Before you quit your job and spend $100,000 or more on a painting franchise, shouldn’t you know who has the best painting franchise? Which painting franchise has the best value and opportunity for you too grow?
This article evaluates seven painting franchise, in four of the most important categories.
First, the painting franchises:
To find out who has the best painting franchise, we will discover which one has:
2. Most in-depth training
3. Reasonable fairest initial start-up costs
4.The lowest ongoing fees that allow you to keep as much profit for yourself.
In order to compare apples to apples, all data is taken straight from each franchisor’s own 2020 FDD.
If you are not familiar with Franchise Disclosure Documents or FDD, let me explain.
It is a document that should include all fees, costs, restrictions, guidelines about the franchise.
FDDS are all laid out in specific topics in a particular order, so it’s easier to find and compare. For example, all FDD’s will have information on royalties and other fees attached to gross sales in ITEM 6.
Here is the table of contents taking from Klappenberger & Son
FDD are lengthy documents and not taking the time to read and understand the details can be a big mistake.
I will only focus on the parts that will affect the profitability and growth of a business, which would include Item 6,7,11,12 of each FDD.
In full disclosure, I am one of the franchises included in the list! Prior to franchising, I started Klappenberger & Son, a painting and handyman company, in 1989. In 2015, I began to franchise and continue and have 6 franchises in the MD, DC Northern VA area.
However, I have gone to great lengths to be as objective and neutral as possible.
As I mentioned, all data comes from each franchisor’s own 2020 FDD. I do include my analysis of the data, which comes from my 30 years of experience.
In our quest to evaluate the best painting franchise, lets start with:
Most people who buy a painting franchise do not have any experience in the industry.
That makes training and support very critical. Short and incomplete training will lead to a slower ramping process and more mistakes. And it is safe to say that mistakes cost time and money, and only give you headaches and stress. Therefore, proper training is paramount.
The task of painting is not very complicated. However, there is a lot to learn about the industry. Therefore it is paramount for the training to include significant time on:
Crucial: What is the best type of training?
|Type of training||Effectiveness|
Below is a list of the seven franchises and how they stack up in the type and length of training from first to last.
Table 2 Training
There is a two way tie for the shortest training with no onsite training.
With 40 hours of training, there is little time to learn anything but the business basics. Also, there is no on-site training included.
Below is a schedule of Color World HousePainting training taken from their FDD. There is no mention of:
360 Painting –(96 hours) 60 of the hours are through a webinar and only 36 hours of corporate training.
CertaPro – (102 hours)For having one of the most expensive franchise fees, the training could be more in-depth and commit to some on-site training. There is no on-site training.
Five Star Painting (80-120 hours) Five Star provides 1-5 days of on-site training. Even if the trainer stays for a couple of days, it can improve the new franchisees’ confidence and morale. Five Star also requires an annual mandatory “reunion training” at franchisees’ expense. The reunion training is a good idea and will help fill in some of the information that was never taught or forgotten.
Wow 1 Day Painting has an in-depth training program, but wow, does it require a lot of traveling. There are three separate trips to Vancouver, Canada!
Also, Phase 3 is concerning. It includes 4-6 weeks of sales and marketing “targets” but no opportunity to start jobs?
Phase 5, Wow 1 Day Painting, has an instructor arrive on-site (2-5 days) for continued training.
The last phase concludes with a trip back to Vancouver for final training.
From the start of training to completion is about three months. I struggle with the fact that no income will be able to be generated for three months. That can be very stressful for you and your family.
For individuals with no experience in the painting industry, the six-week program enables the franchisee to learn, practice, and grow with its founder.
Fees attached to gross sales add up, and it all comes out of your bottom line. Evaluating ongoing fees attached to gross sales and monthly fees makes a huge difference in your bottom line.
Knowing and understanding your royalties and advertisement fees is very important. The difference between franchises adds up to hundreds of thousands of dollars!
These fees are charged based on gross sales. If a company has a net margin of 20%, a 2 % margin equals a 10% cut in your pay!
The marketing fees generally go to anything the franchisor chooses as long it goes towards brand awareness.
But just because you pay into it does not mean you will find a direct benefit in proportion to what you pay.
These fees are in addition to what you are obligated to spend on advertising. The chart below shows how much these single-digit charts really add up. Five of the franchises hover in the 2-3% range for marketing fees. CertaPro and Wow-1 Day can add up to two or three times higher!
Royalties and Marketing Funds attached to Gross Sales
CertaPro – Has the second-highest minimum marketing fees and potentially the highest.
There is a 12% gross sale or $40,000 advertising and marketing campaign that you must spend during your first year on top of the other fees.
