Franchise Services of North America Inc. (FSNA) announced May 28 its second quarter results for the period ended March 31, 2009. Revenue and the net loss for the three months ended March 31, 2009 were $3.4 million and ($212,901), respectively, as compared to revenue of $3.9 million and the net loss of ($5,715) for the second quarter ended March 31, 2008. The comparative period, ending March 31, 2008, included the sale of a Master Franchise for the Country of Mexico for $200,000.
The company also announced the sale of the Brooks, Alberta franchise under the Rent-A-Wreck brand, the sale of the Ft. Lauderdale, Fla. U-Save franchise to an existing affiliate, a sub-franchise for Sheppard, Ontario, the receipt of a letter of intent for a U-Save franchise for the Atlanta-Hartsfield International Airport, and the entering of an Affiliate Agreement for the Country of Greece that has resulted in the U-Save brand now being represented in the Athens, Rhodes, Santorini, and Crete airports. These new franchise locations, the letter of intent for Atlanta, and the affiliate location agreements all transpired during the company’s fiscal third quarter and the financial impact of these new locations are not reflected in the results for the period ending March 31, 2009.
Bob Barton, the company’s chief operating officer, stated, “The second quarter was a challenging operating period for us under difficult economic conditions. We continue to obtain and negotiate with qualified candidates for the purchase of U-Save and Rent-A-Wreck Franchises. The comparative 2008 quarter ending March 31 included the sale of the Master Franchise for Mexico for $200,000. The Ft. Lauderdale franchise and the Greece Affiliate Agreements were completed after March 31, 2009, and were with companies already operating in the rental car marketplace. The letter of intent for Atlanta is also with an operator already in the rental business.
“During the quarter ended March 31, 2009 the company also incurred higher claims experience for vehicles covered under the company’s various insurance programs. Claims experience can be affected by a number of factors, including weather-related/seasonality factors. The results of any one period, positive or negative, are not necessarily representative of the experience the company may have in subsequent periods.
“The general economic conditions currently being experienced in North America, and the related downward trend in tourism and enplanements, while affecting overall car rental activity, has not had a material effect on the company’s royalty revenue stream in the quarter as a significant number of the franchisees do not operate in the airport market and are not directly impacted by these trends.”
