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Franchise Opportunities Abound In Home-Related Services
by Michael J. McDermott

Home is where the heart is, as the old saying goes. Besides being the single largest asset most people will ever buy or own, the home is fraught with emotional and psychological value as well. It is a tenet of English common law that a man’s home is his castle. That being the case, it’s not surprising that homeowners like to keep their castles clean, tidy and in good repair.

Those desires create countless opportunities for prospective franchisees, particularly in the maid services and handyman/home repair sectors of franchising. Both have been growing at a steady pace in recent years, and both exhibit a certain level of resistance to fluctuations in the short-term economy.

Maid services is just one component, albeit a large one, of the overall commercial and residential cleaning services industry. Besides maid services, the residential market includes carpet and window cleaning services and similar specialized businesses.

Overall, the cleaning services industry is a $128 billion-a-year business that is expected to grow by 5.5% in 2008 and 2009, according to research compiled by Freedonia Group and the U.S. Commerce Department. Among the factors driving growth in this industry are current business trends towards outsourcing and the purchase of cleaning services by two-income families desirous of more leisure time.

Existing demand for maid services is tremendous. The Commerce Department estimates that 85% of all two-income households in the U.S. already rely on an outside service to clean their homes. In some markets, maid services actually maintain a waiting list of anxious prospective customers. The Bureau of Labor Statistics (BLS) expects the cleaning industry to be the second-largest creator of new jobs in the early part of the 21st century.

With consumers placing more value on their free time-and many struggling with less and less of it to spare-demand for maid services is vast and growing. Working couples with adult children, single professionals, retired couples and young couples with or without children are all well represented in the maid service industry customer base.

Franchise fees for maid services range from less than $10,000 to about $50,000 and average around $15,000. Total investment usually runs between $50,000 and $60,000, putting this franchise opportunity within reach for many aspiring entrepreneurs. Ongoing royalties are most often in the 5%-6% range.

What makes maid services such an appealing franchise opportunity for many people is the ready availability of customers, the relative simplicity of starting up the business, the significant potential for growth, and the high level of support offered by the best franchise companies in this niche.


Most homeowners like to keep their personal "castles" clean, tidy and in good repair.

Demand among female consumers for residential maid service is greater than for any other service, researchers says. The number of empty-nest households is on the rise, and as more consumers move into the 55-64 age bracket, they will provide additional impetus to growth in the maid services industry.


INCOME RISING

The greatest increase in demand will come from households in the 45-to-54 age group (up 15.7%) and those in the 55-to-64 age group (up 26.5%). Disposable personal income of older consumers is also on the rise, further boosting demand.

The ideal target market for maid services franchises includes consumers aged 45 and older with higher-than-average household incomes. Consumers falling into the older age demographic spend between 22% and 32% more than average on maid services. Those falling into the higher-income bracket spend three times as much, according to a study on housekeeping services by New Strategist Publications.

Historically, many consumers have opted for informal arrangements with self-employed maids and house cleaners. Such independent operators are sometimes less expensive than professional cleaning services and may be more flexible in areas such as the types of tasks they are willing to perform and adjusting their hours to accommodate a family’s schedule. Many householders have developed strong personal relationships with these workers over the years.


There is a shift away from do-it-yourself and towards do-it-for-me cleaning services.

However, BLS reports a sharp decline in the number of such self-employed independents in recent years. One reason for that is the stiff penalties that can be imposed on consumers who fail to report wages paid to domestic help to the Internal Revenue Service and to pay the required employer’s share of Social Security taxes on those wages.

"Stricter enforcement of those regulations is prompting more households to turn to professional cleaning services, including maid services, as an alternative," says an economist for BLS. As a result, the agency recorded annual growth rates of more than 20% in the maid services industry from 1996 through 2002. It expects growth to average between 5% and 7% a year through 2011.


PROFESSIONALS FAVORED

There is a lot of anecdotal and some statistical evidence that today’s consumers are more comfortable hiring a professional cleaning service than a solo operator. Solid growth in the number of franchise companies, franchise outlets and franchise revenues in the cleaning services industry is strong evidence of that trend.

One aspect of franchise cleaning services that appeals to many consumers is the continuity and reliability they represent. Industry research indicates that the average life span of the typical mom-and-pop cleaning business is just 18 months.

What’s more, when independent operators are unable to keep an appointment for personal or other reasons, there generally is no back-up plan in place, and customers are left with the unattractive options of putting up with a dirty house or cleaning it themselves.

Many established cleaning franchises, in contrast, have been in business for many years. They have the management and personnel to make sure that their customers’ cleaning schedules are met no matter what the circumstances.

"Today’s consumers are well educated and aware of the potential liabilities they open themselves up to when they grant access to their homes to a non-professional service worker," says an executive at one leading maid service franchise.

Like most franchise companies in the cleaning industry, this one is licensed, bonded and insured, which relieves the householder of many concerns. Should an employee of the franchise suffer an injury in a customer’s home, the franchise’s insurance will cover it. Bonding employees also provides a level of protection against theft and other illegal activities.

Overall, the outlook for maid services is positive, says labor economist Geraldine Price. A trend that she describes as a shift away from do-it-yourself and towards do-it-for-me cleaning services has staying power, particularly in the residential market.

"Demographic forces will prop up increasing revenues from maid services as the number of dual-income families rises or holds steady and the population ages," she says. “People in two-income households often don’t have the time or desire to do their own cleaning. They view maid service as a necessity, not a luxury.