But wait, there’s more…
CertaPro has a cooperate sales team that will make calls and connection on your behalf. This would be great except the service comes with a whopping 12% fee on top of all there other fees. If you decline these potential customers another CertaPro franchisee can do the work with no compensation to you.
From CertaPro’s FDD:
Wow 1 Day Painting – charges a 5% fee to cover costs for website, social media, CRM, and additional sales and technical services, including administration cost.
A 5% fee adds up very quickly.
Wow 1 Day Painting is entitled to implement a Branding Cooperative fee with the approval of 75% of the franchisees. A local cooperative fund is standard, but the 3% max is higher than most.
Fresh Coat – is very similar to the top four franchises except for one issue. Their Local Cooperative Advertising fund is set at 3% (other franchises are 2%). A one percent increase equals $7,000 for franchises with gross sales of $700,000.
Color World HousePainting – is very similar to the top three painting franchises. The only difference is the local cooperative fee can increase by 1% of gross sales.
Five Star Painting– 8-11% royalties. These royalties rates are very comparable to 360 Painting and Klappenberger & Son. The only difference is Five Star Painting has a Local Cooperative fund that can go up as high as 3%. The franchisees dictate where the funds are dispersed and the amount of contribution.
360 Painting – has the standard 6% royalties and a 2% market fund, which are paid based on gross sales.
360 Painting has marketing funds for cooperative advertising set not to exceed $10,000 or 2%. The franchisor can mandate this at any time.
360 Painting fees are very similar to Klappenberger & Sons. The deciding factor to make Klappenberger & Son #1 was the sliding scale royalty as revenue increases. No other painting franchise offers this reduction.
Klappenberger & Son* is the only painting franchise that reduces the royalty rate as the franchisees reach specific calendar benchmarks. The royalty rate drops 1% when the franchisee achieves $700,000 in gross sales and another 1% reduction at $1,250,000.
Painting Franchise Territories:
Having smaller territories can limit broader marketing methods such as billboards, radio, and TV. Even joining a local networking group such as a BNI or Chamber can generate jobs outside of what the franchisor will permit the franchisee to work.
When You buy a franchise, you are buying the rights to use the franchisors trademarks in a given territory. The franchise fee is always tied into the size of the territory. With all franchises, if you want a larger territory you will pay a higher franchise fee.
In column 5, I divided the franchise fee into the size of the territory to get a per-person cost. Whether you conclude the population size of the territory is the most important, or the per-person cost, Klappenberger & Son is the best value of the painting franchises.
Color World HousePainting – has the smallest territories and the highest franchise fee.
Color World House Painting Additional Territory Chart
A 10% discount for additional territories is the lowest of the painting franchises.
CertaPro – Does not have the smallest territories, but they do have the most restrictions.
Also, CertaPro does not give the franchisee exclusive rights to the territories.
First, you can face competition from other franchisees and other affiliates or channels of distribution that they control.
Furthermore, franchisees have no right to do commercial work in their territory unless they become certified to perform Commercial Services.
The certification comes with a $6,000 price tag. If the franchisee elects not to get certified, another franchisee can do the work with no compensation to the franchisee’s territory.
CertaPro does not mention the size of their territories in their FDD. It states territories will be created before the signing and allocated by zip codes. Also, there is no mention of what a second territory would cost. This vagueness is not encouraging. I have been able to surmise that the CertaPro Painting franchises in MD are between 150,000 – 250,000.
Fresh Coat – With a territory of (175,000 – 200,000), it is very conceivable that one might want some additional customers.
Unfortunately, Fresh Coat charges $500.00 per thousand, which ties for second-most.
Another significant downside is, if your territory is outside your home or community, you will have to lease office space. This additional expense will affect your bottom line.
Such a Deal!
Five Star Painting territory size (150k – 200k) is similar to Fresh Coat (175k-200k). A slightly more significant advantage would be in cases where the franchisee would like a larger territory. Five Star charges $200 per $1,000 people instead of $500 per 1,000.
Wow 1 Day Painting – divides their territories by households and call them sub-territories. A painting franchisee starts with two sub-territories. Additional sub-territories are 12k. Territories are based on zip codes, but typical territory sizes are 200,000
Discounts for a second and third franchise are 20% and 50% off, respectively.
The downside: Your sub-territory is not exclusive. ITEM 12 of the FDD reads:
The non-exclusivity only extends to commercial accounts and not residential customers. The franchisor will not open another Wow 1 Day Painting inside your territory.
360 Painting – Due to their larger territories than most (300,000 people) and reasonable charges for additional areas (.18-.20 per person), 360 Painting came in second place. The franchisor guarantees that at least 100,000 households will have incomes over $75,000. These metrics should generate territories of approximately 300,000 people.
