4 Reasons Why Not to Buy SERVPRO Franchise

Table Of Contents

1 Is the SERVPRO Franchise Still Worth It?
2 Top Reasons Why Not To Buy Servpro Franchise
3 A Few Benefits Of Buying Servpro Franchise
4 Conclusion

A franchisor of water and fire restoration and cleanup, SERVPRO, franchising in Canada and the United States with over 1,700 franchise locations. Its franchise system offers large-scale disaster recovery and localized services. Its franchise fee is as follows:

Franchise Fee- $42,000
Equipment and Products Package- $78,500
Estimated Total Investment- $191,825 to $245,700

Many cleaning franchises compete for the same clients, and some are even branches of one big company.

Will SERVPRO Franchise owners make a profit? Where should I invest in 2022? Is there any other profitable franchise investment opportunity?

We don’t think that investing in a cleaning business is more cost-effective than investing in any proven QSR or lucrative Fast casual Restaurant franchises.

The restaurant industry, in general, has a higher annual sales growth rate than other industries. Restaurants are an ever-growing option for consumers who want a dining experience or a grab-and-go meal. In addition, the cost of entry for a company to start a fast food business is much lower than the costs to start a cleaning franchise. So while there is greater competition in the sector, it doesn’t mean you will make less money.

Is the SERVPRO Franchise Still Worth It?

ServPro was launched by Doris and Ted in 1967 in Sacramento, California, as a painting company. They gradually turned it into a franchise company of restoration, construction, and cleanup services. The company’s headquarters is based out in Gallatin, Tennessee. SERVPRO franchising has been assisting people in realizing their interest in owning a restoration business since its launch.

Hi, this is Dan Rowe from Fransmart. Our website gives you all the information you need to start a successful franchise business. Whether you want to buy a gas station franchise or an award-winning dine and drink franchise, we have everything for you to know.

We can also assist you in finding the golden opportunity in the franchise business, franchise specifically having low investment cost, company that has best state-of-the-art technology, matching your skills and experience, and how to finance your new franchise.

Our team has considered the cons and pros of owning a Cleanup and Restoration franchise. After thorough research on all the construction and restoration services market trends and analyzing competitors like Chem-Dry, Angi, Stanley Steemer, and ServiceMaster, We came across a few points that could indicate why one should not buy the SERVPRO franchises.

First, their company policies are outdated for this day and age, their franchisees are unhappy, and they don’t offer much to set them apart from their competitors.

However, most franchisees cite the lack of capital as their biggest problem when applying for its franchise.

Most businesses operate with a profit margin of 20 percent. ServPro’s franchisees, however, find themselves with a mere 13 percent — a disappointing number for franchisees who’ve paid so much to be a part of their system. By eating into the profits, ServPro is showing that they operate greedily as a franchise brand.

To evaluate the accurate profit of SERVPRO Franchise owners, watch the video below, which gives you the potential financial model of how much profit is earned by any franchise owners after making investment and operation costs.

BBB accredited SERVPRO with an A- rating. That’s not to say that it doesn’t have its detractors — one customer complained about overcharging for services. At the same time, another mentioned careless technicians who left the front door open during a service call.

Top Reasons Why Not To Buy Servpro Franchise

A Good Brand Franchise’s tried-and-true support system lets people from all walks of life create a business that works for them. Buying a SERVPRO Franchise allows you to benefit from their proven track record but has underlying drawbacks, including the following:

#1 Customers Complain About Servpro And Its Failure To Adhere To Standard Processes.

ServPro has been accused of overcharging, unprofessional behavior, and the company has received many complaints from insurance companies and customers.

There are many incidents when ServPro’s customers complain about the way it responds to their needs. The franchisor terminated these franchisees because they did not follow standard procedures.

The problems that arose, in these cases, tarnished ServPro’s reputation, which is detrimental to the brand. Instilling trust in customers with such a wrecked reputation can be a big deal for new franchise owners.

#2 Restoration And Cleaning Services To Be An Industry With Many Technical Aspects.

In a recent class-action lawsuit filed in Federal Court, State Farm Insurance, a large insurance company, has accused SERVPRO of being negligent. Evidence from the case suggests that the ServPro franchise does not always perform proper water damage restoration and is often inaccurate about the severity of the damage. This is only one example.

“Restoration and cleaning services is one of the most technical industries.” It’s not a good decision to buy a ServPro franchise unless the franchisee is experienced in the industry and understands the cost of all materials: licensing, repairs, permits, equipment, and more. Without such an overview, it is difficult to operate a successful business.”

#3 Allegations For Deceptive And Unfair Practices

ServPro and multiple SERVPRO franchises in Michigan were sued on October 13 by Sugar Law Center and Resilience Force for Social and Economic Justice. Seventeen immigrant resilience workers sued ServPro and BTN, alleging they unjustly enriched themselves by forcing their employees to work under inhumane conditions.

Allegations also included forced labor, unjust disposal of public policy violation, innocent misinterpretation, and public nuisance.

#4 Restrictions and Obligations on Franchise Owners

Servpro Franchise Owners earn $41,000 annually, or $20 an hour, 38% lower than the national average income for all Franchise Owners at $60,000 annually and 47% lower than the national salary average for all working Americans. Profit margins are not that good because you have to pay for your own office space, business cards, marketing material.

You have no say in how much to charge clients.

At the same time, the other aspect where your potential is limited through restriction and obligations are:

Franchise licensed will be granted only based on a person’s integrity, personal character, financial capacity, business skills, and management and business experience.
Franchisees or their owners or principals should supervise or perform franchise operations directly.
All franchise owners must sell and offer the services and goods that conform to franchisors’ specifications and standards.

A Few Benefits Of Buying Servpro Franchise

Apart from the independence of owning a company or business and comprehensive training, there are several advantages to franchising ServPro. The initial term of the franchise is five years. If all requirements are met, franchisees can renew for another five-year term.

ServPro might finance your purchase as long as you have a good credit score and meet the company’s financing requirements. ServPro Finance, LLC, a subsidiary of ServPro, is a financing company that may offer to finance your purchase.

Conclusion

If you want to buy a ServPro franchise, the liquid capital required is about $40,000 with a franchise fee of about $42,000 and a minimum of $191,825 to $245,700 total investment. The royalty fee varies from 3% to 10% of monthly net volume with a transfer fee of up to $20,000 with an additional brand fund fee, initial training fee, etc. It also provides financing through a third party. However, specific allegations, breaches, and unfair practices are a few aspects that you must look through before buying a ServPro franchise.

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