Guest post: Ten Reasons Not to Buy a Commercial Cleaning Franchise Or a Janitorial Franchise by Ron Van Orden, CEO, Building Care Services
I am a business broker and I have facilitated the sale of several commercial cleaning franchises and spoken to the owners of many more. I also have a commercial cleaning business. Every franchisee I have spoken to stated that if they could go back and go it again they would choose to not be a franchisee.
Let me start by saying that I do not necessarily have any problem with franchises. For budding business people franchises offer a structured and simple way to get into an industry. Usually franchises have an established brand identity and a training program. Franchisors are very good at selling franchises and typically have exciting brochures that describe the riches that will flow in once you get started. For some, franchises are the right way to go.
The point of this article is to point out a few items specific the commercial (business to business, not homes) cleaning / janitorial industry. One only has to to a internet search for commercial cleaning and the franchise opportunities are endless. Jani King touts themselves as the largest player here with, Jan Pro, ServiceMaster, Coverall and several others also having a national presence. Even with the size of these franchises they only have 10% market share in this industry. This article pertains to the unit franchises who actually perform the cleaning, not master franchises or area developers.
In a nutshell here is the concept. You purchase a franchise from a franchisor. With the franchise you get training, the equipment to perform the work (usually new) and some startup accounts. You purchase your insurance and bond through the franchisor. Once up an running the franchisor handles the billing, customer relations. Often you are required to purchase your supplies through the franchisor.
Let me stop here and say that a franchise is probably a good choice if you want to do the cleaning yourself and stay small. If you want to grow and add accounts and employees then you need new accounts. You can either get them yourself or purchase them from the franchisor….that brings me to my ten points.
1. Cost: The cost of acquiring new accounts are expensive! Usually they are in the neighborhood of 4x the monthly gross. A $500 account would cost you $2,000 – Ouch!
2. ROI: Using this example and a 40% profit margin it would take you 10 months to just recoup your money. I do not have a problem with fees – this is a competitive business and it costs money to get new business but at 4x this is a profit center for the franchisor not the franchisee.
3. Bidding Accounts With the franchisor bidding the accounts they are setting the price. They then bring them to and in some cases you are required to take it. They have no incentive to try to get the highest price, they just want to get the business.
4. Limitations With a franchise your growth is limited and you are confined to a geographic area.
5. Training I have not been through a franchisor training, but I will say that cleaning is easy! That is one of the beauties of this business – it is simple. There are many excellent internet resources and books that will teach you the tricks of commercial cleaning. Don’t want to do that? You could hire an experienced janitor and he or she could teach you for far less that the cost of their training. You can get all the forms and software you need online for less than $200.
6. You have to buy their equipment or supplies Why not shop around, buy used or only buy as you need to. There are many accounts that do not require the top of the line floor buffer.
7. Do you really need the Brand? Customer loyalty is very low in this business. Most often customers only care about the consistency and quality of the work and the price rather than the name.
8. Are you just buying a job? Most people want to own a business because they want to be rewarded for performing. With a franchise your rewards may be limited.
9. Don’t want to do Sales, Billing or deal with Customer follow up? There are alternatives. There are Janitorial brokers who sell accounts for those who don’t like to sell. You can work as a subcontractor and never have to deal with the customer. You can outsource the billing if you want.
10. Beware of projections and financial promises No one can predict how well you will do in this industry. This business is resilient to economic pressures and will always be in demand but no one can predict the future.
For some franchises, with the option of getting a "business in a box" is irresistible. My advice is to start small, buy what you need as you go and avoid going into debt as much as possible as you go.
Ron Van Orden is the CEO of Building Care Services a Sales and Marketing Solution for janitorial and building maintenance professionals and companies located in Los Angeles, California. http://www.BuildingCareServices.com
Article Source: http://EzineArticles.com/?expert=Ron_Van_Orden
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In my opinion purchasing a cleaning franchise is one of the worst investments one can make. I’ve started two companies over the last 35 years and today a company that we started from $0.0 now employ over 200 associates. I received so much information from associations that I have belonged to and the networking that I have experienced over the years-much molre than those franchise companies can give you. I would recommend Building Service Contractor Association International (BSCAI.org); there are also ISSA (issa.org); and others.
