Commercial cleaning businesses are experiencing solid growth thanks to increases in construction and real estate investments. According to Allied Market Research, the commercial cleaning services market size is expected to grow at 5.8% globally by 2022. The commercial cleaning industry encompasses businesses offering office cleaning, window cleaning, floor cleaning, carpet and upholstery cleaning, and other services. Encouraged by the positive outlook, those already in this business may be thinking this could be a good time to franchise.
Franchising can offer a faster and more economical way to expand a business, increase revenue, and build a strong brand. However, as with any new endeavor, it is important to weigh the advantages and disadvantages. Some of the unique considerations with respect to franchising a commercial cleaning business include:
Competition. As noted in the Allied report, the U.S. janitorial services industry is fragmented with 50 top companies generating about 30% of the revenue. Large companies tend to serve customers with multiple locations, while smaller companies compete for other business in local markets. Well-known franchises have an advantage; however, new franchisors should consider the level of competition in the regions where they wish to offer franchises to help ensure franchisees can generate enough business to be profitable.
Franchise model. As discussed in a previous post, there are several types of franchise models for business format franchising including Single Unit, Multi-Unit Development (or Area Development), Conversion, and Master Franchise. Many commercial cleaning franchises choose the master franchise model where a franchisor sells a franchisee the right to offer and sell franchises to other franchisees. In this franchise model, the franchisor becomes a “master franchisor” and the franchisee assumes the role of a “master franchisee” (or “subfranchisor”). This enables the franchisor to give someone local the ability to sell and oversee franchises in a designated territory on the franchisor’s behalf. There are advantages and disadvantages to this model which should be discussed with an experienced franchise attorney. Note that a franchisor may choose to work with an Area Representative who helps recruit franchisees and provides certain services (e.g., training, ongoing support, etc.) to franchisees. However, this is different from a Master Franchise relationship where the Master Franchisee actually sells franchises and contracts directly with the franchisees.
Staffing and training. Cleaning businesses require training of new employees in how to clean properly and utilize the equipment. The franchisor will need to provide a detailed operations manual covering the proper procedures and provide initial training to franchisees. This can be time-consuming for the franchisor. In addition, franchisors must take care that they do not exercise too much control over the operations of the business because they may risk being considered a “joint employer” of the franchisee’s employees. As discussed in a previous post, a joint employer may be liable for labor law violations of the franchisee. Accordingly, franchisors should consult an experienced franchise attorney who can review the franchise disclosure documents, agreements, and operations manuals to protect them from a joint employer claim.
Franchising your commercial cleaning business has great potential for growth, but it is important to discuss the specifics of your situation with a knowledgeable franchise attorney and business advisor.
If you have questions about franchising your business, contact Lusthaus Law.
