Home and commercial services franchise finance

At the typical home and commercial services brand, the best group of locations sells $2,095,258 a year. The worst group sells $207,690. That is $1,887,568 more a year, 10.1 times over, for the same brand on the same agreement. Across these brands, a median of 35% of locations reach their own brand’s average. The average describes the top of a system, not the middle. 66 of the 76 brands here publish bands; the rest disclose no spread at all.

Decided before you open

• What it costs to open.Opening costs run $4,250 to $2,284,321 across the category, and the top of a single brand’s range is typically 1.8 times its bottom. The top group sells $2,095,258 a year against a build that tops out at $2,284,321, so at the heavy end of the range a location sells $0.92 for every dollar it cost to open. A build that heavy takes years of sales to recover, so the site has to be right the first time.
• What a location sells.Average sales run $774,915 at the middle brand and $2,095,258 at the top group. Format and site decide most of that before an owner does anything, which is why the same operator produces different results in different trade areas.
• Rent is one number, and it lands twice.Occupancy runs 2.6% of sales at the middle brand, which on median sales of $774,915 is $20,148 of rent a year. That same $20,148 is 1.0% of sales at the top group and 9.7% at the bottom. Nobody negotiated a worse lease. The top performers move this line by putting more sales through the same square footage: longer earning hours, a second daypart, and a site picked for traffic rather than for the rate.

Live operating levers

• 20 of the 76 brands here sell one job at a time.Every job has to be won again. The owner gives a quote, some share of those quotes turns into work, and each job that lands is worth a certain amount. The top performers raise the share that closes and the size of the average job before they spend more money on leads, because buying more leads is the expensive way to get the same revenue.
• 14 of the 76 brands here publish how a new location builds up.Where a brand shows its first year month by month, an owner can see when sales finally cover the costs and how much cash has to be put in before that point arrives. Where a brand does not show it, that curve has to be guessed at, and the guess is usually optimistic.
• 14 of the 76 brands here run a recurring plan.A plan turns a business that waits for the phone to ring into one that knows roughly what next month looks like, and that predictability is what lets an owner staff properly. It is built by asking the customer to book the next visit before they walk out, not by spending more on marketing afterwards.
• 13 of the 76 brands here sell a contract that bills every month.An account signed this year still bills next year, so the owner who keeps accounts beats the owner who wins them. Losing one account and winning two sounds like growth and usually is not, once the cost of winning them is counted.
• Wages. Same labor market, different result.Wages run 26.1% of sales at the middle brand and 11.3% to 62.6% across the 14 that disclose it. These brands hire from the same pool at the same rates, so a 51-point spread is not a pay-rate gap. It is scheduling and productivity: rostering against booked demand hour by hour, managing sales per paid hour as the number, and keeping enough of the pay variable that the line falls when the week is quiet. On the top group’s $2,095,258 of sales, a point of wages is $20,953 a year; on the bottom group’s $207,690 it is $2,077. The same discipline is worth more where the volume already is.
• Cost of what you sell. The line that compounds.Products and materials take 43.8% of sales at the middle brand, 13.4% to 66.2% across the 21 that disclose it. Buying on the brand program rather than locally, holding the price list instead of discounting to close, and counting waste weekly are what separate the ends of that range, and each of them compounds with volume, which is why the gap widens as a location grows.
• What is left at the end. Where the gap comes from.Of the 11 brands that publish a profit line, the middle one keeps 18.7% of sales, from 2.2% to 35.0%. The cost lines above move by a few points between the best and worst locations while sales move by multiples, so the top performers are not running a cheaper business. They are running the same cost base over more revenue. Hold that 18.7% margin steady and the top group earns $391,813 against $38,838 at the bottom, a difference of $352,975 a year that comes from volume alone.
• What the brand charges. The line that works backwards.Fees run a median 10.0% of sales across 72 brands, from 5.5% to 25.0%. Where a minimum sits underneath the percentage, the weakest location pays the highest effective rate, so the fee line costs most exactly where it can least be afforded. The top performers clear the minimum early and stop thinking about it. At $2,095,258 the fees cost $209,526 a year; at $207,690 they cost $20,769. The percentage is the same and the burden is not.

Context you underwrite around

• How many brands show a ramp.14 of 76 filings in this category show how a new location builds up. For the rest the first year has to be assumed, and the assumption is usually wrong in the same direction.
• What is not banded.10 brands publish no bands at all, so their spread is unknown rather than narrow. Read a single average as the upper-middle of a distribution you cannot see.

Compare these brands side by side →

Also disclosed across this group: $114,687, $126,311, $13,174, $235,574, $7,749, 20245.4.

What the top performers can do that others cannot

20 of the 76 brands here sell one job at a time. 14 of them run a recurring plan, and turning a first visit into a standing arrangement is a skill in itself. Building density inside a territory, so the same day covers more stops, is what separates two owners with the same brand. Rostering against demand is the constraint: wages run 26.1% of sales at the middle brand, more than any other line. 6 sell gift cards in volume, which brings cash in months before the service is delivered.

What the customer is buying

The customer buys a quoted job, usually once. At 13 of them the model is different: the customer buys a recurring account billed monthly, which asks something else of the owner. A location at the middle brand sells $774,915 a year; the top group sells $2,095,258. The offer is the same at both ends of that range, so the difference is volume rather than product. At 8 of them the top performers widen the offer rather than the building: retail and higher service tiers raise what an hour earns without adding an hour.

Who the customer is, and how often they come back

This is an acquisition business. Each job is won again, so lead flow, the close rate and what the average job is worth decide the year. A median 35% of locations reach their own brand’s average, so most of the system is below the number the brand advertises, and the gap is usually a demand gap rather than an effort gap. The top group sells $2,095,258 against $207,690 at the bottom. Trade area and site set that range before an owner takes a booking.

How the money works

Opening costs $4,250 to $2,284,321 across the category, and inside one brand the top of the range is typically 1.8 times the bottom. At the middle brand the cost stack runs wages 26.1%, occupancy 2.6%, cost of sales 43.8%, franchise fees 10.0% of sales. What is left runs 18.7% at the middle brand, which is $391,813 a year at the top group and $38,838 at the bottom. The percentage barely moves between them; the dollars do. Cash and earned revenue arrive in different periods here, so the cash forecast matters more than the profit line in any given month. 14 of these brands publish how a new location builds up, so the first year can be read out of the document instead of guessed at.