Franchise or Organic Start-up

(Steven Hunter) #1

Hello,
I am planning to become a home inspector in MT. I have been researching franchise opportunities as well as going at the business on my own. What do other inspectors say? I see that InterNACHI provides training on just about every aspect of owning a home inspection business, and with that - what is the advantage of a franchise if InterNACHI can provide complete training and operating resources?

(James E. Braun, CMI) #2

I can see before NACHI that a franchise had its advantages, but now with NACHI and a very few of the vendors I do not see a value in a franchise anymore.

(Thomas Witt, CMI MD. Lic. # 30933) #3

Franchises work well for some people.
I just didn’t want to keep paying them forever just to help get up and running.

(Roy D. Cooke, Sr) #4

You Might want to contact .

Patrick Auriol
CMI, CCHI/Certified Level I Thermographer
(416) 819-3419
Pat-cris@bell.net

He is the only one I know of who is a franchise member

(Brian E. Kelly, AZ Cert. # 60234) #5

Here in AZ most of the Franchises died off as soon as the economy tanked, some are returning.

If you are in good financial shape a Franchise is OK, but the Mother Ship always gets paid first. :wink:

I went to a US Inspect discussion a few years back and they were Employee Owned Corp or something I think. If I was a younger man I may have gone that route.

But at my age and temperament I don’t even like the voices in my head telling me want to do.

(Andrew Sleezer) #6

What does the franchise provide that you need? Is that worth the cost? Wouldn’t be for me, but may really help some.

(Steven Hunter) #7

Thanks for weighing in, all. I really appreciate your feedback. Yesterday I joined InterNACHI! I plan to study what is available and continue to reach out to other inspectors like yourselves for info.

(Ian W. Mayer, CMI) #8

lol.

I love this.

All I can say about a franchise is the cost of buying one can buy a lot of marketing.

(Claude Lawrenson) #9

Franchises are often difficult to get out of, IF you plan on leaving and doing your own thing. Many have non-compete clauses, that could certainly have a negative impact on ones future. Some have other fees based on their specific requirements.

(Chris Jacobi, HI01200061) #10

The purpose of a franchise is public’s brand recognition.

Ask the average non-home inspector or non-realtor and nearly none will have brand recognition of Brick Kickers, HouseMasters, or Pillar to Post.

So what are you really getting?

(Erik Schmidt) #11

With a franchise, there is a significant difference between what an inspector charges for a home inspection and what the inspector puts in their pockets, so the choice becomes do I charge more, get more marketing, leads or whatever it is a franchise provides, or charge less and get fewer inspections?
So maybe franchise guy or gal grosses 160 K for 200 inspections , but they handed over 33% of their gross to the franchiser, whereas maybe organic guy maybe only grossed 109K for 162 inspections and paid 2K for advertising that he or she does inspections for 25% less than franchise guy.
So the final score is franchise guy, 200 inspections gets 107 K, organic guy, 162 inspections 107K.
All hypothetical, you will need to plug in your own numbers

(Rob Claus) #12

Hello Steven,

My name is Rob and I sell franchises for The BrickKicker. You, along with many who will read this, will think that because I have skin in the game I cannot be objective. I have been doing this for 30 years and believe that I can be completely objective.

There are three basic ways to enter the Home Inspection Market.

  1. As an Entrepreneur and an independent business. This will place all of the marketing ideas, sales initiatives, report design and learning curve directly upon your shoulders. All of the proceeds and revenue ventures are kept with you.

You are also responsible for your own education and support. This is where your membership in InterNACHI really pays off. There is no other organization that can touch what NACHI provides.

  1. You could be a Licensee of a Branded product. This will help shorten your learning curve but does not provide you with an exclusive territory. The company that licensed you to use their product could place five other inspectors within a few miles of you. You typically pay a higher per inspection fee but the initial licensing fee is sometimes smaller. The license will also provide you with some support.

  2. You could enter as a franchise. With a franchise you will purchase an Exclusive Territory mutually agreed upon by you and your franchisor. The franchisor will have already created enough Branded collateral, report writing tools and training to fully support you and your operation. Most of the franchisors are also there to support you with any issues or questions you might have as your run your business. There is typically an initial franchise fee to secure your territory and get you started and then there is a ongoing royalty fee. I have heard royalty fees range from 5% to 9%. Most franchises also have a National Advertising fee these range from 1% to 5%.

An earlier post indicated as much as 33% of your gross. I do not believe that to be true. Speaking for my firm, that is absolutely not the case.

There is also the conversation of length of need. Those first few years you operate your business are when you really need to rely upon someone to help you through your day. Questions about technical aspects of the home. Questions about customer satisfaction. Questions about sales and marketing are all what a franchisor is there to help you with. Once you hit your third to fourth year your questions will dwindle.

We have five year contracts. The franchises we have in are system typically all renew after the five because they see the value in the small percentage of royalties they have to pay.

If you are a person who is very free thinking and does not need the support of a BRAND the Entrepreneurial spirit of starting your business for scratch is an excellent way to go. But, there are time when you need a boost or the kick start a franchise can offer.

Do you research. Look at the various Franchises out there. I believe there are over 30 of them now. If you have any questions about this I am always available. I promise not to the guy who is trying to hard sell a franchise on you.

(Chris Jacobi, HI01200061) #13

I forgot about the territory limits. Nothing like getting a call from a prospect just outside of your territory.

Royalty: I agree that the 33% from the other guy is inflated, but to buy into the franchise is $10k to $25k. I started mine for $6k.

(Matthew Rivera, License # 16000068490) #14

I switched my company over to a franchise 3months ago. And was the single best thing ive done. The fees are no were near what other guys are saying. We pay 5 percent to franchise. So 5 bucks out of every hundred. If i make 0 they get 0. The 5 perfent is well worth it. The franchise gives you a game plan that actually works. They give you support and advice that is hard to come by. My business trippled in 3 months so im not complaining. The other thing with franchises is they get access to marketing for much cheaper. When your alone you buy small amounts the franchise buys in bulk so stuff is generally cheaper.
The biggest thing about going the franchise route is it makes your business sellable. Most one man shops cant sell there business because once they leave there business is gone. They generally get pennies on the dollar. When your a franchise your building a sellanle asset. If you leave the name still goes on. So when it comes time to retire your getting 2 to 3 times your gross not a quarter of gross. It took me two years to see the difference. Not saying every franchise is equal. Do your research contact a few different franchises and see what they offer and how big there territories are.