Posted by on September 15, 2020 8:06 am
Tags:
Categories: Franchise

FDD Talk 2020: Home Clean Heroes Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

FDD Talk 2020: Home Clean Heroes Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

America's Most Lucrative Franchises of the Year

In this FDD Talk post, you’ll learn the following:

  • Section I – Background information on the Home Clean Heroes franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Home Clean Heroes franchise, based on Item 7 of the company’s 2020 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Home Clean Heroes franchise, based on Items 5 and 6 of the company’s 2020 FDD
  • Section IV – Number of franchised and company-owned Home Clean Heroes outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
  • Section V – Presentation and analysis of Home Clean Heroes’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
  • 2019 gross revenue, discounts and credits, net revenue, field labor, materials costs, gross profit, royalty, marketing fee, advertising, automobile expense, fuel, credit card fees, insurance expense, field supplies and safety gear, repairs and maintenance, integrated business system fees, call center, and operating cash flow before non-disclosed expenses for the one affiliate-owned Home Clean Heroes business operated by the franchisor’s affiliate, HCH Local Operations
  • 2019 total number of recurring services, initial cleans, and one-time cleans; average revenue per service for recurring services, initial cleans, and one-time cleans; and percentage of total revenue from recurring services, initial cleans, and one-time cleans for the one affiliate-owned Home Clean Heroes business operated by the franchisor’s affiliate, HCH Local Operations
  • certain key performance metrics (new customer lead conversion, in-home estimate conversion, monthly services per recurring customer, productivity per vehicle, average daily return per team, and hourly labor rate) for the one affiliate-owned Home Clean Heroes business operated by the franchisor’s affiliate, HCH Local Operations

Section I – Background Information

28 Things You Need to Know About the Home Clean Heroes Franchise

Parent Company Signs FranBridge Capital as First-Ever Multi-Brand Franchisee for 10 Units in Atlanta

1.  In late July 2020, private equity firm FranBridge Capital, the owner of several Atlanta-area businesses in the home services sector, recently expanded its portfolio by signing a 10-unit deal with Buzz Franchise Brands, including a six-unit deal with Home Clean Heroes and four Pool Scouts territories to serve the Greater Atlanta area, with plans to launch Pool Scouts in August and Home Clean Heroes in October of this year.

2.  This is the first multi-brand franchisee for Buzz Franchise Brands and Home Clean Heroes’ second-ever franchisee. Since the start of the year, Pool Scouts has signed six deals for 17 territories (including the recent Atlanta signings) and opened four locations.

Franchises Ranked by Average Revenues and Profits

3.  Led by CEO Jon Ostenson, chairman Allan Young, and operating partner Christian Pillat, FranBridge Capital brings years of entrepreneurship, corporate leadership, and franchise experience to the venture. The three entrepreneurs all met each other through mutual acquaintances.

4.  “I’ve always had the idea to create a collection of home service companies that utilize data, similar customer demographics and technology to our advantage,” said Pillat. “At the same time, Jon and Allan were approaching the same problem from another angle, so we thought it would be best to join forces.”

5.  Based on their backgrounds, Pillat, Young, and Ostenson knew there was a strong opportunity to be a strategic private equity firm in the franchise industry. The trio debates and bounces ideas off each other in order to create a three-way partnership that leverages their experience as franchisors, franchisees, vendors, and consultants.

6.  Ostenson added, “We provide a different avenue of capital and equity for new franchisees. Our model allows investors to participate in franchising without having to operate a store or put all of their eggs in one basket.”

7.  Now, the firm is excited to join Buzz Franchise Brands as their first multi-brand franchisee. According to Pillat, “When we met with the Buzz Franchise Brands team, their leadership was very impressive. We have a tremendous amount of respect for their Chairman and CEO Kevin Wilson and his previous experience in the franchising space. The leadership of a franchise brand is a team you’ll spend the next 10 years working with, and you have to be comfortable with their expertise and decision-making.”

Franchise Matching Quiz

8.  According to Wilson, the excitement is mutual. “FranBridge Capital is the perfect partner for Buzz Franchise Brands, and as the first multi-brand franchisee, they will usher in a new era of growth for the company,” he said.

9.  Joe Delatte, president of Home Clean Heroes, notes that this is a huge step for the brand. Delatte said, “FranBridge Capital observed that people are spending less on vacations and travel and spending more money and time in their homes. Because FranBridge has some experience in home services already, they will be able to quickly adopt and take advantage of our highly efficient systems, operating tools and marketing to make Home Clean Heroes a household name in Atlanta. We look forward to working with their local team to support continued growth in the years ahead.”

10.  FranBridge Capital specifically recognized Atlanta as a strong growth market for a couple of reasons. First, the city is growing rapidly and attracting top talent and big name brands. Georgia is currently the fifth fastest-growing franchise state. With the home services market being so fragmented, there is a massive opportunity within Atlanta to become the premier home services provider by leveraging technology to provide safe, punctual, and professional experiences.

11.  For Pool Scouts specifically, Atlanta is currently the number-one growing pool market in the nation according to the number of pool permits being issued. From a Home Clean Heroes perspective, it’s a market with a high density of target customers in which many are in need of home cleaning services.

12.  Pillat also notes that one of the most encouraging factors that led to this partnership was Buzz Franchise Brands’ transparency on the drivers of success from a financial point of view. “The transparency of the Item 19 from Buzz Franchise Brands made us very comfortable and allowed us to forecast various revenue scenarios for our investors,” he said. “They have a better grasp on their KPIs than most other franchise brands do. They know what the margins need to look like. Another highlight is that they are forward-thinking when it comes to technology. We look forward to executing their systems and maintaining the highest level of service in a market that is fragmented and historically unreliable.”

