Assignment Report On Franchise Investment: NaturaLawn Of America: Essay Fountain

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NaturaLawn of America, Inc. was incorporated on January 18, 1991, in the State of Maryland and maintains its principal place of business at 1 East Church Street, Frederick, MD 21701. They are currently doing business under the name of NaturaLawn of America, Inc. and do not do business under any other name. Since NaturaLawn’s incorporation, they have awarded franchises to individuals and entities throughout the United States granting the right to adopt and use the “NaturaLawn of America System,” its techniques, advertising, trade names and service marks in the operation of NaturaLawn of America Franchised Businesses.

The NaturaLawn of America System is a comprehensive system of organic-based lawn care and pest control services. NaturaLawn has not offered franchises in any other line of business. In addition to awarding franchises, they engage, or are planning to engage, in the sale of products and services such as golf course supplies, pre-packaged cleaners, maintenance supplies, do-it-yourself products, safety products, composting products, biological pest control products and organic-based fertilizers. They may use a web site, storefronts, sales people or any other source to promote and make such sales.

Philip Catron is the founder of NaturaLawn, and has been the President, Treasurer and a member of the board of directors in Frederick, MD since their incorporation in January 1991. He is a board-certified agronomist and has over 31 years of technical lawn care training experience, including more than 31 years with NaturaLawn. I chose NaturaLawn as the franchise I want to invest in for a variety of reasons, one of which being that my dad actually knows the CEO of NaturaLawn Phil Catron. I was able to actually reach out and talk with him about all the factors that go into opening a NaturaLawn franchise and all the fees one must pay along the way. Another reason why I chose to invest in NaturaLawn is because it is considered a service industry franchise. The two other types of franchises I could have started could have been retail or restaurant. I chose not to do retail because Amazon and other internet based companies are expanding to a point where you can buy just about anything from them and have it delivered directly to your front door. I did not want to do any restaurant franchises which includes casual restaurants such as Applebee’s or Chilis, quick service restaurants such as McDonalds and Taco Bell and fast casual restaurants such as Panera or Chipotle because of all the competition between them. The sheer number of options would limit the amount of people I actually would get into my restaurant franchise.

The average gross profit margin for restaurants falls somewhere between 3% to 5% and the gross profit for four different NaturaLawn locations in 2017 fell between 57% to 64%. People are always going to want to treat their lawns and do it in the safest way possible. NaturaLawn treats almost everyone in my entire neighborhood back home in Mount Airy, MD due to the organic products they use. Everyone in our neighborhood really enjoys the fact that they can have someone come and get rid of their weeds, but can also let their pets or children outside without having to worry about them being exposed to harmful chemicals in the grass. There are other companies that also treat lawns in my hometown area, but they do not compete with NaturaLawn because they use chemicals that would keep children or pets out of their yards for days. The total investment necessary to begin operation of a NaturaLawn ranges from $47,500 to $112,650. This includes $29,500 that must be paid to the franchisor, and up to $15,000 that may be paid to the franchisor. To reserve a Licensed Territory, I will have to pay them a $2,950 reservation fee when I sign a Territory Reservation Agreement. This reservation fee is uniform and not refundable. If I sign the Franchise Agreement at least 6 weeks before their next new franchisee initial training class, the reservation fee will be applied towards my initial license fee under the Franchise Agreement. If I do not sign the Franchise Agreement at least 6 weeks before our next new franchisee initial training class, the reservation fee is forfeited. I also must pay them an initial license fee in full when I sign the Franchise Agreement. Currently, the minimum initial license fee is $29,500 for a standard Licensed Territory.

The initial license fee is uniform for all new Franchised Businesses. The initial license fee is not refundable under any circumstances. The Licensed Territory must have at least 40,000 single-family households with median household incomes of over $55,000. If my Gross Sales are understated by more than 4%, I must pay for their inspection and audit expenses. NaturaLawn’s inspection and audit expenses are not uniform among all Franchised Businesses. Before I open, I may choose to purchase additional supplies (including, for example, uniforms, promotional materials and forms) and equipment beyond what NaturaLawn provides to me as part of the initial license fee. If they have these items in stock, I must purchase the supplies and equipment from them, at an estimated initial cost of $7,250 to $15,000. This fee is nonrefundable and is due at the time of purchase. I must purchase these supplies and equipment from approved suppliers through their purchasing department if NaturaLawn does not have certain supplies or equipment in stock.

