Handyman Franchise

[Pavlos Kasselouris]

What is your opinion on a handyman franchise opportunity? Is it worth the investment? I havent found yet someone that actually invested in a franchise and I'm concerned about a business giving royalties from gross profit. It doesnt feel good especially for systems that I can create.

I was thinking tieing this business in my general business model, but at the same time it will operate independently. 

[Marc M.]

One of the primary benefits of a franchise is the dissemination of business processes, materials and suppliers.  In a contracting business, success or failure is generally defined by the particular skillset and communication of the individual rather than external factors so I don't know that the franchise model will be a major advantage here.  In reality, if most of the factors are based on the individual himself, why would he need a franchise?  Just my two cents.

[Pavlos Kasselouris]

I dont agree that success or failure is based on the skilled set of a specific individual. I believe it's a business and like any other business there are  a lot of factors, from marketing and sales, to effective operations.  I dont plan doing any repairs or renovation myself, no more than I do for my properties.

At the end of the day I just want to know if franchises work for others and if they believe its worth the investment, the same way we evaluate RE deals.  

[Pavlos Kasselouris]

I'm almost finished the book E-myth ( there is also a biggerpockets podcast with M.Gerber) and I'm really troubled with this.

[Todd Plambeck]

I'm with Pavlos on this one.  I know a ton of skilled tradesmen who are the worst businessmen ever.  Some good systems would benefit them greatly.  I had one recently who texted me for my email to send an invoice three times of the course of a week.  He finally emailed his bill about a week later then called me two days in a row to make sure I had gotten it and sent the check,  no CC accepted of course.  I sent it to him and three weeks later the check cleared.  How do you stay in business like that?  

[Gino Barbaro]

@Pavlos Kasselouris

Franchises allow the small business owner to implement systems to run the business.  As Michael Gerber says, systems run the business and people run the systems.  If you  are unsure of how to set up a business and run correctly, this may cut your learning curve and give you a head start, albeit at a price.  You have to calculate if this help is worth paying for.

Many small businesses fail in the first 5 year, but franchised businesses are more successful.

Good Luck

Gino

[Pavlos Kasselouris]

Originally posted by @Gino Barbaro:

@Pavlos Kasselouris

Franchises allow the small business owner to implement systems to run the business.  As Michael Gerber says, systems run the business and people run the systems.  If you  are unsure of how to set up a business and run correctly, this may cut your learning curve and give you a head start, albeit at a price.  You have to calculate if this help is worth paying for.

Many small businesses fail in the first 5 year, but franchised businesses are more successful.

Good Luck

Gino

 I understand the stats, but I have also been told that a lot of franchisees get stuck and cant afford to bail out, and end up putting more capital.

[Gino Barbaro]

@Pavlos Kasselouris

What do you mean, get stuck?  You pay a fee to buy the franchise and then you pay a percent of the revenue to the franchisor for advertising and other expenses.  This is all laid out in the beginning.  The franchise can always be sold if you get stuck, but you may lose money. I can't imagine this type of franchise costing hundreds of thousands of dollars like a dunking donuts.

[Pavlos Kasselouris]

@Gino Barbaro

I mean trapped. The general investment can go up to 120K.

[Jim Shepard]

I have been a Subway franchisee for almost 24 years.  The brand brings value to the business instead of "Jim's Subs".  I would think the same would hold true for a handyman franchise.  Subway gives me the buying power of 44,000 stores.  I would suggest that you get their circular.  In their circular will be names and phone numbers of existing franchisees and ex-franchisees.  I would call several from both catergories and get a feel for the franchisor.  With the ex-franchisees take their view with a grain of salt.  Try and get a feel for their business ability.  You want to find out why they lost or dropped the franchise.  Ask current franchisees about their thoughts on the system, system management, accounting, advertising, training, etc.  Go visit the franchisor.  Yeah its a few bucks to get to them and a night or two in a hotel.  Part of doing business.

Next step I would go work for one of the franchise handymen for a month for free.  You say free?  It's better than losing a 120 thousand.  I did this and I got a bonus...the franchisee that I worked for became my mentor.  If I had a problem, I gave her a call to get an answer.

One last piece of advice.  I would suggest that you take a couple of basic accounting classes at your community college.  Yes, the CPA will do the taxes but you need to have a basic understanding of amortization, depreciation, debits, credits, ect.

[Pavlos Kasselouris]

@Jim Shepard 

Awesome information Jim. I really appreciate it! 

The only difference, imo is the brand recognition. Subway is world known. A handyman and remodeling franchise doesn't have that kind of recognition. The way I see it you buy mostly their marking plan and the operations system. Your subway costumer will walk in because they know what to expect. My handyman costumer will call me because he found me when in need.

And that's why I'm hesitant. On the one hand I know I can create these systems either by putting a lot of effort either outsourcing whatever I can't or don't know. On the other hand having support is a big deal, people that they are there to help you when you need it. But is it really worth the initial investment and the ongoing royalty? And also lets not forget the area you service.

I will definitely speak to current and ex-franchisees. They are not regulated and will be able to give me solid numbers.