Low-Cost Franchises: Today's Top Opportunities Under $100K by Franchise Business Review

Franchise Business

REVIEW

Ratings & Reviews of Today’s Top Franchises

SPRING 2014

SPECIAL REPORT:

LOW-COST FRANCHISES

Today’s Top Opportunities Under $100K

Jason Bourgeois, a military veteran, runs two Signal 88 Security franchises in Louisiana and has been a franchisee for two years.

Bevintel Franchisee Invests in “Great Idea” PAGE 5

The Best of the Best in Low-Cost Franchising PAGE 6

WIN Home Inspection Feels Like Family PAGE 13

SPECIAL REPORT: Top Low-Cost Franchises

Features // 2014

Photos courtesy of HUMAN Healthy Vending, WIN Home Inspection, and Mr. Appliance.

2 Letter from the Editor Small Investment, Big Opportunity

3 Low-Cost Franchises: A Look at The Best Opportunities For Less Than $100K

Reviews, interviews, satisfaction awards and more resources available at: www.FranchiseBusinessReview.com

6 THE LIST Best of the Best: Top Low-Cost Franchises

12 Marketplace More on the award-winning franchise opportunities for 2014

Franchisee Profiles 5 Ian Foster, Bevintel 13 Tom Unverzagt, WIN Home Inspection

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SPECIAL REPORT: Top Low-Cost Franchises

Small Investment, Big Opportunity The low-cost franchise space is filled with choices. You can buy a franchise that improves golf games, trains pets, paints houses, or introduces kids to soccer. These businesses are often easier to finance, involve little risk, and require less time to start up than a franchise requiring a bigger investment. Perhaps best of all, many franchisees at lower-cost concepts get to spend more time doing what they love (e.g., working with kids or doing photography) because they are actually operators in the business—not just managers. Yes, you can buy a lot for less than $100K, but it’s important you know just what you’re buying. Low-cost shouldn’t mean inadequate support. The top franchises described in this report use some of the best practices we see in the franchise industry across all investment sizes. Some are very sophisticated, despite their low cost, and others are very high-touch—with franchisees being able to contact the franchise system’s president at any time, day or night.

You can buy a lot for less than $100K, but it’s important you know just what you’re buying.

Regardless of what a franchise system says it does for franchisees, it’s critical you talk to existing operators to find out what the corporate office really does. You’re not just acquiring a job— you’re acquiring a career, a lifestyle, and a community of business owners that should be able to help you along the way. The only way to know a system does all that is to ask them, but we’ve started that research for you with this report. Happy franchising!

Molly Rowe, Editorial Director

Franchise Business Review is the leading market research company in the franchise industry, assisting prospective franchise buyers through the examination process of today’s leading franchise systems. Before you invest in any franchise opportunity, get the facts from Franchise Business Review. Our independent franchisee satisfaction reports measure the health of any franchise system, based exclusively on the feedback of today’s franchise owners ... the real franchise experts!

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Eric Stites, CEO Michelle Rowan, President Molly Rowe, Editorial Director C.J. Fleck, Senior Web Developer Michael Kupfer, Online Marketing Manager Nicole Kenney, Client Services Manager Jamie Lavigne, Client Consultant Linda Lorrey, Client Consultant Jay Metzenroth, Marketing Coordinator Stacey Picott, Office Manager The Secret Agency, Design & Production

SPECIAL REPORT: Top Low-Cost Franchises

Low-Cost Franchises: A Look at The Best Opportunities For Less Than $100K OUR RESEARCH

To compile the data for this report, we surveyed close to 10,000 franchisees, representing more than 135 brands and 29,859 franchise units/locations. Our survey is open to all North America-based franchise companies at no cost. We email our survey to all active franchisees within a system. Franchisees answer 33 benchmark questions ranking their franchise system in the areas of financial opportunity, training and support, leadership, operations and product development, core values (e.g., honesty and integrity of franchisor), general satisfaction, and the franchisee community. An additional 16 questions ask franchisees about their market area, demographics, business lifestyle, overall enjoyment running their franchise, and role in the franchisee community. From this data, we identify our list of the best low-cost franchises based on franchisee satisfaction. Photo courtesy of HUMAN Healthy Vending.

WHY SATISFACTION MATTERS

One of the best ways to know if a franchise opportunity is really as good as it appears is to look at its franchisee satisfaction data. Not all brands survey their franchisees, but those who do offer a wealth of information on the system’s leadership, culture, training and support, financial outlook, and franchisee community to set clear expectations for potential franchisees. LOW-COST FRANCHISE MODELS, CONCEPTS, AND SERVICES

The low-cost franchise segment has traditionally been very service-oriented because these business models don’t usually need a big office space, inventory, or other resources that require lots of capital. Some of the service brands on our top low-cost franchise list this year include 360 Painting, Window Genie, and Weed Man. We also see franchise companies that provide homecare services

(e.g., Right at Home and Visiting Angels), kid- and pet-focused care (e.g., Soccer Shots and Sit Means Sit), and business consulting services (e.g., ActionCOACH and FocalPoint Consulting) on our list. In the last year or two, we’ve seen increased popularity in franchise businesses related to the home, either real estate concepts like Help-U-Sell or companies that offer home services like Budget Blinds. Prospective franchisees may be surprised by the brands and concepts that fall under the “lowcost” umbrella. Food franchises, for example, which typically require a big investment in real estate, equipment, and supplies, don’t usually have much of a presence on our annual lowcost franchise ranking. However, some mobile food concepts, like Repicci’s Italian Ice and Happy and Healthy Products, offer franchisees

the opportunity to run a food-related business without the large, up-front investment. INVESTMENT

The franchise businesses represented in this report have an average initial investment of less than $100,000, but within the different brands, there is great variety of options and investment levels available. Some franchise opportunities can be started for less than $5,000, while others cost $90,000. Most of the franchise executives we spoke with for this report said franchisees are using their available savings, 401K, and/or family and friend investments to purchase their businesses. Although it may seem like getting a loan for a lower-investment business would be easier, that’s not the case for most low-cost franchises.

