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How to finance a cleaning service franchise
Make money by taking care of the cleaning tasks that others don't have time to do.
Get a large business loan to cover your financing needs, no matter what the purpose is.
According to an analysis by Franchise Help, the cleaning industry generated more than $50 billion in revenue in 2015, and there were almost 900,000 businesses employing 3.5 million 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.
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In this guide
Get a large business loan to cover your financing needs, no matter what the purpose is.
What options do I have to finance my cleaning business?
Unlike many other franchise options, cleaning service companies tend to have lower starting costs that other industries. This makes it easier to gather the funding and liquid capital you’ll need to start your business.
- Franchisor financing. Some companies offer financing to potential franchisees. If the cleaning service you’re looking to franchise has a financing option, explore your options. There are even companies that offer discounts to minorities and veterans, so don’t be afraid to talk to your franchisor about reduced rates.
- Term loan. Term loans have both secured and unsecured options so you can decide whether you’d like to put up collateral in order to receive funding. Some franchise business loans allow you to borrow against the value of the company you’re buying into, and you can typically receive between 50% to 70% of the value of the business.
- SBA loan. These business loans are backed by the federal government. While they tend to be more difficult to qualify for, they often have lower rates than similar loans from banks and other financial institutions.
- Equipment loan. Many cleaning franchises will start you off with the basic equipment you’ll need to run your business. But if you expect serious growth quickly, you may want to get an equipment loan for anything from an industrial carpet cleaner to a series of high-powered vacuums. The equipment you buy acts as collateral.
- Vehicle loan. Your franchisor may not cover the van you need to transport your staff and equipment to work sites. In this case, a business vehicle loan may be appropriate. Like a personal auto loan, your vehicle will act as the collateral.
- Line of credit. An open line of credit can help your business cover those random expenses you may not have foreseen in your research. This option is similar to a term loan. But rather than receiving a lump sum and paying interest on it, you only pay interest on the total amount you borrow.
Top loans to compare to finance a cleaning business
7 popular cleaning franchises in the US
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 on 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||Franchise fee||Est. startup costs||Length of term|
|Stratus Building Solutions||$2,700 to $39,600||$3,450–$50,350||12 years|
|The Maids Home Service||$12,500||$81,700–$197,250||20 years|
|Merry Maids||$37,500–$51,500||$86,750–$123,750||5 years|
|Vanguard Cleaning Systems – Janitorial Franchise||$5,000–$31,000||$7,000–$35,000||10 years|
|The Cleaning Authority||$20,000||$96,500–$153,000||15 years|
Franchise loan terms
When you buy into a franchise, you likely aren’t buying it outright. Most cleaning franchises will have term limits between 5 to 20 years. If your business is doing well, you may be able to renew your contract to keep your franchise going. If not, your contract will be ended and you’ll cease being able to use the franchisor’s materials and name.
This is common in all franchises, not just the cleaning industry. It helps protect you as the business owner and 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 noncompetition 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 attorney to ensure you aren’t left in the dark when it comes to your options.
What other costs do I need to consider?
Most franchises have an ongoing fee structure that you need to pay into in order to keep your licensing 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%. In the cleaning service industry, franchisees are often quoted 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:
- Paying your staff. Labor doesn’t come cheap, especially when you’re running a business that relies on picking up other people’s messes. In order to keep things sanitary and clean, you should have the budget for a competitive income that gives your employees a reason to do their job well and stick with you.
- Administrative support. No matter your staff size, you’ll likely need an administrative support team to take care of invoicing, bookkeeping, appointments and other administrative duties.
- Equipment servicing. Some cleaning service franchises will include the initial equipment needed to perform the cleaning tasks, but you’ll still need to service and maintain the equipment at your own expense.
- Consumables. You’ll often receive an initial supply of cleaning products, uniforms, stationery and other business consumables when you purchase your cleaning service franchise, but you’ll likely need to replenish your supplies yourself at regular intervals.
- Rent. If your cleaning service franchise requires an office or physical storefront, rent will be a significant expense to consider. The amount you pay each month depends on your location and the space you need to store your equipment.
Cleaning franchise vs. independent cleaning business
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.
- Cleaning franchise. There are dozens of companies across the US that specialize in commercial or house cleaning. Like other franchise options, you can buy into one for a set fee and use the company’s name and marketing tools to create demand for your services.
- Independent cleaning business. If you already know how to run a business and are familiar with the way the janitorial industry works, you may want to start your own business. This gives you the freedom to do whatever you want, but you’ll have to compete with well-known name brands already servicing your local area.
Tips on starting your own independent cleaning business
Explore your options and talk to professionals who have run their own cleaning business, but these quick tips should get you started on your road to operating your own company.
- Create your business plan. The first step to any successful business is the business plan. Understand what you need to do to set yourself apart from the competition and create a set of goals that will take you there.
- Register your business. Once you’ve constructed a solid business plan, it’s time to put your hard work into action. You’ll want to register your business and have it licensed and bonded. File for insurance that covers you in case anything is lost, stolen or broken while in a client’s home or place of business.
- Determine your prices. Part of your initial research into other cleaning businesses should be the amount they charge per hour. Many domestic cleaning services charge between $25 and $45 per hour. You’ll want to set your fee to remain competitive.
- Build your client list. After your business is properly registered and you know how much you intend to charge, start building your client list. Contact local businesses, send out fliers and post on job boards. You won’t want to purchase any supplies until you have at least one client. After all, things may not pan out, and you won’t want to have excess supplies laying around.
- Work hard. Build your website, clean with care and take the time to build rapport with your clients. The secret to success with any business is to do your job well, and if you can set yourself apart from the rest of the cleaning services in your area, you may find yourself running a top-notch business.
How do lenders determine approval?
Lenders weigh the strength of your business model against other factors, including your personal credit score and the market need. Banks and other financial institutions tend to view franchises more favorably 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.
The type of loan you request also plays a role. Any loan that has built-in collateral will attract more lenders than one that has more risk, like an unsecured term loan or line of credit.
Your history influences lenders as well. Your credit score, background in the industry and business plan shows lenders that you know how to handle yourself under stress and run a successful business. 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.
Shop around and make inquiries with a range of lenders to find one looking to invest in a cleaning service franchise or independent business.
How profitable are cleaning companies?
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 business, 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 small startups. 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 staff, you’ll likely be able to make a decent salary 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 goal of your business. You should plan for expansion and find financing that suits your business now and continues to work in the future. Check out our main business loans guide for more financing tips.
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