Respond to my classmate with at least 2 paragraphs

John Davis

Sep 28, 2020 at 11:20 AM

DAVIS – Post 1

FlyFoe Franchise is a mosquito and tick control business. They offer an integrated protection and elimination system that provides yard, perimeter, shrub, foundation spray, larvicide application, property inspection, and insect surveillance. It’s essentially a technician who shows up to your residence or business, performs and assessment, and provides a multifaceted solution to pest elimination. The professional pest control industry is expected to grow rapidly and reach an estimated $17.4 billion by 2023 (Garside, 2020).

Flyfoe offers turn-key solutions for the mosquito and tick industry. They provide a plethora of tools for franchise owners to become (and stay) successful. Flyfoe partners with major advertising agencies to develop locally tailored marketing campaigns. All sales calls go to a centralized national sales location, which eliminates the need for costly call center overhead. Each franchise is provided custom business management software that includes route optimization, automated billing, and customer service management (FlyFoe, 2020). Finally, they offer direct support from their home office staff, the community of other franchise owners, and a team of pest control experts.

Total Investment Required: $72,940 – $139,490 for an average of $106,215

Scenario 1:

• Amount Borrowed: $106,215
• Monthly Payment: $2,004.41
• Total Interest: $14,049.50
• Total of Payments: $120,264.50

Scenario 2:

• Amount Borrowed: $106,215
• Monthly Payment: $1,179.20
• Total Interest: $35,289.66
• Total of Payments: $141,504.66

Based on this information and the research I conducted, I believe that the franchise is a worthy investment. This is because the upfront investment is relatively low. $72,940 to $139,490 is not a small amount of money. However, it’s not an unattainable number and with the proper collateral, such as a house or property, most people with good credit should be able to secure a loan covering the initial investment. FlyFoe offers assistance and advice on how best to finance your franchise. In some cases they provide direct financing to individuals who quality. In doing research, I found the best thing about the pest control industry is that it’s primarily subscription based. This recurring income means you can count on a certain cash flow, rather than having to deal with fluctuating income (Faris, 2019).

I would choose the Scenario 2 financing option if I were starting this franchise. Even though the interest rate is higher, the monthly payments are lower, which frees up much needed cash at the most critical point in a business…the startup phase. The top overall reason why small businesses fail is due to being under-capitalized, not having enough cash to sustain your business (sbf, n.d.). Additionally, a business can write off business loan interest payments as a business expense, therefore negating the cost of the higher interest rate and longer loan term.

Reference:

Faris, S. (2019, April 8). Startup costs for a pest control business. Chron. https://smallbusiness.chron.com/startup-costs-pest…

Garside, M. (2020, July 20). Pest control in the United States – Statistics & Facts. Statista. https://www.statista.com/topics/3954/pest-control-…

Top Reason Small Businesses Fail – Undercapitalization. (n.d.) SmallBusinessFunding. https://www.smallbusinessfunding.com/under-capital…

Why FlyFoe. (2020). https://flyfoefranchise.com/why-flyfoe