Servpro Franchise in 2024: Costs, Fee & FDD
Explore the opportunities of owning a Servpro franchise in the restoration industry. Learn about the investment costs, earnings potential, and the support system that makes Servpro a trusted choice for disaster recovery services.
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Servpro is a leading franchise in the home and commercial property restoration and cleaning services industry. Founded in 1967 by Ted and Doris Isaacson in Gallatin, Tennessee, the company has grown to become a trusted name in the restoration sector. Servpro specializes in fire, water, mold, and storm damage restoration, as well as offering cleaning services like biohazard cleanup and carpet cleaning. With over 50 years of experience, Servpro has positioned itself as a go-to solution for property damage emergencies.
Servpro’s core customers include residential homeowners, commercial property owners, and insurance companies. Their services are often utilized during times of crisis, such as after natural disasters or accidents, making them a critical partner for those in need of quick and efficient restoration. The franchise operates under a proven business model that focuses on providing top-tier training and support to its franchisees, ensuring that every location upholds the brand’s reputation for quality and reliability.
Today, Servpro boasts a network of over 2,200 franchises across the United States and Canada, making it one of the largest restoration franchises in North America. The company’s scale allows it to serve a vast customer base, providing restoration and cleaning services to millions of homes and businesses each year. Servpro’s extensive franchise system is supported by comprehensive training programs, marketing assistance, and a robust supply chain, enabling franchisees to operate effectively in various markets.
Servpro provides its franchisees with a comprehensive support system, which includes an initial training program at the Servpro headquarters in Tennessee, followed by ongoing education through webinars, regional meetings, and an annual convention. This support, combined with the brand’s strong national presence, makes Servpro an attractive option for potential franchisees looking to enter the restoration industry.
Servpro Franchise Insights
- Servpro has grown its franchise network to over 2,000 locations, emphasizing its strong market presence and the trust it has built within the restoration industry.
- Franchisees benefit from Servpro’s national advertising campaigns, which significantly boost brand awareness and help generate leads for local franchises.
- Servpro’s focus on emergency response services provides a steady demand for its offerings, as customers often require immediate assistance after disasters.
- The franchise has a flexible business model that allows franchisees to operate from a small office or even a home-based location, reducing overhead costs.
Servpro Franchise Key indicators
Unit Growth YOY (%)
5%
vs industry 4%
Total U.S. Franchised Units
Over 2,200
3-Year Failure Rate
2%
vs industry 13%
Sales-to-Investment ratio
6.2:1
vs industry 2.2:1
How much does it cost to open a Servpro franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Servpro 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 Servpro 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 Servpro below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $90,000 | $90,000 |
| Vehicle | $2,200 | $37,600 |
| Equipment and Products Package | $104,000 | $104,000 |
| Supplies | $4,100 | $9,100 |
| Insurance | $4,300 | $6,200 |
| Advertising and Promotional | $270 | $1,600 |
| Training, Travel, Lodging, and Food | $600 | $2,000 |
| Deposits, Permits, and Licenses | $750 | $2,750 |
| Legal and Professional Fees, Accounting Services | $1,700 | $2,200 |
| Xactimate and/or other third-party software | $1,100 | $2,700 |
| Additional Funds - 3 months | $32,250 | $37,625 |
| Real Estate | $0 | $6,000 |
| Total | $241,270 | $301,775 |
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
To open a Servpro franchise, potential franchisees need to consider several financial requirements:
- Initial Investment The total estimated initial investment ranges from $241,000 to $302,000. This includes franchise fees, equipment, initial inventory, 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 Servpro typically requires franchisees to have a minimum of $100,000 in liquid assets. This ensures the franchisee has the financial stability to cover initial expenses and sustain the business through its early stages.
- Net Worth Requirement While Servpro does not specify a strict net worth requirement, it is generally recommended that franchisees have a net worth of at least $250,000 to ensure they can support the business financially.
How much does a Servpro franchise owner make?
Calculating the salary of a Servpro 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 Servpro 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.
Servpro Revenue & Gross Sales
Based on most recent analysis, Servpro franchises have a median gross sales of $1,693,870. This strong financial performance underscores the brand’s robust consumer demand and potential for significant revenue generation.
Which key factors impact the average revenue performance of Servpro franchisees?
Several factors have likely contributed to the performance of Servpro franchisees’ gross sales. These include the increasing occurrence of natural disasters and property damage, which drives the need for reliable restoration services. Additionally, Servpro’s reputation and extensive network ensure a steady stream of referrals from insurance companies and repeat customers. The franchise’s commitment to quality service, combined with comprehensive training and support, enables franchisees to operate efficiently and maximize profitability.
