In this guide
According to Jan-Pro, the cleaning industry in Canada generated more than $8 billion in revenue in 2018 – an increase of 2.8% since 2013. There were almost 30,000 businesses employing more than 132,000 people. This is an in-demand industry that both businesses and individuals are willing to pay top dollar for. If you’re looking to buy into a franchise or start your own business, the cleaning industry may be your chance to run your own company and set your own schedule.
Unlike many other franchise options, cleaning service companies tend to have much lower starting costs than other industries. This makes it easier to gather the funding and liquid capital you’ll need to start your business.
Jillian has been working independently as a cleaner in Ontario for about 5 years but has found herself struggling to compete with the larger, franchised cleaning services that have begun offering services in her area. After reading about the benefits these franchise owners receive – including liability protection and free marketing – Jillian decides to quit working independently and purchase a franchise of her own.
Besides paying $500/month in royalties, she’ll have to pay a $35,000.00 franchise fee + 13% HST upfront. This includes the base cost of the business, a transfer fee for reviewing her application and orientation/training costs. While Jillian feels confident her existing clientele is large enough to cover the monthly royalties, she needs help paying the franchise fee and sales tax.
Jillian applies for a business loan from an online lender. Thanks to her solid credit score, she is approved for a loan of $39,550.00 with competitive terms. She signs the loan documents, and the funds are deposited into her account within 2 business days. Note that, as a GST/HST registrant, Jillian can treat the HST she paid as tax deductible on her next business tax return.
|Cost of purchasing a cleaning service franchise||$35,000.00|
|Loan type||Business loan (term loan)|
|Interest rate (APR)||7.90%|
|Loan term||5 years|
|Additional fees||Origination fee of 3.00% ($1,186.50)|
|Total loan cost||$48,002.40|
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
Every franchise has its own fees, royalties and other costs that make the initial purchase and startup of your business differ. In addition to the fees listed in our table below, you’ll need to have liquid assets as detailed by the franchisor – and enough capital to run the day-to-day of your business to get it off the ground.
|Company||Estimated franchise cost|
|Jan-Pro||Minimum of $35,000 investment|
|Adele||$25,001 – $50,000|
|Chem Dry||$25,001 – $50,000, plus royalty of $495|
|MyMaid||$25,001 – $50,000, plus royalty of 5%|
|Steam Dry Canada||$25,001 – $50,000, plus royalty of $600|
|FibreNew||$50,001 – $100,000, plus royalty of $575|
|Maid Simple House Cleaning||Minimum of $10,000 investment|
*Estimated costs accurate as of September 2019.
This is common in all franchises – not just the cleaning industry. It helps protect both you as the business owner, as well as the franchisor. After all, if things aren’t working out, a shorter term means you can switch franchises or brand your own business — that is if your contract doesn’t have a non-competition clause. When browsing franchise opportunities, see if you have a right to renew or have the option to continue the franchise contract, provided your business is in good standing. Without a right to renew, a franchisor has no obligation to offer you another term.
As with all business options, your franchise agreement should be looked over by an experienced lawyer to ensure you aren’t left in the dark when it comes to your options.
Most franchises have an ongoing fee structure that you’ll need to pay into in order to keep your license and operate your cleaning business. In exchange for the right to use the franchise brand name and business structure, you’ll pay ongoing fees to the franchisor to be part of the franchise group.
In many franchise industries, ongoing franchise fees are calculated as a percentage of gross income, with fees ranging from 2% to 15%. That said, some franchisors will charge a fixed monthly fee, giving franchisees the incentive to increase their customer base and their income without paying correspondingly higher fees.
Beyond the price of having a franchise, you also need to factor in the regular costs of running a business. These include:
Before you start looking into franchises and finding loans, you should know what type of business you want to start. Decide whether you want to pursue a franchise or build a new business from the ground up, then browse your options.
While it’s best to explore your options and talk to professionals who have run their own cleaning businesses, these quick tips should get you started on the road to operating your own company.
Lenders weigh the strength of your business model against other factors, such as your personal credit score and the market demand for another cleaning business in your particular region. Banks and other financial institutions tend to view franchises more favourably than independent startups because of their proven business models, however, that doesn’t mean you won’t be able to find financing for your own company. It also doesn’t mean you’ll be automatically approved because you’ve joined a franchise.
The type of loan you request also plays a role. Secured loans tend to be easier to get approved for since you’re required to provide collateral, and they typically come with more competitive rates. Unsecured loans usually have higher rates, but you don’t risk losing your collateral if you fail to make repayments.
Your credit history influences a lenders decision as well. Your credit score, background in the industry and business plan shows lenders that you know how to handle yourself under stress, run a successful business and responsibly pay back what you borrow. Whether you’re buying into a franchise or starting your own company, lenders want to see that you know what you’re doing and have a history of management skills – both professionally and financially.
The profitability of your cleaning service will depend on its size, the local market and the type of clientel your business has. Cleaning companies tend to have stable business models, and the profits and income-earning opportunities are unlikely to fluctuate significantly.
Unlike many other franchise businesses, those who invest in a cleaning service franchise tend to do some of the work themselves, whether that’s taking on cleaning jobs or managing the office. This reduces the need for extra staff and increases profits – but it can make your business more hands-on than you’d like.
This is even more true for independent cleaning businesses. You’ll be doing much of the initial work, but the profits will largely be yours.
Businesses tend to pay more for cleaners than individual households will. However, a commercial cleaning company will likely need more staff. Your business model should reflect this, so do your due diligence when researching franchise options to see how much you can expect to make as a commercial cleaner versus a domestic cleaner.
The profitability of the cleaning service depends on the hours you’re willing to put into the business as well as how in-demand your services are. With a good attitude and professional, hard working staff, you’ll likely be able to make a decent profit operating your own commercial or house cleaning business.
When you’re considering the purchase of a cleaning service franchise or want to start your own business, remember that your initial investment needs to reflect the goals of your business. While you should find financing that suits your business now, plan for expansion and find financing that will continue to work for you in the future.
Check out our main business loans guide for more financing tips.
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