<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB



(Mark One)

 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---  ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001.


     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---  EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM________________



COMMISSION FILE NUMBER.......................................0-15227



                              THE DWYER GROUP, INC.
--------------------------------------------------------------------------------
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)


<Table>
<S>                                                                             <C>
Delaware                                                                                                 73-0941783
--------                                                                                                 ----------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)                  (I.R.S. EMPLOYER IDENTIFICATION NO.)
</Table>



                  1010 N. University Parks Dr., Waco, TX 76707
                  --------------------------------------------
              (ADDRESS AND ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)


                                 (254) 745-2400
                                 --------------
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)


--------------------------------------------------------------------------------
              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                         IF CHANGED SINCE LAST REPORT)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes X  No


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

           Class                                 Outstanding at November 7, 2001
----------------------------                     -------------------------------
Common stock, $.10 par value                                           6,997,931



   TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): Yes     No  X
                                                                  ---    ---


<PAGE>

                              THE DWYER GROUP, INC.

                                      INDEX


<Table>
<Caption>
PART I  -  FINANCIAL INFORMATION                                                                           PAGE NO.
<S>             <C>                                                                                      <C>

     Item 1.    Financial Statements

                Condensed Consolidated Balance Sheets as of September 30, 2001 (unaudited)
                and December 31, 2000.............................................................................3

                Consolidated Statements of Operations for the Three Months Ended
                September 30, 2001 and 2000 (unaudited)...........................................................4

                Consolidated Statements of Operations for the Nine Months Ended
                September 30, 2001 and 2000 (Unaudited)...........................................................5

                Consolidated Statements of Cash Flows for the Nine Months
                Ended September 30, 2001 and 2000 (unaudited).....................................................6

                Notes to Condensed Consolidated Financial Statements............................................7-8

     Item 2.    Management's Discussion and Analysis of Financial
                Condition and Results of Operations............................................................9-12


PART II  -  OTHER INFORMATION

     Item 1.    Legal Proceedings................................................................................13

     Item 2.    Changes in Securities............................................................................13

     Item 3.    Defaults Upon Senior Securities..................................................................13

     Item 4.    Submission of Matters to a Vote of Security Holders..............................................13

     Item 5.    Other Information................................................................................13

     Item 6.    Exhibits and Reports on Form 8-K.................................................................13
</Table>



                                       2
<PAGE>

                     THE DWYER GROUP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<Table>
<Caption>
                                                                          SEPTEMBER 30,      DECEMBER 31,
          ASSETS                                                               2001              2000
                                                                          -------------      ------------
                                                                           (Unaudited)         (Audited)
<S>                                                                       <C>               <C>

Current assets:
       Cash and cash equivalents                                           $  1,277,696      $    146,852
       Marketable securities, available-for-sale                                552,317           493,684
       Trade accounts receivable, net of allowance for doubtful
             accounts of $439,053 and $506,143, respectively                  1,511,648         1,958,441
       Accounts receivable from related parties                                 318,949           355,929
       Accrued interest receivable, including amounts due from
             related parties of $131,613 at December 31, 2000                    42,986           175,740
       Trade notes receivable, current portion, net of allowance for
             doubtful accounts of $67,745 and $63,360, respectively           1,625,853         1,520,605
       Inventories                                                               79,400            97,369
       Prepaid expenses                                                         419,886           201,292
       Federal income tax receivable                                                 --           330,252
       Notes receivable from related parties, current portion                   187,815           289,022
                                                                           ------------      ------------
          Total current assets                                                6,016,550         5,569,186

Property and equipment, net                                                   3,561,401           981,185
Notes and accounts receivable from related parties                               88,072         1,902,366
Trade notes receivable, net of allowance for doubtful notes of
             $960,411 and $884,403, respectively                              5,097,601         4,638,259
Goodwill, net                                                                 5,077,398         5,218,794
Purchased franchise rights, net                                               3,648,616         4,242,015
Covenant not to compete, net                                                     36,661            51,661
Net deferred tax asset                                                          608,545           611,551
Other assets                                                                    602,601           360,183
                                                                           ------------      ------------

