Starting a Home Inspection Biz..Franchising or Independent?

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1

Originally Posted By: Tim Robertson
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Gentlemen,


My partner and I are going into the home inspection business, one way or another. We are trying to decide now whether to buy a Franchise or go out as an independent company. My question is for those of you in the biz, which would you recommend? Is the royalty fee worth the support network and possible name recognition? Or as an independent, is there enough work to compete with the big boys......?

Also, I have been in contact with an individual who might sell part or all of his franchise territory. Would it be worth the extra $$$ to buy an established territory and customer base?

What is the average earnings one could expect in their first year?

Any thoughts would be appreciated.

Tim

2

Originally Posted By: lcushwa
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Tim,


Where are you located?

How large is the area and how many established Home Inspectors already work the area?

Does the state you live in have a licensing requirement?

Do you have previous experience, or are you going to attend a home inspectors course?

What is the cost of the franchise, can you pay that in cash and how long do you think it will take to make this money back?

Will the company selling you the franchise make you any promises "IN PRINT" regarding expected income?

When you purchase part of a franchise, does that person personally introduce you to all of his contacts?

Finally, you need to understand when you are starting any new business the first few years are lean. Therefore don't expect to become rich right away.

Lynn

3

Originally Posted By: gjohnson
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Tim


I would say that both have their drawbacks and advantages.


I know that my route was to go independent because I wanted to be able to market to a bigger group of people then the franchises in my area were willing to sell to me.


However, having the name of a franchise behind you can help you get in the door with a lot of prospective real estate agents. And you usally get some good perks with it. I know that Joe H. and Russel K. are two guys with very successful franchises and could probaly give you more info.

What it comes down to is:

What type of area do they have.
Will the royalties be worth the cost.
How long will it take you to make the purchase price of the franchise up.

--
Gary (Snicker's) Johnson - Free NACHOS
The NACHI Foundation
Executive Director

301-591-9895

4

Originally Posted By: Blaine Wiley
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Tim,


I have owned a franchise inspection company, and am now independent.

The benefits to owning a franchise company are that you get training, a reporting system, continuing education, a little bit of support, marketing materials at a greatly reduced cost, and depending upon the franchise you might get discounted E&O insurance.

The drawbacks are that you have to do things their way, or at least within the policies of the franchisor, you will spend 6 to 7% in royalties, and 3 to 4% off of your gross revenue for royalties after spending many thousands to buy the franchise, the franchisor will require you to send in all of your financial records annually, and you will have to work within your specified territory.

My preference is at this point to be independent. I am finding that starting as an independent the second time is just as difficult as with a franchise. I had to come up with my own marketing materials, have my own software for reporting and accounting developed (there are several commercially available products which are good, they didn't meet the quality of reporting I wanted to hand out), make a report binder, etc. If you are starting out for the first time, these will be difficult, but not impossible.

When I started with the franchise it all together cost me about 25K to get going (in 1995). Without the franchise, it has cost me about 9k to get going.

So, to make a long story longer, and since this is free advice it's probably worth about that much, weigh your options and your bank accounts carefully. If you are an average inspector, it will take you 12 to 18 months to get going either way, if you are far above average, maybe 9 to 12 months.

Best Wishes!

5

Originally Posted By: kluce
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yep icon_smile.gif

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Originally Posted By: jkiesecker
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Tim, I am a Housemaster franchisee in upstate NY. I can tell you that the tech and marketing support is great. The sales materials, brochures etc are very professional looking and reasonably priced. Also Housemaster is always thinking of new marketing ideas that I wouldn’t otherwise have time for. I can only speak from my personal experience. As far as making money goes, you need to figure your costs and come up with a break even point. Join NACHI if you haven’t already and take advantage of all the perks. Good Luck icon_cool.gif

7

Originally Posted By: Tom Turner
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Tim:


I to have been a member of a franchise ![icon_evil.gif](upload://1gvq2wV2azLs27xp71nuhZOKiSI.gif) and now am an independent . I know of no one who has been an independent and then went to a franchisee and been happy with the outcome. Yes you get the frills of the COMPANY, but you pay and pay and pay. Check the demographics of the area you will service and market your self and your company to the fullest extent possible. With all the teaching and marketing aids available on the web these days you should be able to be as successful as an independent and clear more money than if you buy into a franchise.

Good luck and work hard

8

Originally Posted By: Tim Robertson
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Lynn,


To answer some of your questions, which might give you info to better give me advice:

lcushwa wrote:
Tim,

Where are you located? Columbus Ohio

How large is the area and how many established Home Inspectors already work the area? Population=700,000 in the city of Columbus, with a metrpolitan market population of 1.5 million people, the 34th largest metropolitan market in the U.S.
Does the state you live in have a licensing requirement? No

Do you have previous experience, or are you going to attend a home inspectors course? Classroom Based Course

What is the cost of the franchise, can you pay that in cash and how long do you think it will take to make this money back?

Will the company selling you the franchise make you any promises "IN PRINT" regarding expected income?

When you purchase part of a franchise, does that person personally introduce you to all of his contacts? His business does 400,000/year in sales....[/color]
What part of that would be profit or his income? How much does overhead usually consume? He has 4 full time inspectors. Finally, you need to understand when you are starting any new business the first few years are lean. Therefore don't expect to become rich right away.

Lynn