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SPECIAL REPORT: Top Low-Cost Franchises

What a Typical Low-Cost Franchisee Looks Like

Median age is 45 – 54

65% are 45 or older 10% are 34 or younger

65%

have at least a 4-year college degree

27% are female 12% are military veterans Average income:

$78,009 73% describe their schedule as flexible/very flexible (compared with 65% of $100K+)

75%

would “do it again” in terms of investing in their franchise

“We don’t have a lot of hard assets so it’s very difficult to get a bank loan for our franchise opportunity,” said Dan Smith, CEO of Bevintel, a beverage inventory management franchise servicing bars and restaurants. To offset this, a number of franchise businesses offer in-house financing programs. “We finance 50% of the franchise fee, which sends a strong partnership message to the franchisee,” Smith said. Similarly, U.S. Lawns, Help-USell, and Heaven’s Best Carpet Cleaning all offer some form of in-house franchise financing options. “So far this year, most new franchisees have taken us up on our in-house financing,” said Heaven’s Best CEO Cody Howard. “We require $14,450 up front, and we will finance the balance of $14,450 over a five-year period.” CruiseOne, a travel agency franchise specializing in the cruise business, discounts its franchise fee for people with a successful track record in the travel industry, according to CruiseOne’s Senior Vice President Debbie Fiorino. Experienced franchise candidates with the appropriate certifications can save up to 95% on their initial franchise fee based on how much they’ve made in the past. In the last several years, many franchise companies have taken steps to reduce the financial burden of running a franchise by reducing franchise fees, eliminating office space and vehicle requirements, and working with vendors to negotiate the best deals possible for franchisees. “We have a long-term track record of success with suppliers,” said U.S. Lawns president Ken Hutcheson. “That’s helped sweep the issue of payments off the table, so franchisees can lease trucks, materials, supplies, and equipment at little to no expense in the early months.” “We have vendor relationships that give very healthy discounts to franchisees. And we also allow franchisees to do their shopping at the local level if they can find a better price,” added Robb King, vice president of operations for Paul Davis (the parent company of low-cost franchise Paul Davis Emergency Services, which specializes in emergency mitigation and reconstruction). Along with financing the start-up of their new franchise business, franchisees must ensure they have enough liquid capital to run the business until it starts generating positive cash flow. Franchisors told us this is

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sometimes a challenge in the low-cost space because franchisees have just enough cash to fund the initial start-up but not enough cash to cover expenses early on. WIN Home Inspection works with a banking partner to offer franchisees operating capital beyond what is needed at start-up. This helps new franchisees cover their vehicle, tools, and marketing costs in the first year, president Steve Wadlington told us. People considering any franchise opportunity should ask the franchisor and current franchisees about the company’s cost-cutting initiatives that directly relate to franchisees and what efforts they’ve made to ensure franchisees are well-capitalized for start-up and economic ups and downs. Franchise executives told us that franchisees in the low-cost franchise sector are more likely to be undercapitalized. This is why we urge you to carefully consider the financial documents within the franchise disclosure documents (FDD) and talk to existing franchisees about what you should realistically expect in terms of how long it takes to be profitable. Item 7 in the FDD can help prospective franchisees make sure their franchisor is realistic and upfront about expenses involved in the business, but all Item 7s are not equal. Some franchises outline the necessary working capital, but others—who might want to keep the stated investment level as low as possible—don’t. Any investor should understand and plan for the fact that it might cost three to four times more to actually run the franchise business, as compared to the financial estimates listed in the Item 7 of the franchise company’s FDD. Where possible, all potential franchisees should also thoroughly review and understand a company’s Item 19, if included, so they have a better idea of what to expect in the way of gross revenues and profitability. Not all franchise companies provide an Item 19 as part of their FDD because it’s not required, and, like the Item 7, every Item 19 is different. It is critical that you truly understand what you’re looking at within the Item 19. It’s up to the franchisor how detailed they get or which franchisees’ financial information they include, so you want to make sure that you’re looking at a good representation of all the franchisees and what they earn and spend.

SPECIAL REPORT: Top Low-Cost Franchises

PROS & CONS OF LOW-COST FRANCHISING Pros

In general, low-cost franchise opportunities mean lower risk, and for most franchisees, that’s the biggest pro of starting a low-cost franchise. Depending on the investment, franchisees who buy a lower-cost franchise will be able to recoup their investment pretty quickly and, in general, don’t risk losing their assets or retirement savings if the business fails. Many low-cost franchises can be financed out-ofpocket or through savings, eliminating the need for bank financing all together. “Not having a large investment hanging over a franchisee’s head leaves them free to worry about making their business a success,” said Money Mailer CEO Gary Mulloy. “It allows them to do the right things to build their franchise business for the long term rather than being overly concerned about the burdens of large loans and re-payments.” The costs associated with running a lowinvestment franchise tend to be lower than some of the higher-cost concepts like restaurants or retail stores. Most of the franchise businesses within the low-cost space don’t require a big physical space, lots of inventory, or dozens of employees, so it’s easier for franchisees to manage their expenses. “You can start your new franchise business as soon as you make your initial investment because you don’t need to hire staff, purchase equipment, research and lease storefront locations … All you need is a computer, a phone line, and internet access,” said CruiseOne’s Fiorino. Because low-cost franchises are so often owner-operated, it’s more likely that franchisees in some fields will actually get to do what they enjoy—personal training, work with children, photography, for example—rather than just managing a bunch of employees. This is a great attribute if you’re someone who wants to be very involved in your business, doing something you are passionate about, but it can also be a detriment if the business grows to demand more of your operational oversight. Along with the pros of a lower-cost investment, there are many pros to franchising. Franchisees that invest in a top franchise get the benefits of an established brand with a larger consumer presence/awareness, a proven operational system, and the expertise, training,

and support of an experienced corporate office. This kind of franchise support is particularly important in businesses like senior care, which require very specialized skills to coordinate caregivers, manage elderly care, and follow any state and national regulations. HomeWell Senior Care, for example, provides 4 weeks of training to franchisees before opening, 8 weeks post-opening, and then weekly calls with the home office to keep franchise owners up-to-date. CEO Lori Yount says a project manager is assigned to every franchise owner that comes on board. “We have had a lot of success since we implemented this training model, and franchisees are experiencing a much faster return on their investment,” Yount said. Many franchisees appreciate the “plug and play” nature of franchising—franchisors provide the technology platforms and materials operators need to handle tasks like invoicing, scheduling, marketing, and customer service. Another huge advantage to franchising is the franchisee community. In franchise businesses with a strong and active franchisee community, franchise owners reap the benefits of learning from each other’s mistakes and successes. Cons

Because low-cost franchise opportunities have so many positives, the sector attracts a lot of different franchise companies. This can be a con for franchisees. “For businesses that have a lower barrier of entry, it doesn’t take long for local competitors to crop up,” said WIN’s Wadlington. “A low-cost franchise may not have as much brand recognition in the community because often times, they are not storefront locations,” added CruiseOne’s Fiorino. “Everybody knows 7-11 and Dunkin Donuts because they have physical locations everywhere.” Franchisees may need to work extra hard to differentiate their businesses from others like them in their communities—often without a lot of local marketing support from the national office. “The drawback of a low-cost franchise is it limits the amount of bells and whistles the franchisor can give to each franchisee,” said Heaven’s Best Carpet Cleaning CEO Howard.