TOTAL ASSETS                                                               $ 24,737,445      $ 23,575,200
                                                                           ============      ============

          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
       Accounts payable, trade                                             $    965,486      $    432,390
       Accrued liabilities                                                    1,421,237         1,387,248
       Deferred franchise sales revenue                                         240,610           341,311
       Litigation reserves                                                      269,188           345,501
       Federal income taxes payable                                              14,138           560,775
       Current maturities of long-term debt                                   1,330,781         1,665,948
                                                                           ------------      ------------
          Total current liabilities                                           4,241,440         4,733,173

Long-term debt, less current portion                                          3,537,808         2,727,190
Deferred franchise sales revenue                                                176,350           227,766

Stockholders' equity:
       Common stock                                                             764,519           764,519
       Additional paid-in capital                                             9,257,887        10,193,855
       Retained earnings                                                      8,038,713         6,185,086
       Accumulated other comprehensive income                                   (69,120)          (46,237)
       Treasury stock, at cost                                               (1,210,152)       (1,210,152)
                                                                           ------------      ------------
          Total stockholders' equity                                         16,781,847        15,887,071
                                                                           ------------      ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $ 24,737,445      $ 23,575,200
                                                                           ============      ============
</Table>

     See notes to condensed consolidated financial statements (unaudited).


                                       3
<PAGE>

                     THE DWYER GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)


<Table>
<Caption>
                                                             THREE MONTHS ENDED
                                                               SEPTEMBER 30,
                                                       ------------------------------
                                                           2001              2000
                                                       ------------      ------------
<S>                                                    <C>               <C>

REVENUES:
     Royalties                                         $  3,335,161      $  2,857,686
     Franchise fees                                       1,065,680         1,052,159
     Sales of products and services                         900,690           514,283
     Interest                                               182,980           169,655
     Gain on sale of securities                             112,270                --
     Other                                                  144,766           133,194
                                                       ------------      ------------

        TOTAL REVENUES                                    5,741,547         4,726,977

COSTS AND EXPENSES:
     General, administrative and selling                  3,404,865         3,308,166
     Costs of product and service sales                     723,179           468,527
     Depreciation and amortization                          374,763           336,913
     Interest                                               227,049            71,307
                                                       ------------      ------------

        TOTAL COSTS AND EXPENSES                          4,729,856         4,184,913

Income before income taxes                                1,011,691           542,064
Income taxes                                               (297,433)         (181,839)
                                                       ------------      ------------

NET INCOME                                             $    714,258      $    360,225
                                                       ============      ============


EARNINGS PER SHARE - BASIC                             $       0.10      $       0.05
                                                       ============      ============

EARNINGS PER SHARE - DILUTED                           $       0.10      $       0.05
                                                       ============      ============

WEIGHTED AVERAGE COMMON SHARES                            6,997,931         6,997,980
                                                       ============      ============

WEIGHTED AVERAGE COMMON SHARES AND POTENTIAL
         DILUTIVE COMMON SHARES                           7,207,264         7,111,058
                                                       ============      ============
</Table>


     See notes to condensed consolidated financial statements (unaudited).


                                       4
<PAGE>

                     THE DWYER GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)


<Table>
<Caption>
                                                             NINE MONTHS ENDED
                                                               SEPTEMBER 30,
                                                       ------------------------------
                                                           2001              2000
                                                       ------------      ------------
<S>                                                    <C>               <C>

REVENUES:
     Royalties                                         $  9,262,692      $  8,057,472
     Franchise fees                                       3,324,612         3,342,549
     Sales of products and services                       2,528,925         1,566,390
     Interest                                               546,370           501,931
     Gain on sale of securities                             112,270                --
     Other                                                  424,526           430,788
                                                       ------------      ------------