NaturaLawn does not recommend the purchase of real estate for my franchise, but it is expected that the Franchised Business office and warehouse will have between 1,500 and 2,500 total square feet and be located in an industrial or commercial area. I must pay for me and my manager’s or other principal owner’s transportation to the initial training programs, and for mine and my manager’s or other principal owner’s living expenses while attending 1 week of training at NaturaLawn’s home office and 2 weeks of additional training at 1 of their company locations. The cost for transportation will vary depending on my proximity to their home office and company locations. My lodging will cost about $100 per day per person, and food expenses will be about $50 per day per person. They will supply me with a computer and certain pre-installed software as part of the initial license fee. I must purchase a bar code scanner and an HP LaserJet Printer series, these will cost about $845 for both. I also must purchase the annual support plan from Real Green Systems, Inc. for their proprietary software program, which currently costs $1,000 per year.

Advertising and marketing investments will vary from year to year. In order to grow any business, money needs to be directed for the acquisition of new customers. NaturaLawn will help me develop a budget and marketing plan designed to meet the growth needs of the business to secure a customer base which in turn will provide a source of reoccurring revenue to my business. The amount of money I will spend to acquire new customers is based on many factors, one of which is their 32 plus years of experience growing similar lawn care franchise operations. I should anticipate spending between $30,000 and $50,000 a year on approved marketing and advertising pieces and campaigns. NaturaLawn estimates that required purchases and leases represent 80% to 90% of all purchases and leases to be made by me in establishing the Franchised Business and less than 5% as I am operating the Franchised Business. So to summarize the estimated initial investment, it is $9,500 to $29,500 for the initial license fee, $0 to $5,000 for opening inventory, $1,500 to $4,000 for lawn care equipment purchases, $0 to $3,000 for vehicles that will be leased for 6 months, $0 to $5,000 for office and furniture equipment, $1,150 for training expenses, $0 to $1,000 for computer and technology expenses, $30,000 to $50,000 for initial annual advertising and marketing, $250 to $500 for licenses, $1,250 to $2,000 for professional fees (accounting, legal, ect. ), $2,000 to $3,500 for lease deposits (rent, utilities, ect. ), $1,500 to $3,500 for the insurance deposit and $1,500 to $4,500 for any additional funds. I will open my NaturaLawn franchise in Dublin, Ohio because there is only one other NaturaLawn there. I could have tried to squeeze in another NaturaLawn in Maryland where the headquarters is and be closer to all the extra supplies if I needed them, but there are already seven NaturaLawn’s in Maryland. Dublin, Ohio does not have the nicest weather in the winter, but NaturaLawn offers a service that uses natural alternative ice material to melt ice, so we will still make a profit in the winter. Another reason why I will place my NaturaLawn in Dublin, Ohio is because to receive a fair price for my licensed territory I need to have at least a population of 40,000 and a median income of $55,000.

In Dublin, Ohio the population is 43,874 and the median household income is $125,540. Dublin, Ohio is also the suburbs of Columbus, Ohio so most of the people who live here are residing in a house they own with a yard. The median home value for Dublin, Ohio is $352,300 which is $167,600 more than the national average which is $184,700. Since the people buying these homes are paying more for their homes and have high incomes they will most likely want to treat their yards and keep them looking nice. Dublin is also home to many very nice golf clubs; NaturaLawn is beginning to start to sell golf course supplies, so having some of the most prestigious courses in the United States in my region that even host PGA tournaments would be great possible clients. Another great reason to put my NaturaLawn in Dublin, Ohio is that they are ranked #1 on all the travel websites for best places to live in Ohio. Dublin is considered to have the best public schools which will attract a large amount families to the area. NaturaLawn thrives on the fact that people want to keep their yards looking nice, but not put anything in them that will possibly harm children playing in the yard. Since Dublin, Ohio’s population is 25% children I will be able to advertise on the basis that I can treat your lawn and not harm your kids that want to play in it. The NaturaLawn that is located in Akron, Ohio has received great reviews since they opened in January of 2000.

