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The Exclusive Magazine for the Building Service Contracting Industry Since 1981
April 17, 2012

KEY POINTS TO REMEMBER When Buying a Cleaning Franchise

Written by  Richard D Ollek

KEYPOINTSAfter spending nearly 50 years in the contract cleaning business as an owner and as an advisor, I have had the opportunity to observe, as well as to answer questions about the role franchising plays in the industry. In recent years, franchising of cleaning has become a major part of the industry.

This may surprise some people, but I truly believe there is a role that franchising plays in our industry. In today’s economy, many people have been downsized out of a job and have explored the opportunity of going into business for themselves. The cleaning business is an excellent opportunity. Why?

• In most cases, there is a low buy-in investment, which can be very attractive.

• You can be in business for yourself and not worry about being out of a job.

• A good franchisor will provide you the training you need to succeed.

• A good franchisor will provide continual support to assist you in succeeding.

Having said that, let me provide what I believe to be some of the key points to consider when purchasing a cleaning franchise. There are many franchises to choose from, and it can be mind-boggling trying to make a decision.

1. Check the background of the principals. Do any of them have a background in the cleaning industry, or are they just good salespeople who can sell franchises?

2. Length of time the franchise has been in business. Don’t pay attention to the claims like “We’re the fastest growing” or “We’re the 10th largest.” What you want to know is: do they know this business, or do they just know how to sell franchises?

3. Amount of investment needed. How much cash do they suggest you will need to purchase the franchise and operate the business until accounts are in place? The lowest may not be the best. It’s important to be realistic.

4. Do they help finance the investment and, if so, at what rates? Will they take a note for some of the franchise fee and startup costs?

5. How do you get accounts? This is especially important if you have no selling experience. Do they teach you how to sell, or will they sell for you and then you purchase the accounts? Most franchisors will sell accounts and then let you purchase them for some agreed-upon multiple of monthly sales. This can be really dangerous. Some franchisors will secure accounts at a low price to get you the volume, then you find out you have very little chance of making a profit, but the franchisor made a nice profit on selling you the account. Be sure you have a protection mechanism in place that protects you against low-bid contracts that you may purchase, because in the beginning, until you learn the pricing process, you won’t know the difference.

6. Are they interested in helping you build a business? Some franchisors really want to help you become a successful business operator, while some only want to sell franchises and then sell the accounts to you. Some will even take the account away from you after a complaint and then sell it too another franchisee to make themselves more money, leaving you with nothing. Do your homework. In my opinion, it is best to select a franchisor that will teach you how to sell and secure your own contracts so you don’t have to pay fees for new business. That, in my estimation, is a franchisor that is really helping you build a business.

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7. What about ongoing support? Do they continue to provide education that brings you new products and procedures to increase your profitability? Do they have an annual meeting where you can meet other franchisees and vendors to learn more about the business?

8. What are the monthly royalty fees? This is the amount that the franchisor keeps of the total monthly billing. I have seen numbers all over the board for this, so be careful. What exactly do you get for your ongoing royalty payment? Have them spell it out in writing.

9. What about hidden fees? Will you be charged any type of administration fees, and how much? Be sure to understand all the fees beyond the traditional royalty charged by the franchise systems.

10. What about the actual franchise agreement? It’s important to remember that franchise agreements are hard to terminate, and they have non-competes, so do your homework. Don’t be afraid to pay a higher franchise fee for a better business model. It is a long-term relationship, and you want to get it right.

11. Is there any legal action pending against the franchisor? This may be the most important consideration of all. Has any legal action been taken against them by unhappy franchisees? When I have someone call me asking about a particular franchise they are considering, I always tell them to go to the back of the Franchise Disclosure Document and see if there are any lawsuits pending or lawsuits that have been settled. You can do a Google search on the company you are considering with their name and the words “complaints” or “lawsuits” to find anything happening with that company.

As an exercise, I personally did that with the four companies that I have either subcontracted to in the past or had some dealings with in the competitive arena. The only one that came up with no negative information was Office Pride Commercial Cleaning, a national cleaning franchisor headquartered in Franklin, Indiana. The other three all had past and pending complaints and/or legal action. I will not mention the three by name, but I thought it worth mentioning the one company with no complaints or lawsuits showing.

So there you have a quick overview of items to address when considering purchasing a cleaning franchise. Let me say again that franchises play a very important role in our industry. While I did not own and operate a franchise company, I have on several occasions recommended to my clients they investigate the opportunity, because in their particular situation, I felt that was best for them. After all, that is the job I have for my clients—providing the best advice for their situation.

Richard (Dick) Ollek is the senior consulting partner for Consultants In Cleaning, LLC, where he provides consulting services for building service contractors. Prior to forming Consultants In Cleaning in 2005, he owned and operated his own cleaning company for 34 years, after managing a company for 9 years. He has written three best-selling books, the most recent being The DO’S and DON’Ts of Contract Cleaning from one who DID and DIDN’T. He can be reached at 573.873.9500 or through his web site at www.consultantsincleaning. com. The company has offices in Missouri and Florida. He is also a partner in Tripod Learning Associates, which produces an every-Monday-morning free podcast at www.tripodcast.com. In addition, Tripod produces educational CDs and DVDs for the industry on a variety of subjects. These can be seen by clicking on the company store icon at www.consultantsincleaning.com.

Last modified on April 06, 2016

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