Are Home Franchise Concepts (HFC) Franchises Veteran-Friendly? Turnover Rates Compared

Home Franchise Concepts (HFC) is the multi-brand franchise company (Budget Blinds, AdvantaClean, Kitchen Tune-Up, and more) owned by $18B automotive giant JM Family Enterprises, the 17th largest private company in America.  For years, it has aggressively targeted, recruited and signed on Veterans as franchise owners.  It’s headed by a Navy Veteran, CEO Andrew Skehan.  So is Home Franchise Concepts (HFC) ethical & honest in their promotions to Veterans?  Are they truly dedicated to supporting and sustaining their Veteran franchisees once they sign their franchise agreements?  We’re taking a deep dive to find out… asking hard questions… and seeking the opinions of HFC Veterans.   by Sean Kelly, Founder, Franchise Truth for Veterans

Read our series about the franchise offerings of Home Franchise Concepts (HFC), a company that positions its investment opportunities as Vet-Friendly and Top Franchises for Veterans .

Public Audit: Home Franchise Concepts (HFC) Veterans Franchise Program

• Is KITCHEN TUNE-UP a Veteran-Friendly Franchise if it Sues & Gags Franchisees?
• JM Family, Home Franchise Concepts (HFC) Drives Army Ranger PK Kelley & Father into Bankruptcy
  

  Franchise Turnover (Attrition) Rate is a Key Metric Every Prospective Franchisee Should Know

  A key indicator of a brand’s stability and health is the rate is ability and desire franchisees have to maintain their franchised businesses throughout the entire term of their franchise agreements.

  Happy, content and profitable franchisees tend to continue to operate the businesses they researched, decided upon and financed, right?

  In many ways, this could be considered a failure rate, though with the number of unknown factors that can prompt a franchisee to close or sell their franchise business, I favor “turnover” or “attrition” rate most of the time.   It’s less debatable from situation to situation.

  But if franchisees have paid franchise fees, signed leases and secured financing based on a ten- or 15- year franchise term –and a high percentage are closing, transferring or having their franchises terminated in years two or three… or even seven or eight… one should dig deeper until they find out the root cause – or walk away.

  If some creative, smooth-talking franchise broker or salesperson claims that the high number of sales or transfers is the result of fabulously successful franchisees running out of places to store their gold… or that they cashed out & retired to Fiji… let us know and we’ll look into it.

  Unfortunately, we’ve never found an instance where that checked out.

  3-Year Turnover Rates for HFC Franchises Range From 19% (Budget Blinds) to 73% (Concrete Crafters)

  I analyzed the latest Franchise Disclosure Documents (FDDs) from the nine established Home Franchise Concepts franchise brands.

  Here’s what I found:

  HFC Brands Franchise Turnover Chart (2020-2022)

  FRANCHISE	FDD	VF	AVG	EXITS	RATE	LIT	GAG?
  AdvantaClean	3/21/23	Y	181	99	55%	2	Yes
  Aussie Pet Patrol	4/18/23	N	73	19	26%	2	Yes
  Bath Tune-Up	2/14/23	N	20	9	45%	1	Yes
  Budget Blinds	4/18/23	Y	1198	225	19%	4	Yes
  Concrete Craft	4/1/22	N	64	47	73%	1	Yes
  Kitchen Tune-Up	2/14/23	P	208	76	37%	5	Yes
  Lightspeed Restoration	4/17/23	N	0	0	0%	1	Yes
  PremierGarage	3/21/23	Y	163	32	20%	1	Yes
  The Tailored Closet	3/23/23	Y	163	32	20%	1	Yes
  Two Maids & a Mop	4/1/23	N	191	36	40%	1	No

  HFC Brands Franchise Turnover Chart Key

  FDD  This column indicates the date of the FDD used for this data

  VF indicates whether the franchise is currently promoted in the VetFran directory (Y) or was known to have been in the past (P)

  AVG is the average number of franchises open in the 3-year period reported in the FDD (2022, 2021, 2022)

  EXITS is the number of franchises that left the system through closure, termination, transfer, or non-renewal.