Since Dublin and Akron are only two hours away, hopefully the people of Dublin will have heard of NaturaLawn and what I will be doing. If even a few people from Dublin are aware of the safe, organic service I will provide to their lawns then my business will start to slowly spread across Dublin. The warehouse that I will use to start my business is located on 6375 Shier Rings Road Dublin, Ohio 43016. There are currently only two listings for office/warehouse buildings in Dublin Ohio so I chose the one that had the smaller square footage of 9,050. This is a lot more space than I need since my business is mostly based on being at customers houses, so I will only rent out one side of the warehouse which would give me 4,525 square feet. Since there is such high demand for office/warehouse space in Dublin right now, I will have to buy a slightly bigger warehouse then needed but starting a NaturaLawn is fairly inexpensive so I have the funds to do so. The warehouse is rented on a yearly basis and the payment is $7. 50 for every square foot. Since I am only renting one side of the warehouse my cost will come out to $33,937. 50. Assuming I spend the maximum amount of money on the startup fees I discussed earlier which would be $112,650 then with the warehouse it would be $146,587. 50. This leaves me with $353,412. 50 that I can spend across the board to help my franchise run better. Potential competitors of my NaturaLawn business in Dublin, Ohio would include any other company located there that specializes in the killing of pesticides in a residents yard. I would be able to easily outsell the companies that use any harmful substances to get rid of pesticides because a family that has the money to do so will pay more to have a safer lawn.

Also NaturaLawn offers a variety of different services besides just killing pesticides using natural and organic substances. NaturaLawn also offers aeration, pesticide work on athletic fields, deer repellent program, fire ant control, flea and tick control, gopher control, grub control, mole control and tree and shrub service. The service they offer in the winter uses rock salt, potassium chloride and urea to melt ice. Most companies do not offer this wide a range of products and people who live in Dublin don’t want to use a bunch of different companies when they could just use one really good one. If my NaturaLawn is able to get certain customers for one service, then I would hope they would use us for the other ones if they needed it since we did such a good job on the first service. The company that is most similar to mine in Dublin would be Bio Green Ohio, they also use environmentally-friendly products on your lawn. They offer a lot less services than we do and do not offer anything in the winter. Since my franchise offers more products than they do, people will hopefully give me their business so they only have to deal with one company and not have to deal with two separate companies when mine offers everything. There are many pros and cons of starting a lawn care business. Some of the pros would include, Stable & Repeat Business: Lawn care accounts are perpetual, meaning ongoing and consistent. Your customer base will need their lawns mowed once a week, making for a stable book of business.

Revenue Generating Consumables: Not only do people need their lawns maintained, they need special fertilizers and treatments for weeds and bugs nearly every 4-6 weeks. These treatments would be considered “consumables”, meaning reoccurring product usage, and this business feature makes for an attractive business model.

Scalable: You can start by offering one service and build out to other service offerings. The amount of options available will allow you to scale up as customer demands change.

Entry-Level Workforce: If you scale up and need employees, the majority of this type of workforce needs no formal education and is able to learn on the job. This means no expensive training or recruiting costs. This workforce typically comes with a higher turnover rate though. Some of the cons would include, Seasonal: Unless you live in an area where winters aren’t bad, your customer accounts go into hibernation by mid-October. If you are looking for a year-round business, you will need to find something to diversify your product offering (i. e. snow removal) to keep business up and running through the winter.

Start-Up Expenses: Depending on the type of lawn care business you decide to build out, you will need equipment and something to transport this equipment with. This may require upfront cash and in some cases, a sizable amount. Competitive: Open your phone book and you will find a number of lawn care businesses in your area. If the market is too oversaturated, you will find the need to compete on price and this will cut into your gross margins.

Some Economic Risk: When economic times get tough, existing residential customers may find the need to cut non-essential expenses, and for many, outsourced lawn care is one of those. My target market for NaturaLawn will be anyone who owns some type of land that is covered in grass in Dublin, Ohio. This will mean targeting any homeowners that have a yard filled with grass, the Golf Club of Dublin, Muirfield Village Golf Club, Brookside Golf & Country Club and any grass sports fields in the area. Having three golf courses in the city means I can pitch to all three of them and try to get at least one to become a client. For the neighborhoods and sports fields the best way to advertise is putting up signs and fliers throughout the city and neighborhoods themselves to let residents know what we do. People are always going to treat their lawns no matter where technology takes us. By putting my NaturaLawn in an area with people who own houses with yards and have high incomes I believe is the best way for me to be successful. I also only used about $150,000 of my $500,000 so there is not much risk that is being put into opening a NaturaLawn and if it fails at least I only lose 30% of the money I was given to start it.

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