Module 2: The Residential Cleaning Industry

AN OVERVIEW OF THE

RESIDENTIAL CLEANING INDUSTRY

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THE

INDUSTRY The residential cleaning industry is considered a sector of the larger janitorial industry. While the commercial sector focuses on cleaning building interiors for factories, retail outlets, shopping centers and business offices, residential cleaning business target single family homes, apartments and condominiums.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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1.7 X $2,500 2016

MILLION HOMES

ANNUAL SPENDING

$4 BILLION = INDUSTRY

HOW LARGE IS

THE INDUSTRY? With 1.7 million households served by the industry and an average annual household spending of $2,500, the residential cleaning industry was estimated to be a $4 billion dollar industry in 2016.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY CLEANING

*SOURCE: BLS; Census; IBISWorld; Parthenon 2016 Report

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RECESSION

RESISTANT The residential cleaning market has grown consistently in the low-mid single digits over the past decade. Two factors help dampen effects of economic downturns: 1. Its higher income customer base is historically less influenced by periods of economic decline.

2. Consumers tend to work harder and longer during economic downturns, which limits their personal time.

*SOURCE: Parthenon Residential Cleaning Decision-Maker Survey (n=228); Bureau of Labor Statistics; Parthenon Interviews

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THREE-TIER FRANCHISE

TWO-TIER FRANCHISE

REGIONAL NON-FRANCHISE

INDEPENDENTS

WHAT ARE THE DIFFERENT

BUSINESS MODELS? There are four different business models within the industry: Three-tier Franchise, Two-tier Franchise, Regional Non-Franchise and Independents.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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INDEPENDENT

BUSINESS MODELS A single owner/operator is responsible for the entire scope of the business. They carry the burden and risk of establishing a brand. They are responsible for training, business support and the sales and marketing of the business. They are themselves the cleaning staff or directly employ the cleaning staff.

While independent businesses can often offer a lower price point, they are limited in brand recognition, capacity, leveraging marketing dollars and often can’t offer the protection of being adequately insured and/or bonded.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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REGIONAL

NON-FRANCHISE Regional Non-Franchise companies are centrally owned and operated. While they don’t face the limitations that independents face, being centrally owned does limit their potential for scaling within a market and also into new markets.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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TWO-TIER

FRANCHISE MODEL With a two-tier franchise model, the corporate office sells franchise locations to franchisees. The franchisee purchases an established, proven business model.

Like the two previous models, the franchise is responsible for hiring and managing employees that provide the cleaning service.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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THREE-TIER

BUSINESS MODEL Maid Right is the only three-tier franchise company in the residential cleaning industry. The three-tier differs in that the corporate office sells Master Franchises, which in turn promote and sell Unit Francishes. The Unit Franchise is responsible for employing the cleaning crews.

We feel that this model is beneficial for two major reasons. First and foremost, it empowers the Unit Franchisees to control their success. The benefits and rewards are directly correlated to the attention and effort that they invest into their businesses. Second, this model affords greater flexibility in revenue generation.

Master Franchisees earn revenue by royalty fees from customer cleaning services but also from franchise fees associated with selling unit franchises.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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LABOR

MARKET The labor force for residential cleaning requires little formal education. Job training is typically done ‘on the job’ for independent businesses. The average pay, as reported by the Bureau of Labor Statistics, was $11.27 in 2015. Labor pools are readily available in all areas in the United States.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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LABOR MARKET

FORECAST A healthy labor force is key to the growth of any industry. Employment in the janitorial industry is projected to grow at a rate of 6% during 2014 to 2024.

This rate is slightly faster than the general average of all occupations. *SOURCE: BLS 2015 Occupational Outlook Report

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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WHO ARE THE

CUSTOMERS? Market studies show that older and more affluent households are more likely to employ home cleaning services. As baby boomers are moving into later stages of life, this large population offers a growing market base for the industry.

These same studies show that the market is equally distributed among geographic regions in the United States. *SOURCE: Parthenon Residential Cleaning Decision-Maker Survey (n=228); Census

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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CUSTOMER

MOTIVATORS In surveys, the top two reasons that are given for why consumers choose to employ home cleaning services are the dislike of cleaning and the opportunity to save time. Maid Right leverages these motivators by presenting our service offering as simple and hassle free as possible. Our industry-leading satisfaction guarantee is an example of this strategy.

*SOURCE: Parthenon Residential Cleaning Decision-Maker Survey (n=228)

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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GROWTH

FORECASTS Residential cleaning revenues have grown by 6% over the past decade. Recent projections calculate growth to average 4% over the next four years.

*SOURCE: Bureau of Labor Statistics

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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EXCITING

OPPORTUNITIES The residential cleaning industry is on sound footing and shows significant promise for excellent growth in the future. We believe that Maid Right is uniquely positioned to take advantage of these opportunities and be a leader in the industry.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

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THANKTHANK YOU! YOU SLIDE? We appreciate you taking the time to learn about the residential cleaning industry.

We want to know your thoughts on how our industry fits with your business dreams. Please complete a short questionnaire on the material in this module. Your feedback will allow us to move forward in the mutual evaluation process.

AN OVERVIEW OF THE RESIDENTIAL CLEANING INDUSTRY

CLICK HERE FOR QUESTIONNAIRE

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