Mr. Electric Franchise in 2024: Costs, Fee & FDD
Discover why Mr. Electric might be your ideal franchise investment—explore key insights on costs, earnings, and the support system that sets this leading electrical services brand apart in the home services industry.
Table of Contents:
Mr. Electric, a leading franchise in the home and commercial electrical services sector, was founded in 1994 and is a part of the Neighborly family of brands. Neighborly is well known for its extensive network of home service franchises, making Mr. Electric a trusted name backed by years of experience. With a focus on customer satisfaction and skilled craftsmanship, Mr. Electric has established itself as a major player in the electrical services industry, providing reliable and consistent service to communities across North America.
The core services offered by Mr. Electric include residential and commercial electrical repair, maintenance, and installation. This ranges from simple tasks like wiring and lighting installations to more complex projects like electrical panel upgrades and surge protection. In addition to these primary services, Mr. Electric also provides energy-efficient lighting solutions and electrical safety inspections. Their core market consists of homeowners, small businesses, and commercial properties that prioritize safety, energy efficiency, and quality electrical work.
Currently, Mr. Electric operates over 200 franchise locations across the United States, Canada, and several other countries. This wide reach speaks to the brand’s growth and stability within the home services market. Mr. Electric serves thousands of customers daily, offering services that range from urgent electrical repairs to planned installations, helping individuals and businesses alike maintain safe and functional electrical systems.
One of the standout features of Mr. Electric’s franchise model is its robust support system. Franchisees benefit from comprehensive training programs, including both initial and ongoing education to ensure they’re equipped with the skills and knowledge necessary for success. The Neighborly network also provides franchisees with marketing support, lead generation assistance, and business coaching. This strong support framework helps franchise owners thrive, even if they come from a non-technical background. The emphasis on community involvement and delivering excellent customer service has solidified Mr. Electric’s reputation as a reliable and supportive franchise opportunity in the maintenance and repair industry.
Mr. Electric Franchise Insights
- Mr. Electric has a total initial investment range of $152,000 to $315,000, making it an accessible opportunity within the service franchise industry.
- Mr. Electric is part of the Neighborly family, which boasts over 5,000 franchises across 30+ brands, providing a vast support network for franchisees.
- Mr. Electric has 189 franchised units across the U.S., with no corporate-owned locations, highlighting its dedication to a fully franchisee-driven model.
- The royalty fee is set at 6%, with an additional 2% for marketing, ensuring a balance between franchisee contributions and brand-level support.
- Founded in 1994, has been offering franchises for 30 years, demonstrating experience and stability in the market.
- Mr. Electric focuses heavily on customer safety and satisfaction, offering a 24/7 emergency service that helps franchisees build a loyal customer base.
Mr. Electric Franchise Key indicators
Growth YOY (%)
5%
vs industry 4%
Total U.S. Franchised Units
189
3-Year Failure Rate
19%
vs industry 13%
Sales-to-Investment ratio
4.3:1
How much does it cost to open a Mr. Electric franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Mr. Electric franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Mr. Electric franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Mr. Electric below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $42,500 | $42,500 + $425 per 1,000 population over minimum |
| Vehicle | $3,500 | $55,000 |
| Equipment, Supplies & Inventory | $12,000 | $20,000 |
| Insurance | $5,000 | $7,500 |
| Advertising, Marketing, and Promotional Spending | $30,000 | $60,000 |
| Training, Travel, Lodging & Food | $8,000 | $16,000 |
| Deposits, Permits & Licenses | $1,000 | $2,500 |
| Professional Fees | $0 | $5,000 |
| Real Estate | $0 | $6,000 |
| Additional Funds – 3 Mo. | $50,000 | $100,000 |
| Total | $152,000 | $314,500 + any additional franchise fee + any real estate costs |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
For opening a Mr. Electric franchise, here are the financial requirements based on available data and industry standards:
- Initial Investment The estimated initial investment for Mr. Electric is between $152,000 and $315,000. This includes the franchise fee, equipment, initial inventory, training, and other startup costs. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Requirement Mr. Electric requires a minimum of $38,525 in liquid assets, which helps cover the initial costs and provide a cushion for the franchisee during the early stages.
- Net Worth Requirement Although a specific net worth requirement isn’t provided here, in similar franchises within the maintenance, repair, and restoration industry, it’s common for franchisors to require a minimum net worth of around $150,000 to $300,000 to ensure franchisees have the financial stability to support the business during its growth period. This is an estimate based on industry practices.
How much does a Mr. Electric franchise owner make?
Calculating the salary of a Mr. Electric franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Mr. Electric franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Mr. Electric Revenue & Gross Sales
Based on most recent analysis, Mr. Electric franchises achieved a median gross sales of $1,003,706. This financial performance underscores the brand’s robust consumer demand and potential for significant revenue generation.
Which key factors impact the average revenue performance of Mr. Electric franchisees?