This cleaning business is not rocket science! Three suggestions: 1.Treat your employees the way you would want to be treated and treat your clients even better. 2. Buy good cleaning products and equipment…a little more money for a better product/machine will SAVE you money in labor coasts. 3. Be professional….you only get one chance to make a good impression.
I've had a cleaning franchise for over 10 years. Every year they host an open house in the fall, providing a venue for franchise owners to network and stay current on the latest trends. I've been able to connect with many other franchisees in my area. For the most part, we are doing well but the past 24 months has been hard on everyone due to economic conditions.
What I've learned is that the people with sales, management or business ownership experience do very well. They did their homework before they started and did not have unreal expectations.
On the other hand, their are a number of individuals who should not have started a a business of any type. These are the same people who think they can get rich quick without the need to work hard. Many times these people consider themselves "investors" with no intent of being involved in the day to day operation. Instead they believe they can put a couple thousand dollars, hire workers and wait for the money to role in....these people end up disappointed, disillusioned and angry. Since the American way seems to be to blame someone else for their problems...you'll see them trashing their own company.
I can only speak for myself, but I know what I paid for and got what I expected.
Those of you who want to get rich quick and not have to work hard for it, should skip trying to open a business and instead by lottery tickets.
Peter:
Are you a Master franchisee or a unit level franchisee? Which group are you describing?
I think you make an excellent point about having the right expectations. Don't you think that it goes both ways, though - the franchise seller has the responsibility to set the right expectations and screen out anyone with a "get rich quick" attitude?
From what I've read in hundreds of comments here, many unit franchisees want to take responsibility, to be their own bosses but find that the Master can take their accounts and sell them to others at their own whim.
That sounds like a bad job, not a business they own.
Seems more logical if you want to own a cleaning business you should get experience as an employee, then compete against the chains in a business you own 100%
Thoughts?
Guest: Peter watch out, he's setting you up. He is now and continues to try and blame the "franchise owner" or "master" for everyone's ills. He cannot accept and does not believe that anyone anywhere can own a Unit Franchise and be happy, make money, put kids through college, buy their first home, new car etc...
He is convinced that they are all "corrupt", "crooks", "cheats", "thieves", Liars etc....
SEIU: (formally known as guest) Now let's be careful, "everyone that posts here". I've already done this, if you take your posts, my posts, 1st amendments posts out of here, there are less than a dozen people that have actually "Posted" here. Not the HUNDREDS that you would like to "claim".
FACTS they are a PESKY thing aren't they SEIU?
HOLLER!!!!!! If you think SEIU and other UNIONS are CORRUPT!!!!!
To jerry who said that he is an insider with jan-pro
Jerry you liar. This is the second time you say that you are leaving for ever and not posting ever again. You threw a tantrum last week and said that you would not be coming back. Now you know why I call you a snot nose Hipotric little monkey.
You said that you would never be coming back. You said that you would never post again. You said that we would not see you here again. Liar, Liar, Liar. How many more lies have you told us and how many more will you tell us.
You are not a man of your word you are only a screaming little monkey.
Twice you said that you would not be coming back and here you are again.
The word out in the street is that the check that the franchisor gave you BOUNCED! Just like the ladies who came out on Telemundo who got a Bounced check from jan-pro. So you had to threaten them by coming in here and saying that you would not be posting anymore and that you would be gone forever. I guess the franchisor finally relented and paid you cash to come in here and post your monkey dung once again.
1st amendment: What is it with you and Monkey's? Did your Momma not allow you to have one as a child and now you are taking out some sort of issue with your Momma and throwing it around diguised as an animal complex? I'm sorry, would you like a Monkey for Christmas? Maybe you should ask Santa.
As far as me posting, why is that such a Threat to you and SEIU (formally known as "guest") By the way, this should be the last day for the (formally known as "guest") I'm hoping that even 1st amendment should catch on.
What lies have I told? No more than you and SEIU put together. How many lies have you told? My statements at some point during postings on a regular basis come with the following:
DONT Trust Me, DONT Trust SEIU and never trust 1st amendment on anything said here. Do your own fact finding, fact checking, verification and due dilligence. Don't understand something, ask!
Ron:
Great article. Thanks for giving honest insight into a sometimes shady industry.
Reason #11: Jerry
SEIU: Question of the day is still " What's Next" . Try and answer one simple question. Just one.