        TOTAL REVENUES                                   16,199,395        13,899,130

COSTS AND EXPENSES:
     General, administrative and selling                 10,012,944         9,532,235
     Costs of product and service sales                   2,082,220         1,321,002
     Depreciation and amortization                        1,100,587         1,009,180
     Interest                                               420,907           232,186
                                                       ------------      ------------

        TOTAL COSTS AND EXPENSES                         13,616,658        12,094,603

Income before income taxes                                2,582,737         1,804,527
Income taxes                                               (729,110)         (613,847)
                                                       ------------      ------------

NET INCOME                                             $  1,853,627      $  1,190,680
                                                       ============      ============


EARNINGS PER SHARE - BASIC                             $       0.26      $       0.17
                                                       ============      ============

EARNINGS PER SHARE - DILUTED                           $       0.26      $       0.17
                                                       ============      ============

WEIGHTED AVERAGE COMMON SHARES                            6,997,931         7,000,613
                                                       ============      ============

WEIGHTED AVERAGE COMMON SHARES AND POTENTIAL
         DILUTIVE COMMON SHARES                           7,132,331         7,153,442
                                                       ============      ============
</Table>


     See notes to condensed consolidated financial statements (unaudited).


                                       5
<PAGE>

                     THE DWYER GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


<Table>
<Caption>
                                                                             NINE MONTHS ENDED
                                                                               SEPTEMBER 30,
                                                                       ------------------------------
                                                                           2001              2000
                                                                       ------------      ------------
<S>                                                                    <C>               <C>
Operating activities:
     Net income for the period                                         $  1,853,627      $  1,190,680
     Adjustments to reconcile net income to
                  net cash provided by operating activities:
        Depreciation and amortization                                     1,100,587         1,009,180
        Reserve for doubtful accounts                                      (264,833)          132,601
        Notes received for franchise sales                               (1,694,157)       (2,265,799)
        Loss (gain) on sale of securities                                  (112,270)               --
    Changes in assets and liabilities:
        Accounts and interest receivable                                    547,722          (356,941)
        Receivables / payables to related parties, net                       36,980          (327,920)
        Inventories                                                          17,969           (81,154)
        Prepaid expenses                                                   (218,594)         (188,673)
        Deferred tax asset                                                  138,686                --
        Accrued interest payable                                            330,252        301,579.00
        Federal income tax receivable                                      (118,238)          130,071
        Accounts payable and accrued liabilities                            (76,313)          114,392
        Litigation reserves                                                (152,117)         (135,745)
        Deferred franchise sales revenue                                    (36,112)           13,048
        Other                                                             1,353,189       (464,681.00)
                                                                       ------------      ------------
  Net cash provided by (used in) operating activities
                                                                       ------------      ------------

Investing activities:                                                     1,399,002         1,149,655
    Collections of notes receivable                                      (3,835,932)         (280,878)
    Purchase of property and equipment                                      (46,367)         (450,000)
    Purchase of franchise rights                                           (283,645)          (36,771)
    Purchase of other assets                                                 (5,617)          (17,663)
    Purchase of marketable securities                                       159,262           114,403
    Proceeds from sale of marketable securities                           1,915,501            52,059
    Collections on notes receivable from related parties                   (697,796)          530,805
                                                                       ------------      ------------
  Net cash (used in) provided by investing activities
                                                                       ------------      ------------

Financing activities:                                                             0           (19,466)
    Purchases of treasury stock                                        2,852,800.00         1,114,994
    Proceeds from borrowings                                             (2,377,349)       (1,328,412)
    Payments on borrowings                                                  475,451          (232,884)
                                                                       ------------      ------------
  Net cash provided by (used in) financing activities
                                                                       ------------      ------------
                                                                          1,130,844          (166,760)
Net increase (decrease) in cash and cash equivalents                        146,852           556,383
Cash and cash equivalents, beginning of period
                                                                       ------------      ------------
                                                                          1,277,696           389,623
Cash and cash equivalents, end of period                               $  1,277,696      $    389,623
                                                                       ============      ============
</Table>

     See notes to condensed consolidated financial statements (unaudited).