The performance of Mr. Electric’s U.S. franchisee median gross sales in recent years was likely influenced by several key factors. One major factor could be the increasing demand for home improvement and maintenance services, particularly as more people continue working from home and are prioritizing home upgrades. Additionally, the rising awareness around energy efficiency may have driven more customers to seek electrical upgrades, such as LED lighting and EV charger installations. Economic conditions, such as fluctuating interest rates and consumer spending behavior, might have also played a role in influencing service demand. Lastly, the strong brand recognition and support from the Neighborly network may have contributed to improved operational efficiencies and increased customer acquisition, helping franchisees maintain or boost their sales performance.
Mr. Electric Franchise Operational Costs
When opening a Mr. Electric franchise, some of the key ongoing operational costs you should consider include:
- Employee Wages Hiring licensed electricians and administrative staff will be one of your main recurring expenses. Depending on your market, wages and benefits can vary significantly.
- Vehicle Expenses Since services are typically performed on-site, maintaining a fleet of service vehicles will incur ongoing costs such as fuel, maintenance, and insurance.
- Equipment and Tools Regular maintenance or replacement of specialized electrical equipment and tools is essential to ensure quality service and safety compliance.
- Office Rent and Utilities While Mr. Electric may not require a large physical office space, renting an office or warehouse, along with utilities, will be a recurring operational expense.
- Insurance Beyond vehicles, you’ll need business liability insurance, workers’ compensation, and other types of coverage to protect against operational risks.
By managing these costs efficiently, you can maintain profitability while ensuring the business operates smoothly.
Mr. Electric Franchise Fees
Based on the data you provided from the Mr. Electric Franchise Disclosure Document (FDD), here are some key details about ongoing fees that you should consider as a prospective franchisee:
- License Fee Franchisees must pay 6% of their gross sales as a license fee, excluding specialty services and “roll-in” sales. This fee is due every Wednesday of each week.
- Marketing and Advertising Program (MAP) Fee Mr. Electric franchisees are required to contribute 2% of their gross sales to the MAP fee, which helps support national marketing efforts. For Neighborly Electric franchisees, the MAP fee is 1.5%. This fee is also due weekly on Wednesdays.
Additionally, there may be other fees, such as those associated with training, technology, or specific services. These ongoing costs are important to ensure your franchise maintains compliance and has support from the franchisor.
Mr. Electric Franchise Earnings
Based on the most recent data, the median gross sales for a Mr. Electric franchise were approximately $1,003,706, with owner-operator earnings estimated at $150,000 based on industry operating profits. This suggests that franchisees can expect a healthy return on their investment, assuming effective business management and control of operational costs.
These earnings are indicative of the potential profitability of the franchise, particularly for those who are directly involved in managing daily operations. It’s important to note that actual earnings can vary significantly based on factors like market size, local competition, and effective customer acquisition strategies. Franchisees should also consider other ongoing costs to ensure accurate profit expectations.
How to Open a Mr. Electric Franchise
To become a Mr. Electric franchisee, you’ll follow a structured process that ensures you’re well-prepared to launch and operate your business successfully:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Preliminary Discussion You’ll have a series of discussions with the development team to understand the business model, franchise requirements, and the financial commitment involved.
- Discovery Day Attend a Discovery Day at the Mr. Electric headquarters. This is an opportunity to meet the corporate team, learn about operations, and see if the culture aligns with your goals.
- Application and Approval Submit a formal franchise application, including financial information. Once approved, you’ll move forward to sign the franchise agreement.
- Financing and Site Selection If needed, secure financing to cover the startup costs. Mr. Electric will help you choose an office location and acquire any necessary vehicles and equipment.
- Initial Training Attend comprehensive training at Mr. Electric’s headquarters, which covers technical skills, business operations, customer service, and marketing. This prepares you for the practical aspects of running the franchise.
- Local Setup Set up your local office, hire staff, and acquire service vehicles. You’ll also need to ensure your business is properly licensed and insured for operations.
- Launch and Marketing Support Work with Mr. Electric’s marketing team to create a launch campaign that promotes your new franchise in the local community.
- Start of Operations Once everything is in place, you’re ready to officially start operations, with ongoing support from Mr. Electric’s team to help grow and manage your business effectively.
Pros & Cons
Pros
Established Brand: Mr. Electric is part of the Neighborly network, giving you the advantage of strong brand recognition and a reliable support system.
Growing Demand: The electrical service industry benefits from steady demand, including increasing interest in energy-efficient upgrades like LED lighting and EV chargers, which can boost sales opportunities.
Scalable Business Model: With a service-based model, overhead costs are relatively low, and you can scale the business by adding more service vehicles and technicians over time.
Cons
Labor Challenges: Recruiting and retaining licensed electricians may be challenging, particularly in a competitive labor market, which could limit your ability to scale quickly.
Regulatory Requirements: The electrical services industry is subject to regulations, licensing, and compliance, which may require additional investment in staff training and certifications.
Moderate Investment Level: The required investment, ranging from $152,000 to $315,000, may be a hurdle for some investors, especially when including ongoing expenses like vehicles, equipment, and employee wages.
