Being a franchisee

[martinz1995]

Hi so I have been in the cleaning industry for a while - majority of the people I know are basically mom and pop teams. I know a few that are very successful, and one of them is someone who managed to scale to $20k p month within 6 months owning a franchise. Meanwhile I've been in operation over 9 months and I have only 2 staff plus 1 VA and am no where near $20k p month. So I'm wondering if there's a bigger benefit to franchising? I know I won't technically "Own" the brand but I don't mind honestly.

 

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[Aidan04]

Hi so I have been in the cleaning industry for a while - majority of the people I know are basically mom and pop teams. I know a few that are very successful, and one of them is someone who managed to scale to $20k p month within 6 months owning a franchise. Meanwhile I've been in operation over 9 months and I have only 2 staff plus 1 VA and am no where near $20k p month. So I'm wondering if there's a bigger benefit to franchising? I know I won't technically "Own" the brand but I don't mind honestly.

I don't know much about it, but I've heard from several people on the forum that franchising is a great way to scale.

 

[Johnny boy]

You are usually buying the emotional crutch of someone else who succeeded with a system.

Like Roger banister breaking the 4 minute mile, most people need to SEE something happen to feel confident enough to do it themselves. It’s human, nothing wrong with it.

But with a franchise you are USUALLY still going to be in charge of getting the customers, getting the work done, etc. You usually just get to use their logo, their training manual, and a couple of things.

Those things are all cheap except maybe the training but I promise you’ll see it and think “well no shit….”

No home services brand is worth very much. People buy because it was the first place on Google maps and they answered the phone, unlike many other businesses that rely on brand heavily.

So you’re really buying the feeling of “this is how someone else did it and it worked so it’ll work for me” which will embolden you, keep you from getting discouraged, and make you more confident, all very important things.

With that alone, it may actually be a wise choice. It’s…”embarassing” to admit to people that you paid so much just for something emotional, but a truly wise person would actually see the practical value in that, being that we are emotional creatures 90% of the time and only pretending to be logical to justify things after the fact.

 

[jclean]

you have a choice

1)grow faster with a franchise (in the short term)

2)grow slower on your own (thinking long term)

Being a part of a franchise is good if you don't want to think too much yourself or if you want to learn how a franchise works in order to later own a franchise.

I am now 10 years in and on my way to 1m sales per year.
10 years of taking small steps and learning a lot.
Now after 10 years the turnover is growing faster every year.
The Snowball Effect.

10 years is a long time and I am sure there are many people who could do this faster, I also know that most people do not have that much patience.

 

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[Two Dog]

Hi so I have been in the cleaning industry for a while - majority of the people I know are basically mom and pop teams. I know a few that are very successful, and one of them is someone who managed to scale to $20k p month within 6 months owning a franchise. Meanwhile I've been in operation over 9 months and I have only 2 staff plus 1 VA and am no where near $20k p month.

Sigh.

Is it only the home services industry that's so freakin' stupidly focused on revenue instead of profits?!?

Can't tell you how many people I've met in the past year that are *obsessed* with running a seven figure home services business aka $1M annual sales with zero concern about actually making money. For them having money in the bank is the only metric. Doesn't matter whether it's needed next month for payroll, taxes, equipment or anything else. So dumb.

So I'm wondering if there's a bigger benefit to franchising? I know I won't technically "Own" the brand but I don't mind honestly.

Actually, you won't OWN anything except the franchise fee, monthly royalties and "rights" to a limited territory along with a hundred pages of restrictions. Followed by hoping that whoever launched the franchise has enough brains and expertise to grow it past 70 - 80 locations. Below that point, most are struggling to earn a profit themselves and you get to worry about the entire brand imploding.

The primary franchise benefit is systems. That's how to reach $20K monthly in six months.

I am now 10 years in and on my way to 1m sales per year.

Franchise = fast growth vs. DIY = slow growth is a false choice.

Based on what you've learned in the first ten years, could you start completely from scratch and cut that time to five years to reach your current sales level? Three years? One year? Definitely. That's why growth minded owners read books, attend conference, join MM groups and hire coaches. You buy down the time to earning money more quickly exactly the same way paying a franchise fee of $25K - $150K buys down the time. The fee gets you some software, training, weekly calls with a growth coach and a chat forum with other franchise owners.

 

[Oso]

My first brick & mortar was opened under a franchise. The prior owner failed. While the franchise itself was garbage, the name carried weight in our area and industry, and the previous owner still had an audience with unmet needs. We opened under the franchise, grew under it for 2 years, and then rebranded to our own before opening additional stores.

We can't really tell you if it's a smart play or not as it's entirely based on your individual circumstances. In 2 years, we paid off about 250k in debt, saved about another 100k for future stores, hired a few people, etc. I genuinely believe if we didn't have the added foot traffic from the franchise name, the initial stages would've been exponentially more painful. Furthermore, it probably would've taken us an additional 2-3 years to open a 2nd location. So, while people would often walk in and scoff saying, "ugh, you're associated with <them>?" it didn't change the fact they were coming in multiple times a week to spend money.

But again, this is entirely based on your circumstances. We were a brand new business. You have 9 months under your belt. The factors will obviously be different. Either way, however, the goals are the same: grow your business, hire solid talent, add value, etc.

If franchising with them will increase profits, open your time a bit more, lead to additional clients, etc. then I say do it. Franchise fees are obviously garbage, but if the franchise itself has a big enough name, and you utilize said name correctly, you'll be building a sustainable empire that you can double down on upon severing the connection between you and the franchise.

Cheers.

 

[Two Dog]

My first brick & mortar was opened under a franchise. The prior owner failed. While the franchise itself was garbage, the name carried weight in our area and industry, and the previous owner still had an audience with unmet needs. We opened under the franchise, grew under it for 2 years, and then rebranded to our own before opening additional stores.

Was this awhile ago?

All the FDDS that I've seen the past few years have pretty massive restrictions on competition. Part of all the hundred page boilerplate legal stuff. You wouldn't be allowed to rebrand or basically do anything at all in the industry for up to a decade. The only way to expand is buying another approved franchise territory (assuming one is available). The non-compete stuff has always been a dealbreaker for me mostly because it's so ridiculous.

 

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[Oso]

Was this awhile ago?

All the FDDS that I've seen the past few years have pretty massive restrictions on competition. Part of all the hundred page boilerplate legal stuff. You wouldn't be allowed to rebrand or basically do anything at all in the industry for up to a decade. The only way to expand is buying another approved franchise territory (assuming one is available). The non-compete stuff has always been a dealbreaker for me mostly because it's so ridiculous.

We officially parted ways in late 2020. I don't know the specifics as I didn't view the contract that was signed with the franchise owner as I bought-in after the fact. Furthermore, at this time, I was leaving as I wanted out before the new store opened. Finally, the industry I'm referencing is trading card games. A lot of the industry is janky. I can neither confirm nor deny if the owner has a legitimate franchise, or if it's just 1 business with 5,000 locations. Based on the information I've been given, he draws up the "franchise contracts" with his lawyers.

That said, I do know that after countless hours of lawyer discussions, it boiled down to us getting sued, or we had to pay out the owner before reopening. We agreed to pay him out. We agreed to pay him 80k, as well as cover all outstanding franchise fees (~5k, if memory serves).

A few months later, the original store was reopened with the new branding, the 2nd location was under construction/open, and I had been bought out. Last I heard, they're now planning their 3rd and 4th locations.

Cheers.