As in any industry, franchisees in the maid services business can expect to face some challenges. Chief among them, according to a 2007 survey by an industry trade association, is recruiting good employees and avoiding hiring the wrong people. The second-biggest challenge maid service operators face is retaining good employees and avoiding workforce turnover.

Other challenges mentioned by owners of residential cleaning service businesses in the survey include:

  • Quality control issues, poor work habits of employees and failure of employees to follow prescribed cleaning methods.

  • Finding ways to adequately compensate employees while controlling payroll expenses.

  • Behavioral and attitude problems on the part of employees.

  • Correctly pricing jobs and getting top prices from clients.

  • Attracting new clients and developing effective and efficient marketing and advertising programs.

  • Insufficient profit on sales volume.

  • Failure to meet sales and growth objectives.

  • Retaining clients and reducing client turnover.

    Being part of a franchise system can help maid services owners avoid many of those challenges altogether and find solutions to the ones that do arise. For example, most maid services franchises include a professionally designed and implemented marketing and advertising program, removing the onus of that responsibility from the franchisee completely.

    There are other aspects of the business that have strong appeal to franchisees as well. "One of the best things about owning a maid services franchise is that the hours are reasonable, especially compared to something like a retail operation," says a Maryland-based franchisee who has been in business for 15 years.

    "Most people want their homes cleaned while they are at work," she explains. "That means we usually work just five days a week, eight or nine hours a day. There are not too many business opportunities available today offering those kinds of hours."


    The home repair business has seen the emergence of numerous new franchises..

    Most owners take justifiable pride in their homes, but they don’t always have the time, inclination or resources to keep them in good repair. In addition, many people like to improve their homes with everything from minor alterations to major renovations. Both those factors are driving growth in the handyman/home repair sector of franchising.

    Long the domain of sole proprietors and moonlighting professionals, the home repair business has seen the emergence of numerous new franchises over the past decade. Home repair, remodeling and handyman services is estimated to be a $280 billion business in the U.S.

    While major remodeling projects such as home additions account for a large portion of that spending, the Commerce Department estimates that spending on simple repair and maintenance jobs accounts for up to 45%, making the handyman business a $126 billion industry.

    The jobs performed by handyman franchises run the gamut, from simple carpentry and repairs to painting to installation of various items. About 17% of the market involves projects such as hot water heater replacement, furnace replacement and roofing. Window and door replacement, which is often handled by handyman services, accounts for 10% to 15% of the market, according to Commerce Department estimates.

    More than 30% of the residential remodeling and repair market entails work done on rental properties, which account for about 65% of single-family housing units. Larger multi-family dwellings are an important source of repeat maintenance and repair work for many handyman franchises


    As the green movement spreads, demand for handyman services should increase.

    According to the National Association of the Remodeling Industry (NARI), an increase in environmental awareness among consumers is starting to be reflected in the jobs handyman services are being asked to do. As the green movement continues to spread, demand for handyman services in those areas should increase.

    Among the areas cited by NARI are efficient heating and cooling systems. "With dramatic increases in energy costs becoming an annual occurrence, many homeowners have come to realize that building in an environmentally friendly way also means making smart decisions that translate into financial savings," says a NARI spokesman.

    Homeowners are demanding new insulation technologies that are more environmentally friendly, such as spray-in cellulose insulation, which is made from 80% post-consumer recycled newspaper and will effectively seal homes from harsh heat and cold, he says.

    Solar energy is another growth area for handyman franchises cited by NARI. "Thermal solar energy is a non-polluting energy source that is easily captured and used for water and space heating," the spokesman says. Although solar water heaters can be expensive - costing between $1,000 and $5,000 - they can pay for themselves over periods ranging from four to eight years thanks to reduced energy bills.

    With water costs soaring and drought threatening many parts of the country, home improvements and repairs designed to reduce water consumption are in demand. Installing water-saving washers, dryers, dishwashers and low-flow toilets and showerheads can reduce the amount of water needed and trim water bills.

    "Homeowners today are concerned about maintaining a healthy indoor environment, particularly if they have sensitivities to airborne irritants," the NARI spokesman says. "Modern building materials, such as construction adhesives, paints and treated woods, can emit toxic volatile organic compounds (VOCs) that adversely affect indoor air quality."

    Handyman franchises can capitalize on the demand for healthy indoor air by recommending new non-toxic materials to improve the overall health of a home and by installing air cleaners and purifiers to improve indoor air.

    According to the most recent report from Harvard University’s Joint Center for Housing Studies, consumer spending on remodeling and repairs is expected to grow about 18% from 2010 to 2015, on top of 22% growth for the period 2005 to 2010.

    "Fortunately, improvement spending is typically less volatile than residential construction spending," says Marcia Fernald, editor and project manager of the 2007 report. "In the last downturn, for example, remodeling expenditures declined 8.7% between 1987 and 1991 and then rose 11.5% in the subsequent three years. By comparison, new construction spending plummeted 33% and then rebounded 42% over the same period."


    Home improvements and repairs to reduce water consumption are in demand.

    Once balance is restored after the current correction in the housing market, the outlook will become even brighter. Household growth will accelerate over the next seven years and baby boomers are moving into the peak second-home buying years with record amounts of wealth, Fernald says.

    No matter what the economy does over the short term, home ownership continues to represent the realization of the American dream for millions of people. Once they are in their own homes, they want to keep them clean and well-repaired, and that will continue to create new opportunities for thousands of franchisees in the maid services and handyman/home repair segments.

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