If you are looking to invest in a handyman franchise, you have probably looked at some of the above franchises. At first glance, they may all look about the same, but under closer inspection, some have fees that others do not, and they add up to $ 100,000’s by the time the term of the franchise has expired. That is money that could be in your pocket.
Before we dive deep into the Franchise Disclosure Document of each handyman franchise, let me explain who the author is.
My name is David Klappenberger, and I started my painting and handyman company in 1989. After 25 years of working as a sole proprietor, I decided to franchise Klappenberger & Son in 2015. We currently have six franchises sold as of 2020.
The purpose of this article is to compare apples to apples of the most critical parts for choosing the best handyman franchise.
The results are shocking and may seem perhaps incredulous, but they are not. All information came from the FDD of each franchisor. More specifically:
Three of the handyman franchises have territory sizes measured by the household, which is 2.45 people.
Converting households to people
I can’t speak to why the other handyman franchises have such small territories, but I know why Klappenberger & Son is 3 or 4 times larger than its competitors.
FYI – Prior to franchising, Klappenberger & Son operated in an area of 400,000 – 500,000 people.
I grew my painting and handyman business to having 30 techs and grossing just under 2 million.
I want my franchisees to have the same opportunity that I did. However, it would also be disingenuous to ask a franchisee to do what I did in the significantly smaller territory.
Perhaps they believe a franchisee is not capable of handling the responsibilities. Certa Pro Painters and Wow 1 Day Painting also have the same provisions in their FDD.
Commercial painting and handyman projects can be very profitable.
Not having the right to do these jobs seems unnecessarily punitive.
In 2020 one of our new franchisees did complete two large commercial jobs during his first six months.
The jobs totaled nearly $60,000 in gross sales and net profits of $20,000.
Most people who buy a handyman franchise have no previous knowledge of the industry. Therefore, the quality and quantity of the training program are essential. Short training programs that only last 2-3 weeks are a recipe for costly mistakes.
An improperly trained franchisee will appear incompetent, or worse, grossly underestimate a job and lose money.
With few exceptions, and the answer is more than a few weeks.
As a franchisee with Klappenberger & Son, your training lasts six weeks.
Moreover, the final two weeks are predominantly done in your territory. No other franchise invests this kind of time.
This onsite training allows us to:
After the training, we are still with you every step of the way. We will have a weekly meeting and always ready to help you with estimating and any other questions you have.
I believe this is where we can excel like no other franchise. I have worked in the field for 17 years as a painter and handyman. Furthermore, I have run a painting and handyman business for 29 years. I have the insight and expertise that few in the industry have.
There is a lot of new information to process when investing in a handyman franchise. Trying to pack all the information into a week or two is like trying to cram for an exam. Neither the results nor retention of information is processed correctly.
Suppose each company grossed $700,000 per year, which franchise would allow the franchisee to keep the most net profit. This model assumes that all jobs are accurately bid and that each franchise marketing plan worked as indicated.
When you see marketing fees or royalties that are even one percent different, the cost increases dramatically.
Consider that Mr. Handyman has a possible 3% Local Co-Op fund. This “fee attached to gross sales” is mandated by the franchisor. Local franchises combine funds typically for billboards, radio, or T.V. ads.
But a 3% fee is not 3% out of your profit –it’s much more!
If your net margins are 25%, meaning you get to keep $25.00 for every $100 you invoice, then a 3% fee is a 12% reduction.
Investing in a Klappenberger & Son franchise would allow you to keep a lot more of your earnings.
Over ten years, the differences add up to hundreds of thousands of dollars. The chart below shows the additional money given to the franchisor over and above what a Klappenberger & Son franchise would pay.
You could buy a house and put your kids through college for the money that you would save in 10 years.
Considering the term of the franchise contract and the franchisor’s lease expenses affect the bottom line.
I operated my business out of my home for 30 years. I had 25 guys working and small office staff, but we did it out of my house. With nearly 2 million in gross sales, I rarely felt like my business needed to lease space. It is a costly luxury that can suck the cash flow out of a young company.
Lease prices will vary based on location and size, so it does not matter what each handyman franchise estimated in their FDD. The lease will be for ten years and cost something, so I averaged each handyman franchise lease estimate from their FDD.
Simply put, the franchisor wants to protect his investment with the franchisee. The franchisor receives royalties on the gross sales, not the profit. If the franchisee loses money on a particular job, the franchisor still receives the same royalty share.
In contrast, the franchisee does only derive income from the profit of a job.
If you see two conflicting interests, you are on the right track.
But wait, I have one more point to add.
There are two ways to grow a business.
Pay customers to find you, aka, advertise.
Find customers yourself, aka sales.
A franchisor who has high advertising mandates ensures themselves against the chance that a franchisee will not find customers independently.
Mandating that you to spend 10-12% of your gross sales on advertising is much more than I or my franchisee ever spent.
A Klappenberger & Son franchise has faith that its franchisee is motivated and willing to find customers on their own and advertising. The rewards for doing are as dramatic as they are profitable (see additional charges over ten year period)
As an established business, I spent between 1-2% on advertising and gross sales between 1-2 million.
5-8% minimum advertisement should be sufficient for the first two years and then reduce as needed.
The other three handyman franchises emphasize spending money on portals like Angie’s List, Home advisor, and alike. Klappenberger & Son also agrees with this principle of lead generation but takes a two-prong approach.
Klappenberger & Son has a very aggressive pay per click campaign, Google My Business, Social Media Strategy, and SEO approach. Besides Pay Per Click, the other marketing forms are paid through the 2% brand development. The Pay Per Click campaign is set-up by the franchisor, but the franchisee determines the amount spent.
Also, Klappenberger & Son encourages its franchisees to join networking events, albeit live or viral.
Picking up the phone and reaching out to property managers, realtors, colleges, and other businesses has been proven to be a terrific way to develop long term relationships that generate repeat work. (See True Story at the bottom of the article).
As you read through this material, a few questions probably pop-up. First, you have to take this article with a dash of skepticism. After all, the author is one of the franchisors who is critiquing his competition!
Yes, I am doing some critiquing, but what I am doing is exposing the differences.
All the data is taken directly from each handyman franchise’s 2020 Franchise Disclosure Documents.
The last few questions probably revolve around the following:
Why is there such disparity between Klappenberger & Son and the others concerning?
The last question could also be, “Does Klappenberger & Son mandate enough for advertising expenses to have his franchisees succeed?”
The short answer is yes. And we guarantee it!
But first, I want to answer the disparity or generosity question. Klappenberger & Son has such a generous system because they want you to grow a substantial business as quickly as possible.
We also want you to make money. So if you are willing to leap of faith with us, then I want to honor that, not find ways to gouge you.
We are so confident that our advertising budget is large enough that we offer a guarantee. No other franchise in any industry provides a guarantee of any kind. But we believe in our system so much that we are willing to put our money where our mouth is.
Klappenberger & Son is the only franchise in the United States that has a guarantee. Our guarantee is simply this. If you meet with five people each month in the following industries responsible for having handyman or painting jobs projects completed, we will guarantee that you will gross $500,000 in sales or refund your franchise fee in full.
The effort to establish a relationship and professionally provide a needed service pays enormous dividends.
Klappenberger & Son has ongoing relationships with all of the industries listed above. Furthermore, these relationships have resulted in a flow of repeat work that makes the handyman industry a great choice.
If you are not comfortable networking and making calls to these places, you will likely need to increase your advertising budget.