., the Occupational Safety and Health Act), environmental regulations and employee benefits
(e.g., the Consolidated Omnibus Budget Reconciliation Act of 1985 and the Employee Retirement Income Security Act of 1974).
The TruGreen ChemLawn, TruGreen LandCare, Terminix, American Residential Services and American Mechanical Services
businesses must also meet the Department of Transportation and Federal Motor Carrier Safety Administration requirements with
respect to their fleets of vehicles. American Home Shield is regulated by the Department of Insurance in certain states and the Real
Estate Commission in Texas.
Consumer Protection and Telemarketing Matters
ServiceMaster is subject to numerous federal and state laws and regulations designed to protect consumers, including laws
governing consumer privacy and fraud, the collection and use of consumer data, telemarketing and other forms of solicitation.
Noncompliance with these laws and regulations can subject ServiceMaster to fines or various forms of civil or criminal prosecution,
any of which could have an adverse effect on its financial condition, results of operations and cash flows.
The telemarketing rules adopted by the Federal Communications Commission pursuant to the Federal Telephone Consumer
Protection Act and the Federal Telemarketing Sales Rule issued by the Federal Trade Commission govern ServiceMaster's
telephone sales practices. In addition, many states have adopted statutes and regulations targeted at direct telephone sales activities.
The implementation of do-not-call lists requires TruGreen ChemLawn, and, to a lesser extent, ServiceMaster's other operating
segments, to seek additional marketing methods and channels.
Franchise Matters
TruGreen ChemLawn, Terminix, ServiceMaster Clean, Merry Maids, AmeriSpec and Furniture Medic are subject to various federal
and state laws and regulations governing franchise sales and marketing and franchise trade practices generally, including applicable
rules and regulations of the Federal Trade Commission. These laws and regulations generally require disclosure of business
information in connection with the sale of franchises. Certain state regulations also affect the ability of the franchisor to revoke or
refuse to renew a franchise. ServiceMaster seeks to comply with regulatory requirements and deal with franchisees in good faith.
From time to time, ServiceMaster and one or more franchisees may become involved in a dispute regarding the franchise
relationship, including, among other things, payment of royalties, location of branches, advertising, purchase of products by
franchisees, compliance with ServiceMaster standards and franchise renewal criteria. There can be no assurance that compliance
problems will not be encountered from time to time or that material disputes with one or more franchisees will not arise.
Environmental Matters
ServiceMaster's businesses are subject to various federal, state and local laws and regulations regarding environmental matters.
Terminix, TruGreen ChemLawn and TruGreen LandCare are regulated under many federal and state environmental laws, including
the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Environmental Pesticide Control Act of 1972, the Federal Insecticide, Fungicide and
Rodenticide Act of 1947, the Resource Conservation and Recovery Act of 1976, the Emergency Planning and Community Right-to-
Know Act of 1986, the Oil Pollution Act of 1990 and the Clean Water Act of 1977. American Residential Services and American
Mechanical Services are also regulated under many federal and state environmental laws, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act of 1976, the Emergency Planning and Community Right-to-Know Act of 1986, the
Clean Water Act of 1977 and the Clean Air Act of 1970. ServiceMaster cannot predict the effect on its operations of possible future
environmental legislation or regulations. During 2005, there were no material capital expenditures for environmental control
facilities, and no such material expenditures are anticipated in 2006.
EMPLOYEES
On December 31, 2005, ServiceMaster had a total of approximately 39,000 employees.
AVAILABLE INFORMATION
ServiceMaster maintains a website at http://www.svm.com that includes a hyperlink to a website maintained by a third-party where
ServiceMaster's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments
to those reports are available without charge as soon as reasonably practicable following the time that they are filed with or
furnished to the Securities and Exchange Commission. A copy of each of ServiceMaster's Corporate Governance Principles, Audit
and Finance Committee Charter, Compensation and Leadership Development Committee Charter, Governance and Nominating
Committee Charter, Financial Code of Ethics and Code of Conduct is posted on ServiceMaster's website at http://www.svm.com
under "Corporate Governance" and is available in print to any shareholder who requests it by writing to the Corporate Secretary at
the following address: The ServiceMaster Company, 3250 Lacey Road, Suite 600, Downers Grove, Illinois 60515.