F E AT U R E D

Franchisee Ian Foster Bevintel California, Oregon, Washington, British Colombia Franchisee since 1992 Why did you choose your particular franchise? I was selling food to bar owners and one of my customers had bought a Bevinco franchise to audit his alcohol. He was telling me how much more profit he was making because he could hold his bartenders accountable for over-pouring and lost sales. I was not looking for a career change, but I could see what a great idea it was. I quit my job, bought a franchise in Vancouver, and moved into my parents’ basement. After a couple of years, I was doing so well that I bought another territory in San Diego and moved to California. What’s the best part about your job? Helping our clients make a lot more money by eliminating theft and over-pouring. What is the worst part about your job? Bar owners that don’t think they have a problem and don’t want to even discuss it. The sad thing is that 99 out of 100 bars are missing 20% of their alcohol and don’t know it. What advice do you have for someone considering a franchise opportunity? You really need to understand yourself before launching a business. There is a lot of stress and hard work involved in the first year. Buying a franchise can help with the learning curve, but things won’t always go exactly to plan so you have to expect some setbacks. Some people are ok with that, but some aren’t and give up and go back to a regular job. In the long run, the rewards are worth the effort because owning something you built is incredibly satisfying. For more information on Bevintel opportunities, call (888) 238-4626 or visit www.bevintel.com.

Continued on page 10. For more information on this report, visit: www.FranchiseBusinessReview.com | 5

SPECIAL REPORT: Top Low-Cost Franchises

THE LIST Best of the Best: Top Low-Cost Franchises

*W eed Man Lawn care

*H ome Instead Senior Care In-home senior care

Cruise Planners Travel agency

Budget Blinds

* View this company’s full satisfaction report at: www.FranchiseBusinessReview.com

Custom blinds & window coverings

*Q ualicare – Family Homecare In-home senior care

*H eaven’s Best Carpet Cleaning Carpet cleaning

*M aidPro House cleaning & maid service

Proforma Print & promotional product supplier

*W indow Genie Window cleaning

“ They provide all the tools needed to succeed.” – Window Genie Franchisee

A All Animal Control Wildlife control & removal

*V isiting Angels — more on p. 14 In-home senior care

The Traveling Photo Booth Photography

American Poolplayers Association Pool league

*O ur Town America — more on p. 16 Advertising services

* F ocalPoint Coaching Business coaching

* S occer Shots

“ FirstLight HomeCare’s intranet library of information is an excellent resource for the franchise owners. Everything we need to run our business is in there.” – FirstLight HomeCare Franchisee

