How Much Does Opening a Franchise Cost?
The most common question we get when we speak to potential owners is “How much does a franchise cost?” This is the #1 question for good reason! Entrepreneurs know that the first big hurdle they will face as business owners is finding a responsible way to cover the start-up costs. We’ll cover ways you can do this below, but first, let’s cover exactly what the costs are and why they are there.
All franchises entail some sort of up-front franchise cost or fee. They range anywhere from $10,000 to upwards of $100,000. Clean Air Lawn Care’s franchise fee is $40,000.
So why do franchisors charge franchise fees? Franchise fees are primarily used by franchisors to cover training, support (paying the amazing headquarters staff who support the owners), producing proprietary products, franchise-wide software, and all of the other costs the franchisor takes on to create a thriving brand, and a network of support and businesses.
Franchise Cost: Franchise Royalty Rates
As is the norm for almost all franchises, part of your franchise costs include bi-monthly royalty payments that will be based on your sales revenue. Royalties are used by the HQ team to provide full, personalized support to you as the business owner.
Your royalty rate will be 8.5%. Royalty is based on your revenue after non-royalty expenses have been subtracted. Our billing support will automatically process your royalty payments based on your reported revenue on the 5th and the 20th of every month. Any services you perform that are outside of our business model (ie snow removal) are considered non-royalty revenue and you will not pay a royalty on that revenue.
What Does Your Investment Include?
Your initial franchise fee covers one territory of up to 70,000 households and gives you full access to all of our branding and marketing materials. You also instantly become a part of a supportive and active digital franchisee forum, where Clean Air Lawn Care owners ask questions, provide feedback, and share successes on a daily basis. You’ll be learning from the best as soon as you become a part of the team. Plus, all new owners attend a 5-Day Intensive New Owner Training that covers soil, atmospheric, and turf sciences, as well as operations, equipment, software, sales, marketing, and accounting training.
And, of course, as a franchise owner, you get the dependable and expert support of our HQ team. Besides our innovative and sustainable approach to lawn care, our owner-focused support team is what sets us apart from other franchises. Our HQ team provides complete marketing, billing, business, and operations support that is geared towards helping you reach your business goals.
Equipment and Start-Up Costs
We advise prospective new owners to budget around $25,000 for their equipment and start-up costs. Your equipment and start-up budget should include your electric equipment (mower, blower, trimmer, etc), handheld landscape tools (shovels, rakes, clippers, etc), treatment equipment, the solar panel charging system, a down payment on a new truck, graphic wrap for the new truck, and the treatment (fertilizer and soil builder) products you purchase from HQ. You will also likely purchase some bio-based weed control products and granular organic fertilizer from outside sources. We have many equipment partners that offer discounts and personal support, which comes in handy when you’re purchasing all of your new equipment.
Also, keep in mind that you will have some travel expenses associated with traveling to Fort Collins, CO for the 5-day training (training is held virtually while COVID-19 risk persists).
Grand Opening Marketing
Our new owners are required to spend at least $1500 on grand opening marketing. The way you spend the money is up to you. However, you will have the help and support of our Marketing Director as you put your marketing strategy together. Through our extensive training and follow-up conversations with our team, you will come up with a grand opening marketing strategy that will get you off to a great start. The strategy can be digital-only or have a mix of mailers, door hangers, local media advertisements, and other non-digital marketing avenues.
We have found that when franchisees put money behind their grand opening marketing, they get off to a much stronger start than franchisees who don’t spend money on grand opening marketing. And strong starts lead to stronger businesses!
Other Ongoing Franchise Costs
There will always be ongoing costs for any kind of business owner, and as a franchise owner, you will see some of these, as well. Ongoing costs that our franchise owners see include the owner advertising fund, insurance, workman compensation, labor, equipment maintenance, treatment products, and gas for their trucks. If you start off as an owner/operator with no employees, you won’t need to worry about the labor and workman comp until you hire your first employees.
We also recommend investing in paid advertisements to increase your customers and estimate requests. These paid advertisements are usually through Google or a variety of home services platforms. Our Director of Marketing will work with you to create an effective plan and will implement that plan to get optimum results. As a franchise owner, you are responsible for paying the advertisement costs, but we do not charge additional fees for creating and running them for you.
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How to Access Your Capital For Start-Up
How do people find the money to get their franchise started? We know that most people don’t have $50,000 lying around, ready to be spent. Once you’ve decided to invest in a franchise, you will need to start doing a deep-dive into your financials to see where you can pull your start-up money from.
The most common ways our franchise owners cover their start-up costs is through one or more of the following: refinancing their mortgage, taking a loan against their 401(k), selling stock investments, and accessing their savings in some way. If you’d like to discuss how you can do this, let us know. We can walk you through the process of accessing your capital to cover your start-up costs.
Financial Assistance
If you think owning a franchise might be right for you, but you’re coming up short on the liquid capital it takes to start one, we’d still like to hear from you! Some potential owners qualify for financial assistance through the financing of the franchise fee and other items such as equipment and a truck.
Please get in touch to see if you might qualify for franchise fee financing.
Next Steps
Are you ready to take your economic future into your own hands? Are you ready to make a difference in your community? If so, all you have to do is apply! We’ll answer your questions and get into the details about the business model and operations. After you do your due diligence, and if we think you’d be a great owner, our CEO, Kelly Giard, will extend an invitation to a Discovery Day.
A Discovery Day is a day that you spend with us at our Headquarters in Fort Collins, Colorado. You meet with every member of the team to get an inside look at the support you get and what it takes to run your business. After a Discovery Day, both the HQ team and the potential owner will make the decision whether or not to move forward. Once you’ve decided to become a franchise owner, you sign our FDD and then you’re off! We’ll provide full support and training to help you make the most of your sustainable business.
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