I am looking into starting a inspection business in New Orleans La, I was wondering if going the franchise route is the best option? Any input would be great!
I prefer no franchise. I currently own my own home inspection business and I’m glad I didn’t buy into a franchise. But it’s all up to the individual.
I considered going the franchise route and was pretty far along in the process (down to signing the franchise agreement), but the more I thought about it the more uncomfortable I was with the terms. In my opinion, at least the one I was looking at, I would have been a glorified employee. They dictate almost every aspect of your business. If they decide to change the terms or requirements of the franchise agreement, they can do so. If they want every HI to change software, you have to do it. If they want to change how territories are allocated, they can do it. They dictate everything down to who you order your shirts from. Not only that, but I would have had to basically re-apply for the franchise every few years with no guarantee that it would be granted.
I also didn’t like that they wanted to push me into service with only 2 weeks of training, half of which would have been focused on doing inspections. I don’t have a trade background, so I had a bigger learning curve than most that get into this field and didn’t feel like I would be comfortable with my ability to provide a quality inspection with only a week of training.
That’s just my person experience. Other franchises may be different. But if you decide to go that route, really read the franchise agreement and decide how that’s going to work for you after you’ve been in business for a few years or 10-20 years.
I owned a franchise (Kitchen Solvers). Your not the boss, you may be successful but your not the boss. If giving 7% of net is good for you then buy one as they will provide a guided plan to succeed, but service franchises are the worst and cost the most to own in the lon run.
$150,000 sales per year minus 7% or $10,500.00 to the franchise
30 years in business X $10,500 is $315,000
Plus your buying proprietary marketing ,materials ect.
If you aren’t that creative and want help a franchise may be the best but franchise fail at an even higher rate than other businesses. Call some franchise owners and ask them the pro and con of being a franchise.
Obviously some like them… but if you can make it work on your own then I suggest you will be better off in the long run.
Many franchises are great and the franchise route works for some members. The only one we ever really hear complaints about is Pillar to Post. Most other franchise owners are happy.
My recieving a few Pillar to Post home inspection reports is one of the things that drove me to inspect. The reports I got were so bad I wrote to the CEO of PtP and said I would report them to HUD if they didn’t do better.
I went the franchise route because I needed to get up and running very quickly. I didn’t have time to create my marketing materials, test them for 3-12 months, and then redo everything if they didn’t work. I needed a proven system that I could use from Day 1. The franchise gave me that.
I paid $17,500 for the franchise, for a 5-year agreement. Contrary to what one of the posters here said, no, the franchisor can’t alter the agreement willy nilly. It takes two people to have an agreement. Now at the end of the agreement, if you want to continue, there might be new conditions, but still everything is negotiable
My royalties were 6% with a minimum of $25 per month.
While I was negotiating my franchise agreement, I was checking out what I could do on my own. Franchisor provided coffee mugs at $3.95 each. To get them on my own would cost anywhere from $6.95 to $9.95, depending on how many I bought.
I got professionally designed and printed brochures for mere pennies. I could have designed them myself, but getting them printed would have cost me .25-1.00 per brochure, depending on how many I had printed at one time.
Yeah, I could have gotten 4¢ brochures if I ordered a million brochures like the franchisor does. However, then I would have had to get a warehouse to hold those brochures, costing many dozens or hundreds of dollars a month. And if the warehouse leaked, was destroyed by Santa Ana winds or an earthquake, I’m out all those brochures and money.
With the franchise, I could order anything in any quantity, even just one if I wanted–golf towels, golf balls, golf tees, candy jars, coffee mugs, pens, pencils… you name it, they could get it, and at extraordinary prices that an individual can’t even begin to think of. After all, HomeTeam was ordering for 600 franchises and had a huge warehouse in Cincinnati.
If I were to do it all over again and needed that quick start, I’d buy a franchise, regardless of what business I was in.
Didn’t work for me and I left after 1 year, just couldn’t follow the rules. I did 2 years non compete and have no regrets. It did get me up and running but in my case I was a GC and the franchise was part of my exit plan, it would have been easier to sell a business with a national franchise vs just a local business.
I wouldn’t do it again.
For me a franchise was the way to go. A fast start up and positive returns quickly. Like Russel said, everything is set up for you to succeed.
I did look into 4 different franchises before buying into GPI (NPI in the USA). They offered more bang for the buck and I didn’t feel like I was going to be an employee. I know of one company mentioned above that will not allow their inspectors to do commercial buildings. There is another one like that as well. That was not what I was looking for.
With GPI you take the two week course and then have to do a one week ride along with another inspector. They teach inspections but also marketing and business. Those were the areas I was lacking so to get that course and the support was great.
We use all of the franchise brochures but you are free to make up your own as well. They set up your website and SEO is free. We can change the site to whatever we like.
We are a franchise but we also have are own free will. I buy my shirts anywhere I want, use the inspection software I want (currently using theirs as I think it is the best). I make my own decisions.
The only real downside to a franchise is the percentage you pay to them. They do a lot for that but it hurts when you write the check sometimes.
Basically it is up to you. I you like a little structure in your life then maybe a franchise is the way to go. If you feel you can do it yourself then that is what you should do. Just one thing though, if you are going into a franchise make sure your eyes are wide open and have your lawyer look it all over before you sign. You definitely don’t want to get into something you will regret.:)
I looked at a franchise too. I was actually going to purchase it from the existing franchisee but looking back there were costs that were hard to grasp. The monthly minimum was going to be $600 or 10% (7% fee, 3% national brand marketing) whichever was higher, a $10K five year re-newel fee and a $10K fee if you wanted to walk or not re-new. There was also the $40k to purchase the franchise and there only gave you there training, you still had to pay for your own equipment and office set up.
That’s a lot of money for a brand many people may not have ever heard of…
So look in the area where you want to work and see if there is an inspector that wants to sell you his company.
That is crazy and I think I know the company you are talking about. The national brand marketing is a joke in my opinion. How many national franchise companies actually market via the paper or the TV. That is what you are paying for.
Any franchise is after one thing: your money.
Own your own business. I currently own my own home inspection business and love it. 100 percent of the profits go back to the business and you. The only downfall for me was marketing. After taking the time to get my name out there business is starting to pick up. Right now i’m booked until next week. Franchise is too much to deal with IMHO. No offense to anyone operating as a franchisee.
Agreed, that is one of the reasons I wouldn’t do a franchise.
My point exactly. At the end of each term, at least for the company I was dealing with, you had to sign whatever agreement was currently being used for new franchisees. Who knows what they decide to do in that time. As it happens, the franchise I was dealing with had recently changed territories from exclusive to non-exclusive. From what I heard it was not a very popular decision among existing franchisees.
Thanks for everyone’s input. I think I will stop looking at franchises.
One last thing in Franchises, they sell you a territory. A different one that I was looking at had divide my city into 3 sections. You could not market in those area if you did not buy that area. The area that had the majority of Real Estate Brokerages were in one area. You could not market to those agents. The franchiser did not really investigate the city correctly. No one purchased the other two locations.
WIN claims there franchises make 115k a year? Does anyone have any input on this? Is this 115k then minus 60k of expenses??