9 seriously important tips for choosing a home improvement franchise
Home improvement franchises are among the fastest growing segments in the franchise industry, a market historically dominated by the restaurant sector. They’ve become a popular choice for first-time entrepreneurs due to their low fixed costs and high margins. With so many different home improvement franchises to pick from, how on earth do you pick? What’s the most important thing to look for? How do you know if one home improvement franchise is better than another? We hear ya, it can be a daunting experience to go through… especially if you’re new to the business world. You not only want to make sure that you’ve invested in a profitable business but that you choose a business that’s actually right for YOU.
So, without further ado, here are our tips for choosing the right home improvement franchise.
1. Decide what you want to do
First things first: think about what you want to do, what you want to accomplish and if the home improvement franchise in question will let you do it. What type of business owner do you want to be? Do you want to be the “hands-on guy,” the one who’s on the job-site with his team; or the “investment guy,” the one who hires the right people to make sure things run smoothly? Do you want to work all year long or only during certain seasons? Do you want to interact directly with your customers? How about keeping your full-time job on the side? Asking these questions will give you a good indication of how well your goals and your lifestyle fit with a specific franchise. If they don’t, scratch it off your list!
2. Do your calculations
The next thing to do is assess your financial situation and determine how much capital you need (including loans) to invest in the home improvement franchise you’re interested in. Get the details on what’s actually included in your initial investment: does it include your franchise fee? What about all of your equipment? Don’t forget to find out if you need a physical location for your business, because this might come at an extra cost. Beware of “SUPER LOW” investment costs that in reality don’t include much. Little do you know, you’ll probably have to spend on things like initial cash flow and marketing… bummer. While these may be operational costs, remember to include them as part of your initial investment. Knowing exactly how much you’re able to invest off the bat will allow you to narrow your focus among the many options.
3. Dig into the fees
Find the value in the franchise fee and the royalties— both should actually be worth your while to pay and should give you something in return. Do you benefit from an ongoing program of research and development designed to keep your business ahead of the competition? What’s the royalty structure like (fixed or a percentage of sales) and what do you get out of it? Will your royalty fees go toward funding useful resources like a full-time call centre? Especially in the renovation and home improvement industry (where word of mouth referrals are EVERYTHING), having a qualified call centre to handle calls while you take care of your customers is a huge asset, since it’ll allow you to maintain a high customer satisfaction rate and get those referrals! Not to mention, it would probably be more expensive to hire someone full time to do the same work. FIND the return on your investment, even when it comes to paying fees.
4. Get to know the market
While the renovation industry is a multi-billion dollar market, not all renovations offer the same payoff. Since you can instantly google anything nowadays, homeowners have become a savvy bunch and they know where to spend their money and which renovations will give them the best return on their investment. Do your research and determine which renovations real-estate pros say actually increase property value and which are… well, a waste. When times are financially tough and consumers are tightening those purse strings, the last thing you want is to be offering a service that majority of homeowners label as high-end, extravagant or unnecessary. Of course, there ARE homeowners who are willing to spend on such services, but in the wider scope of things, aim to service the needs of the majority.
5. Find the “wow factor”
North Americans are renovation CRAZY! Call it the “HGTV effect” if you will. With so many home improvement franchises out there, you want the franchise you select to stand out and be different in some way. In others words, make sure there’s a reason for customers to choose your business over others. Look for a home improvement franchise that can hook potential customers by offering a unique concept, exclusive products or ideally, a service that homeowners can’t take on as an easy-peasy DIY project. Today’s franchisor can’t be stuck in the stone age either, so find out if the home improvement franchise offers some sort of managerial software or technology that’ll take some of the administrative load off of your shoulders and make your life as business owner a little easier.
6. Find out how territories are carved out
A service-based franchise means that you’ll be running your business within a predetermined territory of some sort, so you NEED to figure out the criteria on which these territories are based. If the answer is just population, then up comes the red flag. It doesn’t make much sense for a home improvement franchise, operating within the renovation industry, to base their territories solely on population. In addition to population, a viable territory should be based on things like average household income, dwelling type and year of construction and average yearly expenditures. Don’t forget to ask if territories are exclusive or if you and the other franchisees will be running your businesses in close quarters.
7. Check out the marketing
Marketing can either make or break a business because, let’s face it, people DO judge a book by its cover. Go on the home improvement franchise’s website and get a feel for the look of the business. Is marketing clean and professional, or old-school and cliché? Since people literally walk around with the internet in their pockets nowadays, we can’t stress the importance of having a strong web and social media presence. Find out if the franchisor has a national marketing fund (because you’ll benefit from the system-wide pooling of resources, which means your marketing spend will go A LOT further) and what kind of support they provide in terms of your local marketing campaign. In the end, you can offer the best service in the world, but if no one’s calling… it doesn’t really matter.
8. Uncover the franchisor’s reputation
A franchise is essentially a parent business with a proven track record and a scalable business model that can be successfully replicated across different territories. So, you should be able to check out the existing reputation of the home improvement franchise you’re interested in by checking out online reviews and testimonials. If people aren’t happy with the quality and price of the service—and we don’t just mean the occasional bad review—you should be concerned. If the franchise is a member of recognized business groups and associations, this definitely adds to the franchisor’s credibility.
Let’s not forget about media coverage! If the media are talking about the company, this is a good sign in terms of the viability of the business. This also means that your local business will reap the benefits of your franchisor’s national media exposure.
9. Make sure you’re properly supported
Any franchisee’s worst nightmare is to be thrown into the ring without knowing what to do, so find out exactly HOW you’ll be trained. Are you receiving both theoretical and practical training; is your training a one-shot deal or is it on-going; can you easily reach the franchisor’s corporate team if you have any questions after your training; do you have any additional educational resources that you can use when you need it? All of these things will have an impact on how well you’ll be able to handle the learning curve. As a first-time entrepreneur starting a new business, you’ll want to make sure that you’re given the resources you need to successfully deliver the service to your customers.
You’re all set to choose a home improvement franchise
Once you’ve gone through these 9 tips, you should be left with a realistic list of home improvement franchises for you to invest in. By asking the right questions and proactively doing some of the research on your own, you’ll be able to fish out the home improvement franchises that have real potential. When you’ve picked a home improvement franchise that you’re serious about, consider talking to existing franchisees! This is THE BEST way to speak to people who have already been in your shoes and who can actually tell you what it’s like to be a franchisee. Don’t forget: business is as much emotional as it is financial. If you connect with a brand or service and you feel passionate about it, then you can make it a success.