Is starting a franchise a good idea in 2015?

[Eric Young]

Hi all, I want to start my own home inspection business and am wondering if the franchise route may be the way to go. I'm aware of the costs of starting one, and how the main benefits would be help with marketing and running a business. I'm a pretty smart and determined guy, but have little background in business, marketing, real estate, or construction.

AmeriSpec and WIN both said they have territory in my city to start a franchise, but I'm concerned it's not the best territory in town and will limit my potential. AmeriSpec said the territory they are offering has about 22,000 "real estate transactions" per year. National Property Inspections said they're already saturated in my city (all the territory is taken). The others I tried reaching out to are Pillar to Post, HouseMaster, BrickKicker, HomeTeam Inspection service, and 1st Inspection Services.

Is anyone familiar with any of the home inspector franchises? Particularly which ones are best? Do you think it would be a good option for me given my limited experience, or would I be better off in the long run starting my own business?

[Gunnar Alquist]

Eric,

Difficult question. I did not go the franchise route and it worked fine for me, but I did work for another company for a few years prior to starting my own. As a result, I had built a good reputation and starting up was fairly easy. I was not convinced that the franchise was worth the cost, but I know others for whom buying into a franchise has worked.

[Eric Young]

Thanks Gunnar for your input. So it sounds like another option would be to get hired by a company as a home inspector, then start your own business after gaining experience? I'll start researching that option too.

[Marc M]

Not sure if the franchise name is enough to get you the business you'll need. In HI it takes more than a name of your business.

[Raymond Wand]

Do your own research as to transactions per month for your market area. I would not rely on franchisor info, they are trying to sell you their product. Speak to Realtors in your area to get a better idea and data they provide as to monthly transactions/yearly transactions, feedback on reputation of various franchisees in your area,

Market areas are protected, so not only will you be competing with another colleague franchisee you will be competing with the other franchises in your market area. (i.e. P2P, Brick Kicker, et ceteras, plus the independents) The pie is only so big, but there will be overlaps.

What qualifications do you require to purchase the franchise, what training do they provide?

Also each franchisor will likely have their own costs, not only the purchase price for the franchise but monthly fees, for marketing, precentage of gross amount you make, plus other costs such as insurance, equipment are your costs over and above your monthly fees. Also read all the fine print, if you don't produce you will likely have your franchise pulled. Some will limit what type of advertising you can do, or what form of advertising is permitted.

Check with BBB to see if there are any complaints, court records for your area which should be public info.

I will tell you right now they are not all created equal. P2P seems to have a lot of problems at least from my experience in Ontario.

Will the franchisor back you in legal suits for negligent inspection? Take their contracts to your lawyer for review.

Of course the other option is to go it alone. Either way its a hard road to hoe.

Also
https://www.sba.gov/content/franchise-businesses

[Jack Feldmann]

Having never owned a franchise, I can only speak of how it look to me from the outside.
You pay to open the franchise. With it you will get training, support, and some marketing (I'm guessing). You will continue to pay franchise fees on the business you do. In return, you get support, and marketing.

What you will not get is instant business. Just because you hang a banner out does not mean that people will flock to use you.

I have two local friends that have experience with franchises. One gave his up several years ago because he felt he was not getting the marketing that he was paying for or promised. He also resented the monthly fees. He never looked back.

My other friend still has his franchise, yet the parent company decided to open another "territory" in the Knoxville area. He declined it, and someone else bought it. The new guy came to our chapter meeting. He had never been an inspector before. I have no idea how the territory thing is supposed to work.

There is another franchise guy in town that had never inspected before. Its been 5 or 6 years, and he's still in business, but I don't hear much good or bad about him.

I would call franchise owners in other cities and see what they have to say. If you call enough of them, you should get a pretty good idea.

[Scott Patterson]

Why do you want to be restricted to the area you work in? I love being able to go anywhere I want without worrying about stepping on anyones toes..

This is something I have never really understood with the territory model. It's good for the franchiser but not the franchisee! ( I think I got that right..)

I have a couple of friends that both have AmeriSpec franchise's and they both love it. Both have been with AmeriSpec for over ten years, I think one is hitting the fifteen year mark.