Youth sports

Rhea Lana’s — more on p. 15 Children’s consignment

*N ational Property Inspections Commercial & home inspection services

Miracle Method Surface Refinishing Bathroom & kitchen remodeling

* FirstLight HomeCare In-home senior care

Fitness Revolution Fitness club

* S andler Training — more on p. 14 Business consulting & coaching

Aire-Master of America Commercial hygene service

*C ruiseOne Travel agency

*M en In Kilts Window cleaning

6 | For more information on the companies in this report, visit www.FBR50.com

Survey Date

Startup Investment

Cash Requirement

Total Units

January 2014

$40,000 – $60,000

$50,000

475

December 2013

$100,000 – $115,000

$45,000

640

April 2013

$495 – $9,995

$10,000

900+

December 2013

$89,240 – $187,070

$74,950

916

April 2013

$73,600 – $116,600

$75,000

January 2014

$28,900 – $64,000

$15,000

1,248

April 2014

$30,000 – $114,509

$30,000

161

December 2013

$0 – $29,500

$0 - $29,500

750

July 2014

$89,000 – $139,000

$60,000 – $80,000

176

September 2013

$10,750 – $41,615

$5,000

January 2013

$62,935 – $84,685

$34,950 – $42,950

480

November 2013

$27,200 – $45,150

$25,000

November 2013

$16,695 – $19,865

291

September 2013

$49,000 – $85,000

$89,000

January 2013

$49,950 – $59,950

$49,950

122

October 2013

$17,500 – $21,000

$16,500

153

December 2013

$16,050 – $33,050

$8,000 – $10,500

February 2014

$32,900

$39,550 – $42,000

208

September 2013

$85,000 – $125,000

$67,500 – $107,500

137

May 2013

$85,281 – $128,659

$65,000

118

December 2013

$12,509 – $121,909

187

February 2013

$85,150 – $105,125

$100,000

180

November 2013

$21,600 – $36,000

$30,000 – $50,000

102

April 2014

$4,625 – $9,800

$9,800

875

August 2013

$48,400 – $126,900

$100,000

SPECIAL REPORT: Top Low-Cost Franchises

Just Between Friends Children’s consignment

*S ynergy HomeCare In-home senior care

Bottle & Bottega Wine and art studio

*A merican Prosperity Group Financial services

* Snap-on Tools — more on inside front cover Automotive services

Help-U-Sell Real estate

*H omewatch CareGivers In-home senior care

* J umpBunch Youth sports & fitness

Young Rembrandts Children’s art classes

Right at Home In-home senior care

You’ve Got MAIDS House cleaning & maid service

Murphy Business & Financial Business brokers

Tint World Automotive styling

*A ctionCOACH Business coaching

Preferred Care at Home In-home senior care

*U .S. Lawns Commercial grounds care

G.J. Gardner Homes Home building

Estrella Insurance Financial services

Auto Appraisal Network Automotive appraisal services

Sit Means Sit Pet services

Baby Boot Camp Fitness programs

i9 Sports Youth sports

*P illar To Post Professional home inspection

Realty Executives International Real estate

CompuChild Children’s technology education

Survey Date

Startup Investment

Cash Requirement

Total Units

October 2013

$24,074 – $33,668

$14,900

140

October 2013

$59,025 – $156,700

$50,000

268

April 2014

$63,200 – $125,600

February 2014

$85,000 – $105,000

$125,000

November 2013

$30,095 – $307,700

$30,095 – $79,265

3,641

February 2014

$25,000 – $60,000

$17,500

103

November 2012

$83,750 – $136,500

$50,000

223

January 2014

$28,200 – $63,600

$35,000 – $77,000

December 2013

$40,360 – $48,600

$50,000

February 2014

$76,700 – $127,100

$150,000

380

March 2014

$37,999 – $130,842

December 2013

$45,750 – $113,600

$30,000

165

August 2013

$99,974 – $178,818

$50,000

February 2014

$61,250 – $108,441

$35,000

234

January 2014

$62,500 – $84,500

$43,500

September 2013

$51,500 – $79,300

$30,000

262

January 2014

$70,000 – $100,000

$109,700 – $115,200

September 2013

$49,000

$20,000 – $50,000

September 2013

$12,000 – $30,000

$3,000 – $10,000

April 2014

$21,125 – $93,850

$15,000

February 2014

$4,690 – $10,350

$3,900 – $5,900

132

April 2013

$44,900 – $69,900

$50,000

125

September 2013

$33,500 – $41,500

$10,000

460

April 2013

$20,400 – $119,000

$1,000 – $50,000

480

December 2013

$18,300 – $33,600

$20,000

“ No one wants franchisees to succeed more than the CEO/President does. He is a very generous and giving person. I’m grateful to have his assistance.” – American Prosperity Group Franchisee

“ The corporate staff is very accessible. If we have questions, they are quick to respond. If they do not know the answer, they follow up and get back to you.” – JumpBunch Franchisee

“ The annual conferences in particular are worldclass educational events. I couldn’t be happier with the support in that area.” – ActionCOACH Franchisee

For more information on the companies in this report, visit www.FBR50.com

SPECIAL REPORT: Top Low-Cost Franchises

THE LIST Best of the Best: Top Low-Cost Franchises

Surface Specialists Systems Home remodeling

Oxi Fresh Carpet Cleaning Carpet cleaning

Tax Centers of America Tax preparation services

InXpress

* View this company’s full satisfaction report at: www.FranchiseBusinessReview.com

Business shipping ore on Paul Davis Emergency Services — m Emergency home services

p. 17

Jet-Black Asphalt sealcoating & repair

Unishippers Business shipping

Office Pride Commercial cleaning services

THE TUTORING CENTER Tutoring services

“ Our franchisor is very interested in franchisee development and success, so they place a high importance on training and support.” – Signal 88 Security Franchisee

*P adgett Business Services — more on p. 12 Financial services

Amazing Athletes Early childhood development

*H appy and Healthy Products Healthy snack distributor

Boulder Designs Landscape design

DKI (Disaster Kleenup International) Disaster restoration

Kid’s Closet Connection Children’s consignment

Money Mailer Local marketing services

* S helfGenie Shelving solutions

Showhomes Home Staging Home staging

The @WORK Group Recruiting services

* S ignal 88 Security Security services

“ CarePatrol is always willing to hear constructive feedback and make appropriate changes.” – CarePatrol Franchisee

