American Home Shield 2011 Annual Report Download - page 13

Table of Contents
Competition for home service contracts that cover systems and appliances comes mainly from regional providers. Several competitors are expected to
initiate expansion efforts into additional states. According to Warranty Week data, American Home Shield and The First American Corporation are the two
largest industry participants, based on gross premiums paid in 2009, with American Home Shield having 41 percent market segment share and The First
American Corporation having 11 percent market segment share. Based on this information, American Home Shield is approximately 3.7 times larger than this
competitor.
Disaster restoration and reconstruction, emergency response and other services
Most emergency response work results from extreme weather environments and natural disasters such as hurricanes, floods, mudslides, tornadoes and
earthquakes. Firms in this segment also respond to non-weather-related emergency situations for residential and commercial customers, such as fires and
flooding. Critical factors in the selection of an emergency response firm are the firm's reputation, relationships with insurers, available resources, proper
insurance and credentials, timeliness, and responsiveness. The segment is highly fragmented, and key competitors of our ServiceMaster Clean business
include ServPro Industries, Inc., Belfor, a subsidiary of Belfor Europe GmbH, and BMS CAT, Inc.
Home cleaning services
Competition in the market segment for home cleaning services comes mainly from local, independently owned firms, from homeowners who clean their
own homes and from a few national companies such as The Maids International, Inc., Molly Maid, Inc. and The Cleaning Authority, LLC.
MARKETING AND DISTRIBUTION
ServiceMaster markets its services primarily through the internet, direct mail, television and radio advertising, print advertisements, door-to-door
solicitation, telemarketing and yellow pages advertisements. Additionally, American Home Shield and Terminix, in certain jurisdictions, market their services
through various participants in the residential real estate market place, such as real estate brokerages, financial institutions and insurance agencies and, for
American Home Shield, an internal sales organization that supports these distribution channels.
SERVICE MARKS, TRADEMARKS AND TRADE NAMES
ServiceMaster holds various service marks, trademarks and trade names, such as ServiceMaster, Terminix, TruGreen, Merry Maids, ServiceMaster
Clean, American Home Shield, AmeriSpec and Furniture Medic, that it deems particularly important to the advertising activities conducted by each of its
reportable segments as well as the franchising activities conducted by certain reportable segments. As of December 31, 2011, ServiceMaster had marks that
were protected by registration (either by direct registration or by treaty) in the United States and 81 other countries.
FRANCHISES
Franchises are important to the TruGreen, Terminix, ServiceMaster Clean, Merry Maids, AmeriSpec and Furniture Medic businesses. Total franchise
fees (initial and recurring) represented 4.0 percent, 3.9 percent and 4.1 percent of consolidated revenue from continuing operations in 2011, 2010 and 2009,
respectively. Related franchise operating expenses were 2.0 percent, 1.8 percent and 2.0 percent of consolidated operating expenses in 2011, 2010 and 2009,
respectively. Total franchise-related profits comprised 15.2 percent, 23.1 percent and 27.4 percent of consolidated operating income in 2011, 2010 and 2009,
respectively. We evaluate the performance
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