                                       6
<PAGE>

                     THE DWYER GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1.    ORGANIZATION

The Dwyer Group, Inc. is a holding company for service-based businesses
providing specialty services internationally through franchising. The condensed
consolidated financial statements include the accounts of The Dwyer Group, Inc.
and its wholly-owned subsidiaries (the "Company") which include the following:

         o        Rainbow International Carpet Dyeing and Cleaning Co.
                  ("Rainbow") is a franchisor of carpet cleaning, dyeing, air
                  duct cleaning, and restoration services under the service mark
                  "Rainbow International"(R).

         o        Mr. Rooter Corporation ("Mr. Rooter") is a franchisor of
                  plumbing repair and drain cleaning services under the service
                  mark "Mr. Rooter"(R).

         o        Aire Serv Heating & Air Conditioning, Inc. ("Aire Serv") is a
                  franchisor of heating, ventilating and air conditioning
                  service businesses under the service mark "Aire Serv"(R).

         o        Mr. Electric Corp. ("Mr. Electric") is a franchisor of
                  electrical repair and service businesses under the service
                  mark "Mr. Electric"(R).

         o        Mr. Appliance Corp. ("Mr. Appliance") is a franchisor of major
                  household appliance service and repair businesses under the
                  service mark "Mr. Appliance"(R).

         o        Synergistic International, Inc., ("Glass Doctor"), is
                  franchisor of Glass Doctor(R), a service concept whose
                  business is the replacement of automobile, residential and
                  commercial glass.

         o        The Dwyer Group National Accounts, Inc. ("National Accounts")
                  solicits national account customers who call a toll-free phone
                  number for their general repair and 24-hour emergency service
                  needs. The order is filled through the Company's network of
                  franchisees or qualified subcontractors.

         o        The Dwyer Group Canada, Inc. ("TDG Canada") markets and
                  services certain of the Company's franchise concepts in
                  Canada. Currently, those concepts are Mr. Rooter, Mr.
                  Electric, Rainbow and Aire Serv.

NOTE 2.    BASIS OF PRESENTATION

A.       PRINCIPLES OF CONSOLIDATION

The accompanying condensed consolidated financial statements include The Dwyer
Group, Inc. and its subsidiaries (the "Company"). All significant intercompany
balances and transactions have been eliminated.

B.       INTERIM DISCLOSURES

The information as of September 30, 2001 and for the three months and nine
months ended September 30, 2001 and September 30, 2000 is unaudited but in the
opinion of management, reflects all adjustments, which are of a normal recurring
nature, necessary for a fair presentation of financial position and results of
operations for the interim periods. The accompanying condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto contained in the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2000, and with other
filings with the U.S. Securities and Exchange Commission.

The results of operations for the three months and nine months ended September
30, 2001 are not necessarily indicative of the results to be expected for the
fiscal year ending December 31, 2001.



                                       7
<PAGE>

NOTE 3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

EARNINGS PER COMMON SHARE

Basic earnings per share is computed based on the weighted average number of
shares outstanding during each of the periods. Diluted earnings per share
include the dilutive effect of unexercised stock options and warrants.

NEW ACCOUNTING POLICIES

In June 2001, the Financial Accounting Standards Board finalized FASB Statement
No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and Other
Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase method
of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units in order
to assess potential future impairment of goodwill, reassess the useful lives of
other existing recognized intangible assets, and cease amortization of
intangible assets with an indefinite useful life. SFAS 142 requires that an
intangible asset with an indefinite useful life be tested for impairment in
accordance with specified guidelines. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.

The Company's previous business combinations were accounted for using the
purchase method. As of September 30, 2001, the net carrying amount of goodwill
is $5,077,398. Amortization expense during the nine-month period ended September
30, 2001 was $156,951. Currently, the Company is assessing, but has not yet
determined, how the adoption of SFAS 141 and SFAS 142 will impact its financial
position and results of operations.