Bevintel Hospitality profit solutions

Real Property Management Property management

9Round Kickboxing Fitness club

CarePatrol Assisted living placement services

Viamark Advertising Marketing services

8 | For more information on the companies in this report, visit www.FBR50.com

Survey Date

Startup Investment

Cash Requirement

Total Units

December 2013

$46,200 – $77,000

$25,000

October 2013

$33,495 – $55,950

$38,345 – $60,115

272

January 2013

$15,300 – $67,450

$5,000 – $35,000

December 2013

$49,700 – $59,700

$80,000

February 2014

$41,784 – $147,824

$50,000

109

March 2014

$46,000 – $109,310

$16,475 – $36,035

March 2014

$55,000 – $150,000

$75,000

292

November 2013

$29,900 – $59,900

$29,900

115

April 2014

$90,000 – $130,000

$39,000

December 2013

$99,835

400

April 2013

$38,950 – $48,950

$18,500

February 2014

$45,000 – $90,000

$45,000 – $89,045

January 2013

$54,725 – $68,085

$40,000

October 2013

$7,145 – $117,535

$30,000 – $90,000

284

January 2014

$12,000 – $17,000

January 2013

$50,000 – $70,000

$50,000

237

October 2013

$70,100 – $131,250

$45,000

126

December 2013

$43,800 – $75,500

$30,000

February 2014

$74,497 – $122,495

$50,000

November 2013

$85,350 – $135,650

$30,000

263

January 2013

$43,400 – $57,100

$40,000

267

September 2013

$75,000

250

April 2013

$52,850 – $92,900

$18,000

120

May 2013

$58,000 – $72,000

$49,500

115

September 2013

$37,000 – $66,050

$40,000

SPECIAL REPORT: Top Low-Cost Franchises

Caring Senior Service In-home senior care

UCMAS Mental Math Early childhood development

WIN Home Inspection — more on p. 13 Home inspection services

Engineering For Kids Children’s engineering education

Safe Ship Business logistics

Mr. Appliance Appliance repair

Above Grade Level In-home tutoring services

Griswold Home Care In-home senior care

Always Best Care Senior Services In-home senior care

The Grout Doctor Grout repair services

Fitgolf Golf training

The Glass Guru Window restoration

Repicci’s Italian Ice Quick-service shaved italian ice

ATAX Franchise Accounting & financial services

Pet Butler Pet services

Rainbow International Restoration & cleaning

360 Painting Residential & commercial painting

Live 2 B Healthy Senior Fitness Senior fitness

HomeWell Senior Care Senior in-home care

Inspect-It 1st Home inspection services

HUMAN Healthy Vending Healthy food distributor

Screenmobile Screen repair & replacement

4 Pillars Consulting Financial consulting

Pronto Insurance — more on p. 16 Insurance services

Assisting Hands Senior homecare

Survey Date

Startup Investment

Cash Requirement

Total Units

April 2014

$58,035 – $98,750

$35,000

January 2013

$40,000 – $50,000

$50,000

March 2014

$33,900 – $54,500

$8,500 – $15,000

184

September 2013

$35,125 – $90,626

$35,000 – $55,000

102

February 2013

$49,900 – $138,800

September 2013

$54,850 – $114,120

$50,000 – $70,000

169

October 2013

$51,515 – 76,595

$40,000

May 2013

$98,275 – $120,175

$75,000

244

February 2014

$56,225 – $104,100

$44,900

181

December 2013

$20,405 – $33,415

February 2014

$65,405 – $122,320

October 2013

$30,000 – $130,000

March 2014

$49,900 – $115,000

$15,000 – $40,000

April 2013

$41,450 – $80,800

April 2013

$20,000 – $32,000

August 2013

$20,000 – $25,000

$30,000

316

March 2014

$55,625 – $80,500

$30,625 – $60,500

March 2014

$37,695 – $48,135

December 2013

$75,000 – $95,000

$50,000

October 2013

$33,000 – $51,000

August 2013

$62,995 – $133,495

$12,599 – $26,699

100

January 2013

$74,300 – $112,700

$25,000 – $50,000

December 2012

$61,500

April 2014

$36,275 – $84,100

$100,000

October 2013

$65,550 – $135,000

“ They are very detailed in the training process, and the support is great.” – WIN Home Inspection Franchisee

“ I am so glad I selected Engineering For Kids as my franchising company. They are great in every way.” – Engineering For Kids Franchisee

For more information on the companies in this report, visit www.FBR50.com

SPECIAL REPORT: Top Low-Cost Franchises

Continued from page 5.

It’s important for anyone considering a lower-cost franchise opportunity to be realistic about what they’re going to get out of it and what they need to put into it to be successful. “Just because it’s low cost doesn’t necessarily mean you are going to earn profits sooner—you may earn no profits,” said Paul Davis’s King. “Franchise candidates need to look at the total cost of entry, the real cash required to get in, and how much they need to finance. They need to ask, ‘What is this business model and how much capital is it going to take to keep it operating?’” Many owners of low-cost franchises are able to run their businesses from their homes, work their own hours, and keep their full-time jobs, which can be both good and bad when it comes to the long-term success of the business. “The cons of a low-cost franchise can be that some candidates forget they are truly starting their own business, not just acquiring a job,” said Money Mailer’s Mulloy. “They must see this as a long-term commitment with a need to work hard in the start-up period of the franchise business to establish a solid financial base.” With increased flexibility, sometimes comes reduced revenue potential. Not all low-cost franchise opportunities provide a full-time salary (especially those concepts that don’t require a full-time time commitment). Some are intended to be supplemental income businesses—although some of the most successful franchisees have made it their livelihood. This isn’t necessarily a con if what you’re looking for is supplemental income, but prospective franchisees should make sure they have realistic financial expectations. WHAT IT TAKES TO BE A SUCCESSFUL FRANCHISEE

Franchising is not for everyone. You need the skills to run a successful business and the willingness to follow a tried-and-true franchise system. Because they are so often owneroperators with fewer resources, franchisees at the lower investment level must be able to multi-task and wear a lot of hats, at least initially, until their new franchise business is well-established. “We find that our owner-operator model

Photo courtesy of WIN Home Inspection.

is best suited to people who have very strong inter-personal skills—people who enjoy working with others of all backgrounds and economic levels,” said Money Mailer’s Mulloy. “We can train anyone to run our system properly, but it is a lot more difficult to teach them how to be honest and to run their business with integrity if it has not been their life-long pattern,” added Howard of Heaven’s Best Carpet Cleaning. Some franchise brands, like U.S. Lawns and Paul Davis Emergency Services, use a personality profiling tool to help identify which franchise candidates might make a good franchisee or, once they are franchisees, to help identify their strengths and weaknesses for running their franchise business. “We are big fans of personality profiling to identify people’s natural orientation and match it to the core skills and attributes of our successful owners. We can use the profiles to help coach people, or other times, it identifies when someone is absolutely no match for our system,” said Paul Davis’s King. Bevintel uses a different tact to ensure franchisees are a good match in their system. They recently launched a “franchisee in training” program, which enables people who are interested in the industry (inventory control for bars and restaurants) to work with topperforming franchisees, commitment-free, for up to two years and then transition into owning a franchise of their own. “They come in as franchisees in training where they learn all levels of the business

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and operate all levels of the business,” Smith said. “Then, they move on and get their own franchise territory.” A good franchise company will make sure you not only fit with the culture of the franchise but also have enough liquidity to fund your startup and to run the business. Money, however, doesn’t necessarily guarantee success or failure. “We’ve had people that barely qualified and turned out to be fantastic franchisees, and we’ve had people with loads of money who failed,” said Ron McCoy, vice president of business development at Help-U-Sell, a specialty real estate franchise. Most of the CEOs we spoke with for this report don’t require previous experience in their specific industries, but they all require passion for the franchise business. CruiseOne, for example, expects potential franchisees to have an exhibited passion for travel. HomeWell Senior Care looks for franchise candidates committed to working with the aging population. “The care piece is the most important for us, everything else is secondary,” said CEO Yount. FRANCHISEE SATISFACTION

Before buying any franchise, it’s important to make sure franchisee satisfaction and performance across the board is solid. Undoubtedly, you will run into a few unhappy franchisees in any franchise brand, but broad satisfaction research, like the independent reports provided by Franchise Business Review, is that musthave, 3rd-party validation required before

SPECIAL REPORT: Top Low-Cost Franchises

moving forward with a franchise opportunity. When talking to any franchise company, ask to see their satisfaction report. The 100 companies listed at the front of this report excel in franchisee satisfaction based on recent surveys. In general, the average franchisee satisfaction score for all low-cost franchise companies is three percentage points higher than for brands costing more than $100,000, and franchisee satisfaction within our 100 top low-cost franchises is even higher. Low-cost franchise owners rate their franchise companies higher in every category of our survey than do franchisees at brands costing more than $100,000. The most significant difference (4 percentage points) is seen in the area of Franchise Training & Support. Included in the Training & Support category are questions about a franchise company’s marketing and technology, so the high satisfaction in this area may prove low-cost doesn’t necessarily mean fewer resources available from the franchisor. The highest rated categories in our franchisee satisfaction survey are Core Values (of the franchisor) and Franchisee Community. We recommend prospective investors carefully look at a brand’s franchisee community and ask current operators specifically about it while they’re conducting their research. Especially at the low-cost level, the franchisee community may play a big part in terms of advice and ongoing support, and it can greatly influence the overall enjoyment you get from running the franchise business. In the category of Financial Opportunity, low-cost franchisees are slightly more satisfied than franchisees of more expensive brands, even though their average annual income is approximately the same as our overall franchise benchmark ($78,009 vs. $79,684). (It’s important to note that while the average income may be the same, the return on investment may actually be significantly higher on a percentage basis because the investment is so much lower.) SUMMARY

