American Home Shield 2008 Annual Report Download - page 9

Table of Contents
activities conducted by certain reportable segments. As of December 31, 2008, ServiceMaster had marks that were registered in the United States and 118
other countries.
FRANCHISES
Franchises are important to the TruGreen LawnCare, Terminix, ServiceMaster Clean, Merry Maids, AmeriSpec and Furniture Medic businesses. Total
franchise fees (initial and recurring) represented 3.8%, 3.7% and 3.6% of consolidated revenue from continuing operations in 2008, 2007 and 2006,
respectively. Related franchise operating expenses were 2.0%, 2.2% and 2.3% of consolidated operating expenses in 2008, 2007 and 2006, respectively. Total
franchise related profits comprised 32.2%, 31.7% and 15.8% of consolidated operating income in 2008, 2007 and 2006, respectively. We evaluate the
performance of our franchise businesses based primarily on operating profit before corporate general and administrative expenses and amortization of
intangible assets. Franchise agreements entered into in the course of these businesses are generally for a term of five to ten years. The majority of these
franchise agreements are renewed prior to expiration. The majority of international licenses are for ten year terms.
COMPETITION
ServiceMaster competes with many other companies in the sale of its services, franchises and products. The principal methods of competition in
ServiceMaster's businesses include quality and speed of service, name recognition and reputation, pricing and promotions, customer satisfaction, brand
awareness, professional sales forces, and reputation/referrals. Competition in all of the Company's markets is strong.
Lawn Care Services. Competition in the market for lawn care services comes mainly from local, independently owned firms and from homeowners
who care for their own lawns. Competition also comes from Scotts, which operates on a broad geographic scale.
Landscape Maintenance Services. Competition in the market for commercial landscape maintenance services comes mainly from small, owner-
operated companies operating in a limited geographic market and, to a lesser degree, from a few large companies (notably, The Brickman Group and The
Valley Crest Companies) operating in multiple markets, and from property owners who perform their own landscaping services.
Termite and Pest Control Services. Competition in the market for termite and pest control services comes mainly from regional and local,
independently owned firms, from homeowners who treat their own termite and pest control problems, and from Orkin, a subsidiary of Rollins, which operates
on a national basis. Ecolab Inc. competes nationally in the commercial pest control segment.
Home Warranty Contracts for Systems and Appliances. Competition in the market for home warranty contracts for systems and appliances comes
mainly from regional providers of home warranties.
Home Inspection Services. Competition in the market for home inspection services comes mainly from regional and local, independently owned
firms.
Residential & Commercial Disaster Restoration and Cleaning Services. Competition in the market for disaster restoration and cleaning services
comes mainly from local, independently owned firms and a few national professional cleaning companies such as ServPro, Paul Davis, Belfor and BMS Cat.
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