MOTO PHOTO, INC.

MOTO PHOTO, INC.

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Company Overview
The company, with registered office address in DAYTON, is a US-based firm engaged in the provision of business services. It is in a legal form of a private company.
The firm specializes in the owning, operation and franchising of one-hour photo processing retail stores in the United States. It provides a wide range of photo processing services, portrait, and related imaging services and merchandise under the trade name and service mark, Motophoto. The company operates in business segments such as development, royalty and advertising, wholesale, and company stores. The development segment involves in the marketing of the company’s franchise and recruits franchisees. The royalty and advertising segment provides services to current franchisees. The wholesale segment retails to franchisees products and related services not covered under the franchise agreement, which the franchisees need to operate their businesses. Its company stores segment operates retail photo processing and portrait stores owned by the company.
Business Summary
Moto Photo, Inc. is engaged in the franchising and ownership of stores offering one-hour photo processing services, portrait, and related imaging services and merchandise under the trade name and service mark, MOTOPHOTO. The operating segments of the Company’s business are Development, Royalty and Advertising, Wholesale, and Company Stores. Development markets the Company’s franchise and recruits franchisees. Royalty and Advertising provides services to current franchisees. Wholesale sells to franchisees products and related services not covered under the franchise agreement, which the franchisees need to operate their businesses. Company Stores operates retail photo processing and portrait stores owned by the Company. In November 2002, the Company filed a petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for The Southern District of Ohio, Western Division in Dayton, Ohio. In February 2003, the Company was sold to MOTO Franchise Corporation.
Description and history
Moto Photo, Inc., incorporated in 1981, is engaged in the franchising and ownership of stores offering one-hour photo processing services, portrait, and related imaging services and merchandise under the trade name and service mark, MOTOPHOTO. The operating segments of the Company’s business are Development, Royalty and Advertising, Wholesale, and Company Stores. Development markets the Company’s franchise and recruits franchisees. Royalty and Advertising provides services to current franchisees. Wholesale sells to franchisees products and related services not covered under the franchise agreement, which the franchisees need to operate their businesses. Company Stores operates retail photo processing and portrait stores owned by the Company. In November 2002, the Company filed a petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for The Southern District of Ohio, Western Division in Dayton, Ohio. In February 2003, the Company was sold to MOTO Franchise Corporation.

Development

The Company offers franchises for stores, which provide one-hour photo processing, portraiture, and sales of related imaging services and merchandise. The Company offers a franchise agreement for a single store.

During 2001, the Company granted eight new franchises, while 27 franchises were canceled or terminated, for a net decrease of 19 franchises in the United States. The Company’s master franchisor for Canada, CIS Franchising, Limited, granted one new franchise, while four franchises were cancelled or terminated, for a net decrease of three international franchises. In 2001, all foreign source revenue represented less than 1% of total revenue.

Royalty and Advertising

The Company provides to franchisees operation, management, and marketing programs and systems and other services designed to promote the business of the franchisee. Moto Photo develops advertising materials for its franchisees, which promote the franchisee’s business and build goodwill and name recognition for the MOTOPHOTO trade name and service mark and other proprietary names and marks of the Company.

Under the form of franchise agreement for new franchises, the Company receives a royalty of 6% of the franchisee’s net retail sales and 3% of net wholesale sales. The franchise agreement requires franchisees to expend for advertising or contribute to their local advertising cooperative an amount of at least 5.5% of net retail sales. In addition, franchisees are required to pay to the Company 0.5% of net retail sales for advertising development.

Wholesale

The franchisee is required to purchase MOTOPHOTO private label film, private label one-time-use cameras and certain start-up advertising materials from the Company. The franchisee generally is not required to purchase other supplies or equipment from the Company but is required to purchase or lease supplies and equipment in accordance with certain specifications in order to maintain the quality and integrity of the franchise. The Company is a distributor to franchisees of photo processing paper, chemistry, promotional materials and other items, and is the sole approved supplier of certain photo packaging materials and point of sale materials. Beginning in 2002, Moto Photo began offering a discounted initial franchise fee to franchisees that agree to purchase photo processing paper and chemistry from the Company during the initial ten-year term of the franchise agreement. In addition, it offers certain credits to conversion franchisees against their purchases from Moto Photo of film, photo processing paper and chemistry, provided the franchisees sign a three-year agreement to purchase such items from the Company.

Company Stores

At December 31, 2001, Moto Photo had 32 Company stores in operation compared to 42 at year-end 2000. In November 2001, the Company announced its intention to franchise, sell, or close all Company stores, except those in the Dayton, Ohio market, which it will retain as testing and research sites.

The Company has ten stores in Arizona, 22 in California, 17 in Colorado, 11 in Connecticut, three in Florida, four in Georgia, 22 in Illinois, two in Indiana, two in Kansas, five in Kentucky, 18 in Maryland, one in Maine, nine in Massachusetts, six in Michigan, one in North Carolina, 47 in New Jersey, 15 in New York, 23 in Ohio, 21 in Oklahoma, seven in Pennsylvania, one in Rhode Island, six in Tennessee, five in Texas 25 in Virginia, three in Wisconsin, 12 in the District of Columbia and 35 in Canada.

Business Line
Owning, operation and franchising of one-hour photo processing retail stores
Subsidiary

Advisor
ARTHUR ANDERSEN LLP
IPO date

US SIC Code
7384
Company Address
4444, Lake Center Drive

City province or state postal code
45426, DAYTON, OH
Phone: +1 937 854 6686
Fax: +1 937 854 0140
Country address: UNITED STATES OF AMERICA
Website url: www.motophoto.com