The lower-risk nature of low-cost franchises is increasingly popular with all levels of investors, and the number of opportunities and types of businesses within the space increases every day. However, as we caution with every franchise model at every investment level, not

all franchises are equal, and not all “low-cost” opportunities are as good as they sound. It is important to do your homework, talk to current franchise owners, and be sure your expectations are realistic. No matter how good the franchise brand and the franchisee satisfaction, ultimately, what matters most is how YOU fit into THEIR franchise system. That’s why Ken Hutcheson from U.S. Lawns says a portion of your franchise research should include time in the home

office of the franchise company you’re considering and “in the trenches” with franchisees. “There is nothing like meeting people face to face, because this is still a personal type of enterprise. See what the people behind the franchise brand look like and whether you fit with them as individuals,” Hutcheson said. For more detailed information about researching a franchise brand or on the brands featured in this report, please visit us online at www.FranchiseBusinessReview.com.

Looking to finance a franchise that costs less than $100k? By Mark Challis, co-founder of Directed Equity, Inc. If you are looking to finance a startup business that that will be $100,000 or less, you will likely run into many obstacles, even if you have perfect credit. Here’s why: Most lenders are still not doing conventional loans for startup businesses. But what about the Small Business Association, (SBA), can’t they help? They can, but the money still has to come from a bank, and the bank still has to want to do the deal. The SBA is a governmental program and to ensure that the deal fits within the parameters of the program, there are many additional requirements and reviews. Each additional requirement and review adds to the origination cost of the lender. Therefore, unless the loan is of a certain size (in today’s market, about $150,000) the bank cannot earn enough interest on the loan to justify the cost of origination. Even with the SBA loan guarantee, the lender will see the loan amount as too small. There may be some lenders that will do a conventional loan (without the SBA guarantee), but you will need a very good credit score (above 720) and personal Guarantee, a 50% cash injection, 100% collateral, and a very strong source of income outside the startup business. If you have all that, you probably don’t need the loan! If getting a loan isn’t an option, here are some other options for securing the funds: • Friends and family •H ome equity line of credit: Provided you have sufficient equity in your home and you and/ or your spouse are working, a HELOC is a quick, easy and potentially inexpensive source of financing. • S ecurities-backed lending: As the name implies, you can borrow against a portion of your non-retirement securities/stocks and use those securities as collateral. (Ask your investment advisor or broker about this option) • Local credit union: Obtaining $50k-$100k through a credit union for a business loan is possible. However, you will need to meet the same bank financial criteria as outlined above. • Secure a “Signature Loan,” using your personal guarantee (usually limited to $50k) •B orrow from your current employer’s 401(k). This option is generally limited to 50% of your vested account balance or $50k, whichever is smaller, and the loan must be repaid over a 5-year period. • I f you have left your employment but want to access the monies you have set aside in your 401(k) or an IRA, you can create a company for your franchised business, start a 401(k) plan, and roll your Qualified Plan dollars (401k, IRA, 403(b), etc.) into the new plan. Then, you can borrow from your now current employer’s 401(k) plan, subject to the same limitations outlined above. Many times a combination of strategies will prove to be the best option. Call a Directed Equity consultant at 877-839-8064 to explore all your options for startup financing. Mark Challis, J.D., L.L.M. co-founded Directed Equity, Inc., in 2004 out of his passion to assist entrepreneurs through the sometimes complex territory of financing their business. Direct Equity’s single source financing solution, personal approach, and financing expertise provides sound funding strategies for any business owner or franchisee.

For more information on this report, visit: www.FranchiseBusinessReview.com | 11

SPECIAL REPORT: Top Low-Cost Franchises // MARKETPLACE

Heaven’s Best Carpet Cleaning

MaidPro

Startup Investment: $28,900 – $64,000 Cash Required: $15,000 Domestic Franchises: 1,248

Startup Investment: $30,000 – $114,509 Cash Required: $30,000 Domestic Franchises: 161

Our Franchisees love our business. Everyone has carpet, upholstery, wood flooring, or tile and grout. We clean it all and when finished it looks good, it smells good, and it feels good. Our unique Dry in one hour process, our environmentally responsible cleaning products, and our way of pleasing the customer generates great repeat business. Our low franchisee fees, and low initial cost to enter our franchise provides an excellent business opportunity. Check us out and we are sure you will love what we have to offer.

MaidPro prides itself on its proven groundbreaking technology and software, creative marketing efforts, established brand identity, and stellar support to its franchisees. The company is constantly trying to reinvent new practices and refine old ones to ensure its place in the rapidly growing house cleaning industry. MaidPro offers you the advantages of rapid growth, low startup costs, manageable hours, and recurring revenue. Join a franchise that gives you control and ownership of your business with unmatched 24/7 support!

For more information on Heaven’s Best Carpet Cleaning opportunities, call (800) 568-3605 or visit www.heavensbest.com.

For more information on MaidPro opportunities, call (888) 624-3776 or visit www. maidprofranchise.com.

Visiting Angels

Our Town America

Startup Investment: $62,935 – $84,685 Cash Required: $34,950 – $42,950 Domestic Franchises: 480

Startup Investment: $49,000 – $85,000 Cash Required: $89,000 Domestic Franchises: 42

Visiting Angels has established over 450 senior home care franchises (non-medical) in 47 states across the U.S. We advertise and market nationally for homecare client leads, and we distribute thousands of homecare client leads every month to our franchisees! Visiting Angels has been ranked by Franchise Business Review as #2 in the homecare industry and #10 in the Top 50 Best of the Best.

Our Town is America’s premier welcoming organization. Since 1972, we have been connecting new movers with the businesses they are searching for by mailing warm gifts from neighborhood businesses in a premium gift certificate package. Thousands of satisfied business owners throughout the United States attest to the success and effectiveness of our program, while dozens of locally owned Our Town franchises validate our success as a viable business opportunity.

For more information on Visiting Angels opportunities, call (800) 365-4189 or visit www.livingassistance.com.