  RATE is the turnover rate calculated by the commonly accepted formula [EXITS divided by AVG x 100]

  LIT indicates the number of government enforcement actions, lawsuits from franchisees or franchisor lawsuits against franchisees to collect royalties and fees disclosed in this FDD.  Note that there may be other litigation that doesn’t require franchisor disclosure.

  GAG  “Yes” in the GAG column means that the franchisor discloses that it has prohibited franchisees, through confidentiality or NDAs from, from sharing negative experiences or opinions with prospective franchisees or others.  It indicates that prospective franchisees will likely be forced to give up their right to share any negative franchise experiences or opinions (positive opinions are allowed)

  What is an Acceptable Turnover (or Failure) Rate?

  There is no single answer to this question.

  We all have a different ideas of acceptable risk.

  Considering that buying a franchise vs. starting up an independent business is supposed to minimize risk, what would you, as a prospective franchisee, consider an acceptable risk that in any given 3-year period you would cease to be a franchisee?

  The turnover rates of Budget Blinds (19%), PremierGarage & The Tailored Closet (20%) seem to fall in the lower risk range of franchises we’ve examined (with the caveat that the two latter were previously combined as one business.)

  As a somewhat arbitrary place to start, we ask:  would you agree that turnover of, say, 25% – 40% is cause for serious concern?

  If so, Aussie Pet Patrol (26%), Kitchen Tune-Up (37%), & Two Maids and a Mop (40%) fall into the serious concern range.

  Would you agree that turnover of 40% to 69% be cause for extremely serious concern?

  With a turnover rate of 40% to 69%, shouldn’t prospective franchisees be provided with an explanation for such high turnover, and explain what urgent measures have been taken to better protect the remaining franchisees’ investments?

  If so, Bath Tune-Up (45%) and AdvantaClean (55%) fall into the extremely serious concern range.

  Turnover of 70% or higher would seem to indicate a catastrophic event (or events), a business upheaval, new competition or a flawed or outdated business model.

  HFC has disclosed that Concrete Craft has a 3-year turnover/failure rate of 77%.  Despite having the right to take over terminated franchises, it operates no company owned outlets. 

  Is there a valid justification for continuing to sell Concrete Craft franchises to Veterans?  Or non-Veterans, for that matter.

  Let’s take a closer look at the company’s 2023 FDD Item 20  for clues:

  Footnotes to this chart in the FDD state:

  1. One outlet opened in 2020, and the same outlet terminated in 2020.
  2. One outlet opened in 2021, and the same outlet terminated in 2021.
  3. Two outlets opened in 2022, and the same two outlets terminated in 2022.
  4. One outlet opened in 2022, and the same outlet terminated in 2022

   

  Questions for Home Franchise Concepts:  What Accounts for Concrete Crafts’ 73% Turnover Rate? 

  Should You Be Selling Concrete Craft as a Great Franchise for Veterans?

  Questions for JM Family Enterprises, Home Franchise Concepts (HFC) and Concrete Craft:

  • What accounts for the sky-high franchise turnover rate of Concrete Craft franchises?
  • Why did 5 franchises open in less than a year?
  • What measures have been taken to lower the failure rate?  are they working?
  • Is it ethical to be marketing a high-failure franchise as great investment for Veterans?
  • Is it ethical to be offering franchises for Concrete Craft at all?

  We hope to hear from JM Family Enterprises, Home Franchise Concepts (HFC) and Concrete Craft executives and franchisees regarding these serious concerns.

  We will be happy to share any corrections, clarifications, rebuttals, or developments regarding any or all of these issues.

  WHAT DO YOU THINK? PLEASE SHARE A COMMENT BELOW.  (ANONYMOUS COMMENTS ACCEPTED).

  Read our Posts Supporting Veterans in Franchising:

  VetFran or VetScam? Turnover Rates of IFA-Endorsed Vet-Friendly Franchises

  FTC: Stop VetFran’s Deceptive Franchise Marketing to Veterans

  Some Franchisors & VetFran Exploit Veterans Even After They’ve Failed

  Franchise Warning: JDog Junk Hauling for Veterans (Index)

  JDOG Franchise Dream Ends in Veteran Suicide, Double Homicide

  What Every Veteran Should Know About the JDog Franchise

  JDog Franchise News & Discussion Newsletter Sign-Up

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