NOTE 4.   RELATED PARTY TRANSACTIONS

In April of 2001, the Company purchased its principal executive and
administrative facilities (land, buildings and equipment) from a related party
for approximately $3.7 million, which equaled the appraised value of the
facilities. In accordance with generally accepted accounting principles, the
transaction was recorded at the related party's basis of approximately $2.7
million, with the difference being reflected as a reduction in stockholders'
equity. A portion of the $3.7 million payment was funded by a $2.9 million bank
loan collateralized by the facilities. The related party used a portion of the
monies received in the sale of the facilities to pay off approximately $2.2
million of related party debt to the Company. The Company is using the excess
cash of approximately $1.4 million netted from the above transactions for
improvements to the property, payment of existing debt, and for additional
working capital.

NOTE 5.   DERIVATIVE FINANCIAL INSTRUMENTS

During April of 2001, the Company entered into an interest rate swap agreement
("SWAP") to effectively limit exposures to interest rate movements on earnings
and cash flows. The SWAP effectively converts a floating interest rate on the
bank debt described in Note 4, to a fixed rate instrument. The SWAP was entered
into for the same period as the note and settles monthly. Changes in the SWAP's
fair value is recognized in earnings as an adjustment to interest expense, with
the fair value of the SWAP recorded on the balance sheet as either an accrued
liability or other asset. Due to the recent declines in interest rates, the
exposure on the SWAP as of September 30, 2001 was $151,474. This amount also
represents the amount of additional interest expense recorded for the nine
months ended September 30, 2001.



                                       8
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Unless otherwise noted, all dollar amounts are rounded to the nearest thousand.
Percentages represent the change from the comparable amount from the previous
year. Note references refer to Notes to Condensed Consolidated Financial
Statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital ratio was approximately 1.4 to 1 at September 30,
2001 as compared to 1.2 to 1 at December 31, 2000. The Company had working
capital of approximately $1.8 million at September 30, 2001 as compared to
approximately $840,000 at December 31, 2000. For the remainder of fiscal 2001,
management expects to fund working capital requirements primarily through
operating cash flow. At September 30, 2001, the Company had cash and cash
equivalents of approximately $1.3 million, and marketable securities of
approximately $552,000.

In February 2001, the Company negotiated a $500,000 line of credit with its
bank. This was paid off with the loan from the purchase of the facilities
discussed in Note 4.

Cash in the amount of $1,353,000 was provided by operating activities in the
first nine months of 2001, as compared to $465,000 used by such activities for
the same period in 2000. In 2001, cash was generated primarily by a net profit
of $1,854,000, depreciation and amortization of $1,101,000, a decrease in
receivables of $585,000 and a decrease in a tax refund receivable of $330,000,
partially offset by notes received from franchise sales of $1,694,000, a
decrease in deferred franchise sales of $152,000, an increase of $219,000 in
prepaid expenses, and a net increase in accounts payable and accrued liabilities
of $56,000.

In the first nine months of 2001, the Company used $698,000 for investing
activities, primarily for the purchase of property and equipment of $3,836,000
and the purchase of other assets for $284,000, partially offset by collections
on notes receivable of $1,399,000, collections on notes receivable from related
parties of $1,916,000, and proceeds from sales of marketable securities of
$159,000. For the same period in 2000, the Company generated $531,000 in cash
from investing activities, primarily from collections on notes receivable of
$1,202,000 and the sale of marketable securities for $114,000, partially offset
by the purchase of franchise rights for $450,000 and the purchase of property
and equipment for $281,000.

Cash in the amount of $475,000 was provided by financing activities in the first
nine months of 2001. Proceeds from borrowings of $2,853,000 was partially offset
by payments on borrowings of $2,377,000. In the first nine months of 2000, the
Company used $233,000 in cash for financing activities for payments on
borrowings of $1,328,000 and purchases of treasury stock for $19,000, partially
offset by proceeds on borrowings of $1,115,000.

The Company is not aware of any trend or event, which would potentially
adversely affect its liquidity. In the event such a trend would develop,
management believes that the Company has sufficient funds available to satisfy
the working capital needs of the business.

