United Home Services franchise’s biggest growth

The United Home Services franchise has reported that its biggest growth area is cleaning.

While outsourcing lawn-mowing has long been acceptable in Australian society, the community has taken longer to come around to the idea that hiring a home cleaning franchise is not just for the wealthy. United Home Services franchise managing director Jol Keeble says, “I think there’s actually been a cultural shift. It’s not snobby to be a cleaner any more.

Perhaps the most attractive thing about home cleaning franchises is that they are cheaper than food or retail systems. According to Griffith University research, franchises in the retail industry have average start-up costs of about $206,500 compared with $60,000 for non-retail franchises. An examination of the BRW Hot Franchises list shows that the average price of a service franchise is $124,500, compared with $306,225 for a non-service franchise and 10 of the 18 service franchises on the list sell for less than $40,000.

Home cleaning franchise businesses cost less because they need far less infrastructure than a retail or food franchise. There is no need for expensive shop fittings, stock, ingredients or giant cooking ovens. In many cases, the biggest cost for franchisees who buy a service franchise is their own labour.

The heavy reliance of the franchisee’s labour is why service franchises are known as buy-a-job franchises (as opposed to retail and food franchises, which are seen as buy-a-business franchises). But many service franchisors bristle at the buy-a-job tag and say franchisees who buy a franchise with the simple aim of becoming a cleaner, dog washer or gardener risk failure.

Home service franchise businesses need to be run just like any other business and franchisees need skills in management and operations.

The chief executive of the hairdressing Just Cuts franchise, Dennis McFadden, says he deliberately steers away from taking on hairdressers as franchisees.

“It’s not about that. Our business is open seven days a week, so you couldn’t work the whole time even if you wanted to.”

McFadden recommends franchisees work in their shop in a management role for at least three months to get a feel for the business. After this period most franchisees will appoint management and simply monitor their investment or even buy another Just Cuts franchise. The average franchisee owns 2.4 franchises.

The franchise business model works particularly well for the buy-a-job style of service business. Typically, a franchisee’s initial payment buys equipment, some marketing materials, stationery (such as business cards and letter heads), bookkeeping materials and a training package, which usually includes training sessions and manuals. Franchisees pay regular fees for marketing and promotion, the use of a centralised call centre, training, administrative support and group-buying discounts.

The United Home Services franchise and the Just Cuts franchise charge a fixed and regular franchise fee rather than a percentage of turnover.

While franchisors complain that suitable franchisees are in short supply, they are now finding it hard to get any candidates at all.

“Like every franchise, we knock people back,” the home cleaning franchise’s Keeble says. “But to be honest, we are not knocking back that many at the moment.”

Australia’s low unemployment rates are to blame - people who would once have been potential franchisees have good, well-paid jobs and have instead become customers.

United Home Services franchise’s Keeble is wary about getting into areas that only involve one-off purchases, such as antennas or pergolas.

“Our business philosophy is to do what we’re good at and not fiddle around in things we know nothing about. That said, we are keen to expand the suit of services. But we tend to focus on the services that people need on a regular basis, say once a week or once a month at the most.”

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