Company Description
WASH HOUSE Co., Ltd.

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1. Company Overview

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Company overview

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As of June 30, 2017

Name

WASH HOUSE Co., Ltd. (TSE Mothers, FSE Q-Board)

Established

November 28, 2001

Representative

Yasutaka Kodama, President and Representative Director

Headquarters

86-1 Shineicho, Miyazaki, Miyazaki Prefecture

Capital

JPY993,886,000

Employees

104 (not including directors)

Lines ofbusiness

Planning, development, operation,and system provision for coin-operated laundries

Facilities

Tokyo Branch, Osaka Branch, Hiroshima Branch, Fukuoka Branch,Headquarters Sales Div. (Miyazaki), Yamaguchi Sales Office, Nagasaki SalesOfficeStores

431 (406 franchises, 25 directly operated stores)

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COIN LAUNDRYCOIN LAUNDRYManagement philosophy and corporate
message
Management philosophy
Remaining a presence truly needed by society, bybasing all of our ideas on the customer’s point of view.

Corporate message
Creating the de facto standard in the coin-operated
laundry industry
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COIN LAUNDRYCOIN LAUNDRYStore photo

Semicircular signage and round pillars makethe red-and-white color scheme stand out4

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5COIN LAUNDRYCOIN LAUNDRYWashers and dryers painted in original color scheme.
Design makes it easy for multiple customers to share
work tables.

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COIN LAUNDRYCOIN LAUNDRYHistory (2001-2008)
2001

Nov.

Established as KDM Co., Ltd., a provider of consulting services on effective use of real-estate
properties

2002

Dec.

Began franchise business and coin-operated laundry management business with simultaneous
opening of Jogasaki and Oshima-dori stores, aiming to manage coin-operated laundry properties.

2004

Feb.

Secured first business-model patent in Miyazaki Prefecture for remote coin-operated laundry
management system combining in-store Web cameras with remote operation of coin-operated
laundry equipment (pat. no. 3520449, coin-operated laundry management system)May

Began directly operated business (opened Aoba Store under direct operation)

Nov.

Advanced into Fukuoka Prefecture (opened Munakata Store under direct operation)

May

Advanced into Oita Prefecture (opened Ino and Munakata stores simultaneously as franchises)

2005

Company name changed to WASH HOUSE Co., Ltd.
2006

Aug.

Advanced into Kumamoto Prefecture (opened Yokote Store under direct operation)

2007

Jan.

Advanced into Saga Prefecture (opened Tosu Honmachi Store as franchise)

2008

March

Chosen to receive the second High-Service Japan 300 presented by SPRINGAug.

Secured business-model patent for coin-operated laundry management system that customers
can restore themselves using in-store touch panels (pat. no. 4172043: coin-operated laundrymanagement system)
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COIN LAUNDRYCOIN LAUNDRYHistory (2009-2016)
2009

May

100th store opens (Sakanoue Store opened as franchise)

2010

Jan.

Secured business-model patent for a system enabling loading of coupons for free use from instore touch panel devices to plastic cards with IC chips, prepaid cards, and mobile phones (pat.
no. 441796: coin-operated laundry management system)

2013

June

Advanced into Yamaguchi Prefecture (opened Ayaragi Store as franchise)

2014

May

Opened Hiroshima Branch (Higashi Ward, Hiroshima); advanced into Hiroshima Prefecture(opened Hiroshima Yahata Store under direct operation)

Dec.

200th store opens (Aeon Town Tasaki Store, as franchise)Jan.

Opened Oita Sales Office (Oita, Oita Prefecture)

April

Opened Osaka Branch (Nishi Ward, Osaka)

Oct.

Opened Tokyo Branch (Chuo Ward, Tokyo)

Dec.

Advanced into Osaka Prefecture (opened Tondabayashi Koda Store as franchise)

Feb.

Opened Kumamoto Sales Office (Kumamoto, Kumamoto Prefecture)

March

300th store opens (D&D Yukuhashi Store, as franchise)

June

Advanced into Nagasaki Prefecture (opened Omura Tominohara Store as franchise)

July

Advanced into Tokyo (opened Shinjuku 7-chome Store under direct operation)

2015

2016

8COIN LAUNDRYCOIN LAUNDRYHistory (Nov. 2016-)
2016

Nov.

