Owning a restoration company can be both lucrative and rewarding. From the profit standpoint, you’re providing a specialized solution by restoring structures that are damaged by natural disasters, water, fire, or mold. That requires labor and skill, which are services that have value. You’re also supplying an essential service to homeowners or business owners in their time of need. Restoration franchises typically provide emergency services, such as water extraction, mold remediation, fire damage restoration, and smoke damage restoration, as well as reconstruction services to restore the property to its pre-damage condition.
If owning a franchise that functions as a vital community resource is something you’re interested in, there are some costs you should become acquainted with so that you are well-prepared for your investment in a restoration franchise opportunity.
Franchise Cost Breakdown
When you look at restoration franchise costs, prices will vary depending on the brand. Keep in mind, one of the benefits of franchising is that there are no surprises when it comes to costs compared with so many unknowns when you start a business from scratch. As a franchise owner your financial commitment is clear as franchisors are required by law to be financially transparent. These are financial commitments you make as a franchisee, outlined in the Franchise Disclosure Document or FDD. This is a legal document, regulated by the Federal Trade Commission, that is provided to individuals who are interested in purchasing a franchise. It discloses detailed information about the franchise system, the franchisor, and the terms and conditions of the franchise agreement.
Regarding your financial obligation, there are three main restoration franchise costs associated with ownership. At ServiceMaster Restore™, we’re transparent with our franchise costs, because we want this to be a successful partnership. This ensures that you, as a prospective franchisee, will be aware of the necessary financial qualifications for ownership and it helps you understand your financial commitment.
- At ServiceMaster Restore, for example, the initial franchise fee, or the initial fee paid to the franchisor to join the brand is $72,500. This is your non-refundable entry fee or upfront money required to get your business off the ground. It entitles you to utilize our model, logo, operational system, and training, as well as giving you access to our industry specialists dedicated to your success. We provide certain qualified discounts and incentives on the franchise fee as outlined in Item 5 of our FDD.
- There are also recurring fees called royalties. These are ongoing payments you are required to pay to the franchisor. These fees are typically a percentage of your gross sales and are paid on a regular basis, such as weekly or monthly. Royalty fees are an important source of revenue for the franchisor, and they are used to fund ongoing support and training for franchisees, as well as to develop and improve the franchise system as a whole. At ServiceMaster Restore, our franchise owners pay the greater of $250 or 10% of monthly gross service sales.
- Another type of royalty fee are ad royalties that may cover a myriad of expenses for the franchisor, which in turn benefit you as a franchise owner. For many brands, the money collected from every franchisee may help fund innovative research and product development. But, as the title implies, these fees mainly fund promotional advertising campaigns created to assist each franchise location, which strengthens the overall brand.
A Few More Items to Consider
Franchises require prospective candidates to meet a minimum net worth requirement; this shows the franchisor that you have the means to cover your investment. At ServiceMaster Restore, we require our franchisees to have a net worth of $300,000.
Next, a franchisor will want to see that you have available liquid capital, sometimes called a liquidity requirement. At ServiceMaster Restore, we require our franchise owners to have between $150,000 and $200,000 in liquid assets. Liquid assets are essentially the amount of available cash a person has on hand to spend. This is important, because with any new business, it may take some time before income and profits begin coming in. Your cash on hand will keep the business afloat until your business starts taking off.
Finally, you'll need to take into account the initial investment range, or the costs to get started. ServiceMaster Restore, like most franchisors, provides a financial range because these costs are dependent on prices where you will locate your business and any market fluctuations. To own one of our franchise locations, expect to invest between $252,675 and $358,810.
Besides these restoration franchise costs, there are a few more considerations to be mindful of before signing a contract agreement and investing in a franchise brand.
- Make sure you know the term length of the franchise agreement.
- Fully understand the amount of training and support you will receive.
- Talk to current franchise owners about their experience. This not only provides a realistic view of ownership, but it helps build a valuable networking community. These are fellow franchisees that you can gain great insight from and help you through challenges faced in your business.
The ServiceMaster Restore Difference
At ServiceMaster Restore, our successful model has been scaled to 2,300 units. That’s because we have expertise on two levels. First as a top-notch franchisor for more than 65 years. Secondly, because we provide the highest level of service to commercial and residential customers of disaster restoration services, helping them get their lives back to normal as quickly as possible.
If you’re ready to provide a much-needed service in your community while owning a business with great profit potential, let’s get started .