No one is ever truly prepared for a disaster. Extreme weather, fires, floods, or other scenarios can quickly take our homes and turn them inside out. It’s hard to know what to do when you’re staring major damage in the face.
ServPro aims to take some of the burden off homeowners in these particular situations. They provide a full menu of services ranging from water and fire damage to full restoration projects. When a fire breaks out, or a flood comes rolling in to our living rooms, it may seem like nothing will ever be the same again, but ServPro leaps into action, doing everything possible to bring your home back to its former self.
ServPro is very passionate about the work that they do and they are seeking others who wish to join them by purchasing franchise licenses.
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ServPro’s Professional Services
ServPro was borne of the need for restoration services for homeowners. With so many scenarios that can result in devastating effects on home and property, there needed to be a way for the damages to be cleaned up properly and efficiently, without taking the homeowners themselves an eternity to accomplish.
When fire, flood, or other disaster strikes, the rebuilding phase cannot commence until the mess has been cleaned up. In many scenarios, the cleanup process itself can be unsafe due to mold, soot, or other toxic factors. By hiring professionals who have the right equipment to protect themselves, as well as ensure all the danger has been removed, it keeps the homeowner safe.
Fire and flood damage are not the only areas where ServPro’s expertise comes in handy.
Damages caused by storms also falls in the wheelhouse of local ServPro providers. They have experience and training in removing all damaged pieces and making way for construction crews to come in and put your home back into proper working order.
Mold infestations can cause big headaches, both literally and figuratively. Removing the mold can disturb it, causing it to go airborne and create even more health issues. ServPro professionals are highly trained in the art of mold removal and can do so without further jeopardizing the residents’ health or their own.
Another factor that can lead to health issues in homes is a dirty ventilation system. Dust and allergens can build up in vents and be blown around the home, aggravating inhabitants’ respiratory systems. ServPro offers comprehensive ventilation cleaning to remove these allergens and improve the air quality of the home.
One service that ServPro provides, but hopes that no one ever has the need for, is trauma and crime scene cleanup.
When violence occurs within a home, it can leave behind biohazardous material that not only serves as a painful reminder, but can also pose a threat to the health of those residing within the home. It is imperative that the area is thoroughly cleaned and sterilized following these traumatic events, and it is highly recommended that this grim task be performed by professionals.
No one should have to clean up the aftermath of something so terrible in their own home. Going through that process can be like reliving the event all over again. ServPro removes that burden and ensures the home is clean and safe to live in once more.
ServPro’s Franchising Process
ServPro is seeking additional franchisees to open more locations and serve a wider area, but they only have select territories available at this time.
ServPro currently has franchised locations all over the United States, as well as in Canada, the United Kingdom, Ireland, New Zealand, and Australia. Since they offer each franchisee exclusive territory rights, they will not grant any additional licenses to candidates seeking ownership in an area that has already been franchised. For this purpose, candidates are first filtered by the area in which they live.
Candidates that are seeking a franchise license in an area that is available will be invited to begin the full application process. This will include background checks, credit checks, and experience evaluations. ServPro requires each franchisee to have prior business experience, as well as the financial strength to shoulder the costs associated with launching a new franchised location.
Those that are deemed worthy by ServPro will be invited to sign a franchise agreement. At that time, the license fee of $150,000 will need to be paid.
In addition to the license fee, it will cost between $92,000 and $206,000 to get the location up and running. Specialized equipment, vehicles, and hiring staff will eat up much of this cost.
Prior to opening the location, the new franchisee will undergo a 15-day training at the National Training Center in Gallatin, Tennessee. The training center was opened in 1992 as way to introduce new franchisees to the brand and get them acclimated with the policies and procedures of the company. Today, it also serves as a way to train franchise employees in the ways of the business.
ServPro offers additional, ongoing trainings for franchisees to keep them up to date with current practices and techniques. By offering these trainings, they are ensuring that each location is keeping up with the times and offering the latest technologies of the trade. It’s how ServPro stays competitive in a constantly evolving industry.
Serving Up a Strong Franchise System
ServPro has been franchising since 1969. In those nearly 50 years, they have exploded all over the world with more than 1,700 franchised locations.