Listed shares simultaneously on the Tokyo Stock Exchange’s Mothers board and the Fukuoka
Stock Exchange’s Q-Board

2017

March

400th store opens (Fukuoka Nata Store, as franchise)
Opened Yamaguchi Sales Office (Yamaguchi, Yamaguchi Prefecture)
Opened Nagasaki Sales Office (Omura, Nagasaki Prefecture)

June

Advanced into Okayama Prefecture (opened Okayama Saidaiji Store as franchise)
Advanced into Kagawa Prefecture (opened Takamatsu Kitagawanishi Store as franchise)
Advanced into Ehime Prefecture (opened Uwajima Warei Store as franchise)9COIN LAUNDRYCOIN LAUNDRY

Remote management system forcoin-operated laundry
This system combines security cameras and remotecontrol systems to provide customer service identical tothat of a staffed store even though no staff are present
in the store.

Business model patent attained(Patent no. 3520449)
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1) Audio/video system
Eyes:

Cameras with sufficient resolution toview apparel tags
Camera placement free from blind spots

Ears:

Voice system that enables interaction
with customers without requiring them tocall on the telephone

Mouth: Managers also can contact customers
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2) Washers, dryers, remote-control system
Can provide customer service even without goingto the store

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3) Sales management system

Clarification of issues involved in cash businessAlso used for marketing

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4) Labor management, business reporting system
Efficiently and appropriately handles management and instruction ofstore cleaning staff who work only 1 hr./day when convenient.

5) Inventory management system

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Concepts that inspired the startup of WASH
HOUSE1) What would be feasible without requiring much money?
2) How could we ensure sustained growth in sales and profits in a time inwhich Japan’s population steadily is decreasing due to low birth rates andthe ageing of society?
3) Are there any predecessors in the market, can we succeed incompetition, is the business resistant to easily being copied?
4) Can we develop a business based on the existing building stock?
5) Can we generate additional revenues accompanying the core business?
6) Can the market promise a scale of JPY1 trillion?
7) Is the business an important one for society?
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1) What would be feasible without requiring muchmoney?
Brokerage, software development, design,architecture and construction, consulting,education, etc.

Franchising business21

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2) How could we ensure sustained growth in sales
and profits in a time in which Japan’s population
steadily is decreasing due to low birth rates andthe ageing of society?

A business that has a small rate of use today butfor which that rate can be expected to grow in thefuture
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COIN LAUNDRYCOIN LAUNDRY3) Are there any predecessors in the market, canwe succeed in competition, is the business
resistant to easily being copied?
 An industry in which a predecessor has anoverwhelming presence would be difficult
 Are there any industry associations (resistingforces)?
 Can we develop a system that could not becopied easily?
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Revenue structure
Overview of stock revenue

Stock revenue in previous period＝
Revenue from new stores in FY2016＋
Revenue from stores existing prior to FY2016

Stock revenue in current period＝
Revenue from new stores in FY2017＋
Revenue from new stores in FY2016＋
Revenue from stores existing prior to FY2016

Periodic revenues from franchises (monthly per store)
 Sore management fee
JPY50,000 (JPY600,000/year) System maintenance fee JPY10,000 (JPY120,000/year) Share of advertising costs JPY30,000 (JPY360,000/year) Cleaning costs JPY36,000-47,000 (JPY432,000-564,000)

Revenue from new stores in FY2017

Revenue from new stores in FY2016

Revenue from new stores in FY2016

Revenue from stores existing prior to FY2016

Revenue from stores existing prior to FY2016

FY20161月JanuaryFY2017
12月 1月DecemberJanuary

12月
December24

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5) Can we generate additional revenues
accompanying the core business?
Ideal business style

Conglomerate business style
Everything from entry to exit handled within the group25

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6) Can the market promise a scale of JPY1 trillion?
While this also depends on the content of business,
In simplified terms the business can be expected
to lead to a large market through the following
approach:Becoming a leading company in Miyazaki:
JPY100 billion
In Kyushu: JPY300 billion
Nationwide: JPY1 trillion
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COIN LAUNDRYCOIN LAUNDRY7) Is the business an important one for society?
 Contemporary trends
 Themes in society
 Environmental issues
 Health issues
 Energy efficiency“Green economic and social innovations,”
Japan’s version of President Obama’s “GreenNew Deal” policy
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Consideration of the above led to:

The coin-operated laundry business28

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Growth market
While the domestic market is growing at a pace of morethan 500 stores per year, there are no major predecessor firms
in the market▼ Number of coin-operated laundries (stores)

FY1999 FY2001 FY2003 FY2005 FY2007 FY2009 FY2011 FY2013
Source: Ministry of Health, Labour and Welfare study

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General image of coin-operated laundries Dirty Dark ScaryOur image
 Clean Bright

 Safe, reassuring
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COIN LAUNDRYCOIN LAUNDRYDistinguishing features of the coin-operated
laundry business
1) A business that can succeed even with low usage rates2) A cash business with almost no losses and inventories
3) Operations do not depend on individual abilities
Machines do not slack, no need for individual training
Low risk of failure4) Most are owner-operator businesses
No corporate players5) Some coin-operated laundries are in violation of the law6) Can be expected to see increasing needs in light ofbackground social conditions

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The structure of the coin-operated laundry industry
Industry
structure

Manufacturer associations

Manufacturing

Manufacturers

Selling

Retailers,
equipment
suppliers,
boiler companies

BuyingOwners of coinoperated laundries

Theformer
SanyoTosei

ElectroluxHuebsch Wassalon

DexterCoin Laundry Association
Co. A Co. B Co. C Co. D Co. E Co. F

Owner-operators

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Current issues in the coin-operated
laundry business
Ordinary coin-operated laundries:
Since most are owner-operator
businesses, they lack the ability(or awareness) to addresscompliance-related issues
WASH HOUSE:As coin-operated laundries operated
by a corporation, the maximum
attention is paid to compliancerelated issues and the safety ofusers is given the top priority

No clearmanagement
standards for thesteadilyincreasing
number ofcoin-operatedlaundries

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Laws and regulations related tocoin-operated laundries
1. Issues related to procedures foropening the business
2. Land-zoning issues
3. Building Standards Act issues
4. Issues related to the Fire Service Act
and the Gas Business Act
5. Business-guidance issues
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Societal background
Changes in living environmental conditions
Increasing allergens
Increasing numbers of allergy patients
PM 2.5

Increasing numbers of people who need touse coin-operated laundries
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Matters given consideration in business planning
1) Low level of sales unless operating a large number of storesBut businesses in the industry lack funds and credit
As an equipment-based business, a company opening numerous stores by itself would facehigh depreciation costs, so that it could experience losses even while generating cash flow Franchising, off-balance-sheet transactions
2) Resolution of issues related to franchising (franchising businesses have a bad image)
Antagonism between franchise headquarters and franchisees/area franchises Developing a brand-new franchise system
Employing financial tools from the perspective of investment to increase number offranchisees3) Issues in operating a large number of stores
Sales stop when there are no more areas into which to expand  System of opening directly
operated stores
Avoiding a rights-based business  Distribution business4) How to compensate for low rates of use
Japanese trends and culture are created by the mass media
Among products with the same level of quality, price and name recognition are decisive
Incorporating from the start a system under which advertising costs are triple those of anordinary business

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2. Lines of Business and StoreOperation

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Lines of businessFranchising business

1

Creating a unique operations-subcontracting franchise business
Bundling store design, construction, machinery installation, etc.
Selling the WASH HOUSE coin-operated laundry system as a whole.
Receiving advertising and preparatory costs when opening and franchise fees.

Store management business

2Standardizing quality through adoption of an integrated management method
for all stores
Receiving the prices of providing services including immediate support through a 24-hr./day, 365-day/year
call center, Web cameras, and remote controls, daily inspection and cleaning, refilling detergent,maintenance, collection of cash, and ascertaining activities

Directly operated businesses etc.

3

Directly operated stores are trial shops for entering new areas
Receiving payment for use of washers and dryers from store users.
Opened mainly in new areas for the stores. These raise awareness of the WASH HOUSE brand,
stimulate use of coin-operated laundries, and serve as model stores for franchise owners and landowners.
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COIN LAUNDRYCOIN LAUNDRYFranchise system
The new business model will resolve issues with the existing franchise system

General franchise modelFranchise HQ
Cannot increase
sales due topoor training offranchisees

Brand name (signage)
Expertise
Product purchasing,etc.