Klappenberger & Son –franchises are easily 2-3 times larger than the competitors making it the best value. Furthermore, each person in a given area is between 6 and 11 cents. The size of the Klappenberger & Son territory is so large that buying multiple territories is not necessary. However, additional territories are only $20,000, which comes out to .04 per person.
If you have looked at a few painting franchises, you probably noticed a real disparity in estimated start-up costs. Why?
There is a great disparity between each painting franchises initial start-up cost.
For instance, Fresh Coat can be as low as $53,945, and CertaPro starts at $133,250. That is nearly an 80,000 dollar difference! In other words, does Certapro give you $80,000 more in value, or does Fresh Coat underestimate the start-up costs?
When a franchisor creates an FDD, they put in allowances for necessary expenses such as trucks, accounting fees, tools, etc. So, you would assume that many of the expenses would be about the same.
Because there is so much data to cover, we are going to break this down into two seperate charts. The first chart, table 5, will focus on the estimated additional capital while you are ramping up your business and an advertising budget.
The advertising budget is only important to compare with each franchise because it plays a substantial role in start-up cost totals. However, it is subjective for me to grade what I think is the optimum amount for an advertising budget.
Highlighted in yellow are 3 franchises that have very low estimated additional capital to fund your business and your personal expenses while your business is ramping up. In other words, each painting franchise should similar amount for additional capital. But instead we differences from $2,000 – $30,000!
Additional capital is for:
Fresh Coat, Five Star Painting, and Color World HousePainting can boost low initial startup costs partly because they have low additional capital allowances to start a painting franchise.
Having low additional capital allowances makes the painting franchise more attractive on paper. However, you may find you need an additional $10,000 – $15,000 in the upcoming weeks.
The green column on the far right of Table 5 shows how Fresh Coat was able to keep its initial high and low investment low by partly underestimating additional capital and advertising budgets.
First, what do I mean by “best initial start-up cost”? I evaluated this section and graded it in four different ways. Does a franchise have:
All costs listed in table 7 are either one-time fees or ongoing. The squares that are colored represent something unusual.
As you can clearly see, Fresh Coat has 4-5 reds (necessary expenses with no allowance). And, 5-6 yellows allowances (unrealistically low estimates compared to the others) which is why they state to have such low start-up costs.
On other hand, CertaPro has five expenses that offer at no additional charge. Also they have four charges that are substantially higher than the other painting franchises. Hence, CertaPro initial start-up cost is amongst the highest.
Conclusion: Who Has The Best Painting Franchise?
Below is a chart that shows the high and low cost for a Certapro Painting Franchise that grosses 1 million dollars compared to a Klappenberger & Son franchise.
CertaPro: Apples to Apples Excerpt from 2020 FDD
Of the seven franchises, CertaPro has the highest fees attached to gross sales and onetime fees.
Besides the unique initial fees, CertaPro has the highest expenses that are attached to gross sales.
Below is a chart that shows the high and low fees for a CertaPro Painting Franchise that grosses 1 million dollars compared to a Klappenberger & Son franchise.
*Certapro charges a 12% fee for any jobs that are referred by the franchisor. In this example, an estimate of 0 – 10% of gross sales was projected to be from franchisor referrals.
In all critical factors in evaluating who has the best franchise, Color World is at or near the bottom.
Fresh Coat under-estimates start-up costs their franchise. The allowances they give are substantially lower than other painting franchises.
The two graphs below show where Fresh Coat Fees are either unaccounted for or unrealistic.
Below are areas where Fresh Coat had unrealistically low allowances.
Fresh Coat Painting:
* underestimates costs * small territories
* inadequate training * poor value
Wow-1 Day Painting has scored very well in all categories except fees attached to gross sales.
Additional fees could add up to $165,000- $315,000 taken out of your net profit in five years.
Wow 1 Day Painting Overall Score
|Catagory||Wow 1 Day Painting Rankings||Score|
|Fees attached to gross sales (Royalties and marketing funds)||6th||2|
|One-time fees and fixed fees||Very Good||6|
360 Painting has very reasonable fees attached to gross sales. Their fixed cost is in line with what most franchisors are factoring in. The territory size is good (300,000), but the training was short, with no on-site training included.
Five Star will have the highest startup cost because they give the highest allowances for several categories. If you reduce the allowances to what other franchises are factoring, they fall into the middle of the pack.
Klappenberger & Son comes in way ahead of the other six painting franchises.
* Bookkeeping For Painters– organizes your records and performs job cost analysis.
This feature is unique and certainly saves you time and gives you valuable insight into how the franchise functions.
Klappenberger & Son has a franchisee guarantee that was not discussed. The franchise guarantee states that if you follow their marketing plan and fail to gross $500,000 in your first 20 months, Klappenberger & Son will reimburse the franchise fee.