With this level of presence it’s hard to believe that they are still looking to add more, but ServPro feels that there are still areas that have not been given access to the services that they provide.
In the last three years, ServPro has added 58 additional franchise units to their roster for a 3.6 percent increase. Twenty-six of those units were added in the last year alone, pointing to an increased rate of sale for their licenses.
For a brand that already has such a huge presence, to see their licenses being sold at faster and faster paces puts Servpro in a very unique situation. With that kind of brand coverage, it can be common to see license sales decline due to the dwindling number of territories left available.
ServPro may have Entrepreneur Magazine to thank for their continued growth and success. They have received multiple accolades from the magazine, including being named the number one restoration service franchise every year since 2009. Franchisees looking for a restoration industry company to partner with are much more inclined to go with the brand that has been on top for nearly ten years.
Determining ServPro’s Worth as an Investment
With statistics like these, it’s easy to see why franchisees continue to choose ServPro over the other guys when it comes to investing. Not only are they providing some of the best training and support in the industry, they are also growing at an incredibly fast rate while doing it.
Oftentimes, when a brand grows to such large proportions, they lose touch with their franchisees. ServPro maintains those relationships, guiding their franchisees through the industry and providing them with support and updated training as needed. Instead of sitting back and counting their money, they continue to reinvest in their brand, making it better for customers and franchisees alike.
The downfall of a ServPro franchise is that it is an incredibly expensive investment. That’s not to say that it doesn’t necessarily pay off and that these franchisees aren’t making their money back several times over, because they very well may be. However, the initial investment costs are much higher than other franchise opportunities and there’s no guarantee how long it will take to see a return on investment. The startup costs are right about average but that $150,000 license fee is astronomical.
Even with the financing assistance that ServPro offers, it would still be difficult for many to invest. ServPro does not explicitly state what, if any, net worth they require their franchisees to have, but with a license fee that high, it can be assumed that they expect a fairly large net worth.
Because of this, they narrow the pool of potential franchisees significantly. Even if they have no net worth requirement, it would take someone in a pretty unique financial situation to be able to afford this type of investment. Most people don’t have an extra $150,000 laying around to just fork over for a license.
Another point to consider is that all business is a risk. By paying a higher franchise license fee, the franchisee is placing a larger bet on the business. ServPro does not refund the license fee under any circumstance, so if the franchisee is unable to make the location work, for any reason, they are out a lot of money. Most franchisors don’t offer refunds on their fees either, but they are charging a whole lot less for them. It’s easier to stomach a $35,000 risk than what ServPro is asking their franchisees to do.
On top of the high franchise license fee, ServPro also charges incredibly high royalty and advertising fees. The averages for franchise royalty and ad fees are 6 percent and 2 percent, respectively. ServPro wants a bigger cut than that. They charge 10 percent of total gross sales in royalty fees and 3 percent in ad fees.
When considering that most successful businesses operate with an approximate profit margin of 20 percent, that 13 percent that ServPro takes out becomes huge. Eating into the profits of their franchisees who have already paid so much to be a part of their system seems like a greedy move.
Clearly, ServPro is doing something right if they are growing the way that they are. They have dominated the restoration industry for years now and have increased their franchise location count continuously. With the high price of doing business under their name, it’s hard not to wonder how many franchisees are actually happy with their investment.
If ServPro locations were not making enough through sales to allow them to continue paying their bills and their franchising costs, it would show by a large number of locations closing. But that’s not the case, so it can be deduced that each location is at least making enough money to stay afloat. It would be more interesting to see what kind of profits they were working with.
Of course, ServPro only publishes the positive reviews from their franchisees on their website, so that information is pretty unreliable. A potential franchisee who is considering joining ServPro would be advised to make calls to currently operating, or former, Servpro franchisees. Candid and honest feedback regarding the franchisor and what it was like to partner with them could be the single most important piece of data to analyze before making the decision.
ServPro has a lot going for it as a franchise system. Potential franchisees have to decide for themselves if the high cost of doing business with them is worth the support and recognition they will receive in return.