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For more information on Our Town America opportunities, call (727) 345-0811 x232 or visit www.ourtownamerica.com.

F E AT U R E D

Franchisee Sandler Training

Snap-on Tools

Startup Investment: $85,150 – $105,125 Cash Required: $100,000 Domestic Franchises: 180

Startup Investment: $30,095 – $307,700 Cash Required: $30,095 – $79,265 Domestic Franchises: 3,641

Sandler Training is the leader in innovative sales and sales management training. We have over 235 training centers in major cities throughout the country and around the world, offering instruction in a dozen languages. Entrepreneur Magazine has ranked Sandler as the No. 1 training franchise nine times. Our training is designed to create lasting performance improvement rather than the motivational “quick fix” typical of many seminar-based training programs. The demand for quality sales training has rarely been greater than it is today. As a Sandler franchisee, you can tap this vast market—and beyond.

Snap-on Incorporated is a leading global innovator, manufacturer, and marketer of tools, diagnostics, and equipment solutions for professional users. Product lines include hand and power tools, and are sold through its franchisees, company-direct sales, and distributor channels, as well as over the internet. For more information on Snap-on Tools opportunities, call (877) 476-2766 or visit www.snaponfranchise.com.

For more information on Sandler Training opportunities, call (800) 669-3537 x2005 or visit www.sandler.com.

Tom Unverzagt WIN Home Inspection Long Island, NY Franchisee since 2002 Why did you choose your particular franchise? To sum it up, WIN Home Inspection took the time to get to know me. Immediately, they encouraged open conversations among the home office and franchisees already within the system to determine if WIN would be a good fit. From there, I flew to the main office, met the team, and I was impressed by the “family” feel, as they were investing in me just as much as I in them. Additionally, the report software I work with is second to none and easy to operate. What’s the best part about your job? Seeing the face of a first-time homebuyer when we wrap up an inspection and the excitement they feel afterward. What is the worst part about your job? When we finish the inspection, or it is stopped half way through and the potential buyer chooses not to buy the home. They either have seen many things they had no idea about or realize they are in over their head. I never tell anyone to buy or not, its not up to me. I just supply the facts.

Auto Appraisal Network

Pillar To Post

Startup Investment: $12,000 – $30,000 Cash Required: $3,000 – $10,000 Domestic Franchises: 25

Startup Investment: $33,500 – $41,500 Cash Required: $10,000 Domestic Franchises: 460

Auto Appraisal Network supplies our clients with accurate, highly detailed appraisal values of their vehicle. This is your chance to join the fastest growing automobile appraisal company in the country. You will be providing your clients with the most professional, most comprehensive, most detailed automobile appraisal documents available. This is your opportunity to join the most respected appraisal company for classic and custom vehicles and much more. For an extremely low franchise territory fee, we offer a protected territory, extensive training, and certification. You will benefit from our 25 years of experience, impeccable reputation, national advertising, and website presence.

Home inspection is a thriving industry. With more than 450 locations in the U.S. and Canada, Pillar To Post is growing to meet the increased demand for home inspection services. Pillar To Post is the most recognized brand among top real estate firms—a key factor in getting business referrals. Pillar To Post enjoys a reputation second to none in the home inspection industry. We have been in business since 1994, and our track record of success continues to garner recognition each year. Your success as a Pillar To Post franchise owner is our number one goal. You are in business for yourself, but not by yourself.

For more information on Auto Appraisal Network opportunities, call (888) 269-1120 or visit www.autoappraisalnetwork.com

Where do you see yourself in five years? I would like to see my franchise inspection numbers doubled. What advice do you have for someone considering a franchise opportunity? Do your homework. Nothing comes easy or everyone would be doing it. Stay the course and follow WIN’s guidelines. They are in place for a reason—to help aid in your success. The training and marketing plan that WIN has in place works. It’s just like the movie Field of Dreams, “If you build it they will come.” For more information on WIN Home Inspection opportunities, call (800) 967-8127 or visit www.winfranchising.com.

For more information on Pillar To Post opportunities, call (877) 963-3129 or visit www.pillartopost.com/franchise.

For more information on the companies in this report, visit www.FBR50.com

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SPECIAL REPORT: Top Low-Cost Franchises // MARKETPLACE

BUILD ON THE

LEADERSHIP OF SANDLER TRAINING RATED THE #1 TRAINING FRANCHISE BY ENTREPRENEUR MAGAZINE

FOR 11 YEARS INCLUDING 2014 Sandler Training is a global network of sales and management trainers with hundreds of training centers throughout the world. Become a Franchise Owner and be at the forefront of a business niche that is growing exponentially, with the support of a pioneer and leader in the training industry.

FranchiseBusinessREVIEW

™

has recognized Sandler Training SIX times as a Franchisee Satisfaction Award winner. TM

2008 | 2009 | 2011 | 2012 | 2013 | 2014

SANDLERFRANCHISING.COM 800-669-3537 ext. 2005

Paul Davis Emergency Services Startup Investment: $41,784 – $147,824 Cash Required: $50,000 Domestic Franchises: 109 Paul Davis Emergency Services is engineered as a modern, lean, technologically advanced business that can be run from your home and vehicle. With an average gross margin of 64.5%, you’re looking at the potential for real financial success! Paul Davis Emergency Services provides rapid response water and fire damage cleanup, structural drying, and mold removal using the latest technology and procedures. Paul Davis has been in business since 1966 in what is now a $70-billion, need-based industry that is recession-proof and in consistent demand. The business model can be easily scaled to meet demand as you grow and succeed. For more information on Paul Davis Emergency Services opportunities, call (800) 722-5066 or visit pauldavisbusiness.com.

Padgett Business Services Startup Investment: $99,835 Cash Required: $99,835 Domestic Franchises: 400 Does the idea of helping small business owners reach their goals sound interesting to you? Do you have a deep drive to build a growing business? Padgett Business Services is a homebased opportunity for people with business, sales, or marketing experience. Over 25,000 small businesses rely on Padgett Business Services franchise owners for a wide array of business services, including accounting, financial reporting, tax planning and preparation, government compliance, payroll services, and general business consulting.