RESULTS OF OPERATIONS

For the nine months ended September 30, 2001, compared to the nine months ended
September 30, 2000.

Total revenues for the nine months increased by $2,300,000 (17%) to $16,199,000
in 2001 from $13,899,000 in 2000. This increase is due to increases in each of
the Company's revenue categories as follows: royalties - $1,205,000 (15%); sales
of products and services - $963,000 (61%); interest - $44,000 (9%); and gain on
sale of securities - $112,000, partially offset by decreases in franchise fees -
$18,000; and other revenues - $6,000.



                                       9
<PAGE>

Royalty revenues from each of the Company's franchise concepts increased as
follows:

<Table>
<S>                                     <C>                <C>
         Mr. Rooter                     $498,000           14%
         Glass Doctor                   $454,000           40%
         Aire Serv                      $105,000           24%
         Rainbow                        $ 76,000            4%
         Mr. Electric                   $ 21,000            3%
         Mr. Appliance                  $  7,000            5%
</Table>

In addition to the above, royalties from the Company's Canadian and other
foreign operations increased by $44,000 (14%).

Overall, these royalty revenue increases coincide with the increased business
revenues of existing franchisees as well as an increase in the number of
franchisees producing revenue. These increases are a direct result of the
Company's emphasis on providing strong franchise support services, and its
methods and programs created to assist franchisees in building successful
businesses, along with continued emphasis on the sale of new franchises. These
strategies are very important to the future of the Company, as royalties are the
foundation for the Company's long-term financial strength.

The decrease in franchise fee revenues was due to decreases from each of the
following concepts: Glass Doctor - $418,000 (42%); Aire Serv - $131,000 (25%);
and Mr. Appliance - $8,000 (6%). These decreases were partially offset by
increases in franchise fees generated from: Mr. Rooter - $30,000 (4%); Rainbow -
$338,000 (192%); Mr. Electric - $9,000 (2%).

In addition to the above, franchise sales from the Company's Canadian and other
foreign operations increased by $160,000 (287%).

Sales of products and services increased by $963,000 (61%), primarily due to
additions to the National Accounts customer base.

Interest income increased by $44,000 (9%) due to an increase in trade notes
receivable related to the sale of franchises.

General and administrative expenses increased by $481,000 (5%), due to
additional costs and personnel associated with the increase in overall revenues.

Due to the increase in product and service sales, costs associated with such
sales increased by $761,000 (58%).

Depreciation and amortization increased by $91,000 (9%) due primarily to
amortization of franchise rights purchased in late 2000 and depreciation of
property and equipment related to the facility purchase discussed in Note 4 of
the notes to the condensed consolidated financial statements.

Interest expense increased by $189,000 (81%) due to additional debt resulting
from the purchase of property as described in Note 4 and the interest rate swap
discussed in Note 5, partially offset by reductions in existing debt.

The Company reported net income of $1,854,000 for the nine months ended
September 30, 2001 as compared to net income of $1,191,000 for the same period
in 2000. The Company had a lower effective tax rate in 2001, due to utilizing
available tax credits, which were previously fully reserved.

For the three months ended September 30, 2001, compared to the three months
ended September 30, 2000.

Total revenues for the quarter increased by $1,015,000 (22%) to $5,742,000 in
2001 from $4,727,000 in 2000. This increase is due to an increase of $477,000
(17%) in royalties, an increase of $14,000 (1%) in franchise fees, an increase
of $386,000 (75%) in sales of products and services, an increase of $13,000 (8%)
in interest income, and an increase of $12,000 (9%) in other revenues and a gain
on sale of securities of $112,000.



                                       10
<PAGE>

Royalty revenues increased for the following franchise concepts:

<Table>
<S>                                    <C>                <C>
         Mr. Rooter                    $184,000           15%
         Glass Doctor                  $182,000           44%
         Rainbow                       $ 48,000            8%
         Aire Serv                     $ 31,000           17%
         Mr. Appliance                 $  9,000           21%
</Table>

These increases were partially offset by decreases in royalties of $20,000 (6%)
from Mr. Electric.