Servpro Franchise Operational Costs
Operational costs are a critical aspect of running a Servpro franchise. Here are the key ongoing costs you should consider:
- Supplies and Equipment Costs Expenses related to purchasing and maintaining the necessary equipment for restoration and cleaning services, including vehicles, tools, and cleaning agents.
- Labor Costs Wages and benefits for employees, including technicians and administrative staff who are essential for daily operations.
- Rent or Mortgage Payments Costs associated with leasing or owning a facility for storing equipment and managing operations.
- Marketing and Advertising Fees for local and national marketing efforts, which are crucial for attracting new customers and maintaining brand visibility.
- Insurance Various insurance policies, including liability insurance and workers’ compensation, are necessary to protect the business and its employees.
Managing these operational costs effectively is essential to maintaining the profitability and smooth operation of your Servpro franchise. By carefully budgeting and planning for these ongoing expenses, franchisees can ensure their business remains financially stable and continues to deliver high-quality services to clients. Proper management of these costs will not only support day-to-day operations but also contribute to long-term success and growth within the competitive restoration industry.
Servpro Franchise Fees
Owning a Servpro franchise involves ongoing fees that are critical to maintaining the brand’s quality and consistency across locations. These fees include:
- Royalty Fee A monthly royalty fee ranging from 3% to 10% of your gross sales, depending on the volume of business.
- Fixed Fee An additional fixed fee that varies between $45 to $115 based on your monthly gross volume.
- Additional Fees There may be additional fees for technology, training programs, and other support services provided by Servpro to ensure franchisees have access to the latest tools and resources needed for successful operations.
These ongoing fees are a crucial part of owning a Servpro franchise, supporting the overall infrastructure and ensuring that all franchisees benefit from the brand’s established reputation and comprehensive support system. Careful consideration and management of these fees are essential for maintaining profitability and aligning with Servpro’s high standards of service and quality.
Servpro Franchise Earnings
Based on the most recently available data, Servpro franchises have a median gross sales of $1,693,870, reflecting the strong demand for their restoration and cleaning services. This impressive sales figure demonstrates the brand’s ability to generate significant revenue for its franchisees, driven by its established market presence and the essential nature of its services. With the increasing occurrence of natural disasters and property emergencies, the need for reliable restoration services continues to grow, positioning Servpro franchisees to capitalize on this demand and achieve robust financial performance.
The earnings potential for Servpro franchisees can be significant, with owner-operators earning around $254,081 annually based on median gross sales. For those who choose a semi-absentee model, earnings are slightly lower at $203,264 due to the additional costs of hiring a manager. These figures reflect the profitability of Servpro franchises, which benefit from a consistent demand for restoration services and the strong support system provided by the franchisor.
How to Open a Servpro Franchise
Opening a Servpro franchise involves a series of steps designed to ensure that potential franchisees are well-prepared to run their 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).
- Application Complete a detailed application that includes information about your background, finances, and business goals.
- Interview Process Participate in interviews with Servpro representatives to assess your suitability as a franchisee.
- Background and Financial Check Undergo a thorough background check and financial review to ensure you meet the franchise’s standards.
- Approval If approved, you’ll move forward with site selection and training.
- Training Program Attend a comprehensive training program that covers all aspects of running a Servpro franchise.
- Site Selection and Build-Out Work with Servpro’s corporate team to choose a suitable location and prepare your business for operation.
- Grand Opening Launch your franchise with support from Servpro’s marketing and operational teams.
- Ongoing Support Continue receiving support to ensure the success and growth of your franchise.
Pros & Cons
Pros
Recession-Resilient Industry: The restoration and cleaning services offered by Servpro are essential and in demand regardless of economic conditions, providing a stable revenue stream even during economic downturns.
Exclusive Territories: Servpro offers exclusive territories to franchisees, reducing competition within the brand and allowing franchisees to focus on maximizing their market potential.
Proven Business Model: With over 50 years of experience in the industry, Servpro’s proven business model provides a clear path to success for franchisees, minimizing the risks associated with starting a new business.
Cons
Demanding Work: The nature of restoration services means that franchisees must be ready to respond to emergencies at any time, which can require a significant time commitment and can be physically and emotionally demanding.
Dependency on Local Market: The profitability of a Servpro franchise can be heavily dependent on the local market’s demand for restoration services, which can vary based on factors like climate, population density, and competition.
Intense Competition: The restoration industry is competitive, with multiple national and local players offering similar services, which can make it challenging to capture and retain market share in some regions.