For more information on Padgett Business Services opportunities, call (866) 729-8725 or visit www.smallbizpros.com

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Bevintel

Viamark Advertising

Startup Investment: $43,400 – $57,100 Cash Required: $40,000 Domestic Franchises: 267

Startup Investment: $37,000 – $66,050 Cash Required: 40,000 Domestic Franchises: 13

Bevintel is the #1 franchise specializing in comprehensive bar profit management solutions for the food and beverage industry. For over 25 years, Bevintel franchisees have consulted with thousands of bar and restaurant owners and executives to create profitable business through technology, inventory control services, staff education, and business marketing solutions for independent and globally-recognized operations. Bevintel’s leading industry products, Bevinco and Bevchek have maximized liquor, beer and wine profits for thousands of bars and restaurants worldwide and have been featured on numerous National media platforms.

Viamark is creating the most unique advertising agency in America. Founded in 1995, we have grown to 12 offices in 4 states with over 300 combined years of media and agency experience. We’re a franchise company, and each Viamark franchisee owns and operates their own advertising agency. We serve a diverse group of clients including those in the automotive, real estate, retail, restaurant, healthcare, education, pharmaceutical, service, and non-profit industries. For more information on Viamark Advertising opportunities, call (508) 746-1802 or visit www.viamarkfranchise.com.

For more information on Bevintel opportunities, call (888) 238-4626 or visit www.bevintel.com.

WIN Home Inspection

Safe Ship

Startup Investment: $33,900 – $54,500 Cash Required: $8,500 – $15,000 Domestic Franchises: 183

Startup Investment: $49,900 – $138,800 Cash Required: $49,900 – $138,800 Domestic Franchises: 28

WIN Home Inspection began in 1993, offering home inspection business franchises in the Pacific Northwest. Within a year, the company dominated this regional market and has since expanded across the U.S. with 184 locations in 29 states. It is one of the fastest growing home inspection companies in the country and listed on VetFran and GI Jobs as a top 10 VeteranFriendly Franchise. A member of the VetFran Chairman’s Corps, WIN is a recognized leader on behalf of veterans and the franchise industry.

Your Safe Ship Store is designed to do all shipping business modes including U.S. Postal, air express, ground, freight, import, export, water, air and ground container, and LTL/LCL shipments. You will also be trained to do the most fragile packing using our patented high value BoxMakerPRO box making machine and more. We are grooming a network of forward thinking entrepreneurs to turn the packing and shipping industry upside down while growing their investment into a profitable and fun to run business.

For more information on WIN Home Inspection opportunities, call (800) 967-8127 or visit www.winfranchising.com.

For more information on Safe Ship opportunities, call (386) 677-7909 or visit www.safeship.com.

For more information on the companies in this report, visit www.FBR50.com

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SPECIAL REPORT: Top Low-Cost Franchises // MARKETPLACE

Repicci’s Italian Ice Startup Investment: $49,900 – $115,000 Cash Required: $15,000 – $40,000 Domestic Franchises: 50 Repicci’s has gone mobile! Join the food truck craze and experience the fun and revenue potential of Repiccis Italian Ice and Gelato. Repicci’s is expanding their already successful event based franchise by enhancing the opportunity with the addition of a mobile unit and concession trailer. We have also added to our premium award winning products. Our all natural Gelato and Hot Chocolate increase our market and expand our primary selling season. Full or part time opportunities are available with our trailer and Mobile Van. These additions make our business customers easier to reach while increasing potential revenues significantly. For more information on Repicci’s Italian Ice opportunities, call (888) REAL ICE (732-5423) or visit www.repiccisitalianice.com.

ATAX Franchise Startup Investment: $41,450 – $80,800 Cash Required: $41,450 – $80,800 Domestic Franchises: 42 ATAX Accounting & Financial Services has been in business over 25 years. We are a leading provider of tax preparation, bookkeeping, payroll, and related business services. Offering a unique business model that provides yearround revenue that will help you achieve your goals while building security for you and your family. While it would be great if you had a tax, accounting, or bookkeeping background, you don’t need to be a tax professional or CPA to succeed as an ATAX franchisee. We provide you all necessary training and on-going support in personal and business tax preparation, and other business-related services. ATAX believes opening a business should be within everyone’s reach. That’s why an ATAX franchise costs less than any of our major competition. For more information on ATAX opportunities, call (866) 999-2829 or visit www.ataxfranchise. com.

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Pronto Insurance HomeWell Senior Care Startup Investment: $75,000 – $95,000 Cash Required: $50,000 Domestic Franchises: 43 We are seeking caring individuals and couples who have a passion for seniors. By 2030, one in five Americans—nearly 72 million people—will be 65 or older. Millions will need a caregiver to help them in their daily activities as they age. HomeWell was founded in 1996 and began franchising in 2002. If you fit our franchise profile, we train and support you to create a successful senior home care agency. Our proven business model has already allowed us to grow into 43 units in the United States and Canada. For more information on HomeWell Senior Care opportunities, call (206) 747-7795 or visit homewellfranchising.com.

Startup Investment: $36,275 – $84,100 Cash Required: $100,000 Domestic Franchises: 34 The insurance industry continues to grow at a remarkable rate; the auto sector alone in Texas is over $13 billion! The need for valueoriented products has never been greater. A Pronto Insurance franchise offers a unique retail approach to insurance and financial products, by offering high quality, value-oriented products. Unlike some insurance franchises, Pronto issues its own underwriting guidelines and manages the entire claims process. Our underwriting process allows us to offer extremely competitive rates, which our value-focused consumers want, all while providing excellent service for our clients. Pronto prides itself in providing fast and efficient service. “Pronto. It’s our name and our promise”™—our motto speaks for itself. For more information on Pronto Insurance opportunities, call (855) 687-7088 or visit www.prontofranchise.com.

Mr. Appliance Startup Investment: $54,850 – $114,120 Cash Required: $50,000 – $70,000 Franchise Units: 169 Mr. Appliance is North America’s leading home appliance repair franchise. Established in 1996, Mr. Appliance provides full-service appliance repair and servicing to both commercial and residential clients. Mr. Appliance is an active partner in the VetFran Program providing discounts on initial franchise base purchase to those that qualify. Mr. Appliance’s service management systems are designed to create greater efficiency and effectiveness in many areas of business. With these systems, our franchisees can learn how to find new customers, gain market share over local competition, and operate a profitable, predictable and sustainable business. For more information on Mr. Appliance, call (800) 290-1422 or visit www.mrappliancefranchise.com.

For more information on the companies in this report, visit www.FBR50.com

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