In addition to the above, royalties from the Company's Canadian and other
foreign operations increased by $43,000 (54%).

Overall, these royalty revenue increases coincide with the increased business
revenues of existing franchisees as well as an increase in the number of
franchisees producing revenue. These increases are a direct result of the
Company's emphasis on providing strong franchise support services, and its
methods and programs created to assist franchisees in building successful
businesses, along with continued emphasis on the sale of new franchises. These
strategies are very important to the future of the Company, as royalties are the
foundation for the Company's long-term financial strength.

Franchise sales revenues increased by $14,000 (1%) from 2000 to 2001. Increases
from: Rainbow - $138,000 (829%); Mr. Rooter - $56,000 (18%); and Mr. Electric -
$78,000 (72%) were more than offset by decreases from Glass Doctor - $203,000
(53%); Mr. Appliance - $8,000 (17%); Aire Serv - $37,000 (23%); and Canadian
operations - $10,000 (38%).

Sales of products and services increased by $386,000 (75%), primarily due to
additions in the National Accounts customer base.

Interest income increased by $13,000 (8%) due to an increase in trade notes
receivable related to the sale of new franchises.

General and administrative expenses increased by $97,000 (3%). This increase was
primarily a result of additional costs and personnel associated with the
increase in overall revenues.

Due to the increase in product and service sales, costs associated with such
sales increased by $255,000 (54%).

Depreciation and amortization increased by $38,000 (11%), due primarily to
depreciation of property and equipment related to the facility purchase
discussed in Note 4 of the notes to the condensed consolidated financial
statements.

Interest expense increased by $156,000 (218%) due to additional debt resulting
from the purchase of property as described in Note 4 and additional interest
accrued for the interest rate swap discussed in Note 5, partially offset by
reductions of existing debt

The Company reported net income of $714,000 for the quarter ended September 30,
2001 as compared to net income of $360,000 for the same period in 2000.

IMPACT OF INFLATION

Inflation has not had a material impact on the operations of the Company.

FOREIGN OPERATIONS

The Company operates in 16 foreign countries. Typically, foreign franchises are
sold and managed by a master licensee in that country. Royalty revenues from
master licenses are recorded as received due to the difficulty sometimes
experienced in foreign countries when attempting to transfer such funds to the
United States. The Company does not depend on foreign operations, and such
operations do not have a material impact on its cash flow. During the remainder
of 2001, the Company may sell additional master licenses, which could result in
lump sum payments from the master licensees to the Company.



                                       11
<PAGE>

FORWARD-LOOKING STATEMENTS

The Company cautions readers that various factors could cause the actual results
of the Company to differ materially from those indicated by forward-looking
statements made from time-to-time in news releases, reports, proxy statements,
registration statements and other written communications (including the
preceding sections of this Management's Discussion and Analysis), as well as
oral statements made by representatives of the Company. Except for historical
information, matters discussed in such oral and written communications are
forward-looking statements that involve risks and uncertainties, including, but
not limited to, general business conditions, the impact of competition, taxes,
inflation, and governmental regulations.









                     THIS SECTION LEFT INTENTIONALLY BLANK.






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<PAGE>

                                     PART II
                                OTHER INFORMATION


THE DWYER GROUP, INC. AND SUBSIDIARIES

ITEM 1 - LEGAL PROCEEDINGS

         NONE


ITEM 2 - CHANGES IN SECURITIES

         (a)  NONE

(b)      Not applicable.

         (c)  NONE


ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

         NONE

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         NONE

ITEM 5 - OTHER INFORMATION

         NONE

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:

                  NONE


         (b)      Reports on 8-K

                  NONE




                                       13
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




  Date:    November 7, 2001                The Dwyer Group, Inc.


                                           By: /s/ Thomas Buckley
                                               ---------------------------------
                                                   Thomas Buckley
                                                   Vice President and Chief
                                                   Financial Officer



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