Franchisees does notlisten to HQ’s
instructions after
increasing sales

Franchise fees
Royalties
Opposition

Store operation, HR, etc.
are franchisee’sresponsibilities

Cannot increase
sales due tofaulty system at
HQFranchisee

Wash House’s franchise modelFranchise HQPayment ofinvestment
Operation fees
(Settled from sales)

Brand name (signage)
Expertise
System that
Product purchasing, does notetc.
lead toopposition

Very easy!

Store operation
Sales administration,etc.

Franchisee39

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System for accelerating store openings
Developing a system aimed at opening a large numberof stores from the start
1. Centralized management of each store’s sales, labor and operations fromheadquarters
2. No need to train human resources when opening a store. Machines offer uniform
capabilities and do not slack.
3. Choosing vendors to handle key aspects of construction nationwide
4. Securing multiple construction contractors to handle simultaneous opening of newstores
Also responded to shortage of contractors after the Kumamoto Earthquakes throughcooperation among multiple construction contractors.
5. A system that makes it easy for a single franchise owner to open multiple stores
 A system for repeat franchisees (passage of 10-year period) Since franchisees do not have to manage the stores, the business does not dependon their management abilities No antagonistic relationship develops with headquarters
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Lessening the psychological burden of sales
1. Resolving the difficulties of new business development
Telephone calls for new business development pose a significant burden
Not having sales staff conduct telephone calls for new businessdevelopment
Not too much difficulty presented in securing new franchise owners
Telephone Appointer (TAP) system
 Visiting only customers and real estate companies with whom
appointments have been made Pairing sales staff with TAPs to create an environment conducive tocommunicating key points
 Having sales staff focus on thorough coverage through a system ofassigning sales territories
2. Separating tasks such as simulation and preparing contracts
Having sales staff focus on mobile work.

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Analysis of number of properties to develop based on
15 years of data
Calculating base numbers of contracts that can beconcluded per year based on experience
Five years or more: 7Branch manager:

6Leader:4

One year or more:

2

Less than one year: 142

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3. Future businessadvancement

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Future advancement
1. Expanding area of new store openings
2. Expanding business infrastructure
3. Media strategy

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Expanding store area
Full-fledged area expansion centeredon the Chugoku and Shikoku areas

Numbers of stores by region (June 30, 2017)
Tokyo02

Osaka

36
1Okayama
Hiroshima

10322

Yamaguchi
Kagawa1Ehime1

Fukuoka

7

Saga

167
18

9

Nagasaki
Kumamoto

41

245

Oita
Miyazaki

5Kagoshima

30Franchise
Directly operated

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33
50

100

150200 Number of households in Miyazaki Prefecture: 466,718(Estimated by the Miyazaki Prefecture General Policy Planning Dep.,
Statistics and Research Div., June 1, 2017)
 Number of stores in Miyazaki Prefecture: 57
 Coverage (households per store)
466,718÷57＝8,188
 Number of households in Japan: 56,412,140(Ministry of Internal Affairs and Communications, Local
Administration Bureau, Residents Administration Policy andManagement Div., January 1, 2017)

500
450
400
350

386

300
250

278

200
150
100
50

431

134

164

203

0
2012/122013/12

2014/122015/122016/122017/645

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Expansion of business infrastructure
Securing human resources Increasing number of hiring personnel
 Proactively hiring manager-class human resources

Advancing into related and peripheral businesses Increasing opportunities for revenues and cutting costs through bringing
activities in-house Entering new businesses based on the existing business model46

COIN LAUNDRYCOIN LAUNDRYMedia strategy
Deploying an integrated brand strategy for all storesnationwide, based on the concepts of peace of mind, safety,
and cleanliness, to establish an overwhelmingly strong
brand image far above the competition.
 Growing the market
 Media strategy using systems such as TV commercials to enhance
advertising and promotion and using key local broadcasters
 Firm establishment of the practice of washing futons

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COIN LAUNDRYCOIN LAUNDRYContact: WASH HOUSE Co., Ltd.
Address: 86-1 Shineicho, Miyazaki, Miyazaki PrefectureTel.: 0985-24-0000

This presentation includes forward-looking statements based on assumptions and projections about the future made at the time of preparation.
These involve risks and uncertainties. Actual business performance may vary and be subject to change due to changes in circumstances overtime and various other factors. Please note that the Company is under no obligation to revise this document in the event of such changes.
All rights to this document are the property of WASH HOUSE Co., Ltd. Unauthorized reproduction, reuse, etc. for any purpose, whether byelectronic or mechanical means, is prohibited.

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