Franchise Chatter Is Your Unbiased Franchise Comparison Tool

13.  According to Pillat, the goal is to become a recognized brand name in the Atlanta area for house cleaning and pool services. “As a private equity firm, we also want to return strong funds to our investors,” he said. “One of the things that is near and dear to our heart at FranBridge Capital is the ability to promote young and diverse leaders. We believe that giving young people the guardrails they need to be successful business owners, leaders and employees is incredibly important. We will have brand managers for Home Clean Heroes and Pool Scouts that will allow them to serve as the CEO of their small business.”

14.  In the Greater Atlanta area, there are approximately eight to 10 territories still available with Home Clean Heroes. Nationwide, the brand would like to sign nine more franchisees before the end of the year. Moving forward, Home Clean Heroes’ goal is to identify multi-territory operations that can become sizable businesses in cities like Chicago; Pittsburgh; Nashville, Tennessee; Charlotte, North Carolina; and Charleston, South Carolina.

15.  On a final note, Pillat said, “There are a lot of brands that have processes, but there are few brands that have the systems and support to ensure that the processes are followed every time. We believe Buzz Franchise Brands has the right systems in place to operate successful businesses in each category they operate in, and that is why we are excited to partner with them and bring Home Clean Heroes and Pool Scouts to Atlanta.”

Positioned for Success in a Post-COVID World

16.  In mid-August 2020, Home Clean Heroes highlighted how the brand is positioned for success in a post-COVID world. Home Clean Heroes’ cleaning methods include eco-friendly products and an EPA-approved disinfectant (effective at killing the COVID-19 virus) in order to provide a memorable and outstanding customer experience.

17.  Now, amidst the COVID-19 pandemic, Home Clean Heroes’ consumer offering is more in-demand than ever. Not only are people more concerned about keeping their homes germ-free, but they are also spending less time and money on vacations and travel and more on their homes.

18.  According to Joe Delatte, president of Home Clean Heroes, “The residential cleaning business model has always been solid – a high-demand service with predictable, recurring, year-round revenue. But now, more than ever, homeowners are aware of how important it is to keep their home professionally sanitized to avoid the spread of viruses. Coming into the pandemic, we knew that our services were not only essential, but also in extreme high demand. The current situation creates a perfect business opportunity for entrepreneurs.”

19.  To take advantage of this demand, the Home Clean Heroes proven business model positions owners for success. “The systems and processes we equip our franchisees with are easily scalable and highly efficient, allowing them to add teams quickly to meet demand as it surges,” said Delatte.

20.  “We have been able to stay ahead of the demand for PPE and keep our owners well supplied. The EPA-approved disinfectant used by our teams is proven to kill not only the COVID-19 virus but is also rated to protect against other pre-emergent pathogens as well. Our shared-services marketing and communications teams continuously develop and provide relevant messaging and tools to help keep our customers informed about our processes and safeguards. Just as importantly, we provide strong digital and direct mail lead-generation programs to help our franchisees stand out and to drive customer acquisition,” said Delatte.

21.  Home Clean Heroes also offers franchisees the support of Buzz Franchise Brands — an experienced, well-capitalized parent company. Delatte added, “Our business model focuses on efficiency and quality, which drive profit and loyalty. Our company has been built to scale and open franchises quickly, with high levels of support. Our support from the home office provides key analytic insight and coaching that helps an owner identify opportunity and move quickly towards it. It also helps track performance to keep an owner on track with his or her goals.”

22.  Beyond support, Home Clean Heroes appeals to franchisees looking to enter the $6 billion residential cleaning segment thanks to a recurring revenue stream, low operational costs, and a simple business model.

23.  In 2019, Home Clean Heroes signed its first franchise agreement with new owners Jessica and Jeff Ruiz. The couple brought Home Clean Heroes to the Virginia Peninsula in November 2019. The husband and wife team plans to continue growing within Virginia and will eventually open a second Home Clean Heroes location covering the eastern part of Richmond, VA to include parts of Hanover, Henrico, Mechanicsville, New Kent, and parts of Chester.

24.  “We want to be a major player in the area,” said Jessica Ruiz. “We believe in the brand, its attributes and what it stands for. Our goal is to grow with Home Clean Heroes, and we’re definitely up for the challenge of being the first franchisees.”

25.  Now, Home Clean Heroes is gearing up for continued franchise growth. “High-caliber candidates who may have been displaced by the economic situation are searching for the kind of scalable opportunity that a strong brand like Home Clean Heroes — in a high-demand category like residential cleaning — presents,” said Delatte. “Given that, we expect to award 20 to 30 territories within the next 12 months.”

Company History

26.  Home Clean Heroes was founded in 2017 by Buzz Franchise Brands in Virginia Beach, Virginia. Buzz Franchise Brands, which was founded in 2012 with one brand, Mosquito Joe (which was sold in 2018), also owns the Pool Scouts and British Swim School franchise brands.

27.  Home Clean Heroes was launched as a higher-quality residential cleaning brand. A year after starting Home Clean Heroes, Buzz Franchise Brands started franchising the concept. At the end of 2019, Home Clean Heroes had only one franchisee.

Entrepreneur’s Franchise 500

28.  Home Clean Heroes did not rank on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Home Clean Heroes franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Home Clean Heroes’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2018

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2019

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  1
  • Net Change:  +1

Company-Owned

2017

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  1
  • Net Change:  +1

2018

  • Outlets at the Start of the Year:  1
  • Outlets at the End of the Year:  2
  • Net Change:  +1

2019

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  2
  • Net Change:  0

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

  • This financial performance representation includes detailed information for Home Clean Heroes’ affiliate, HCH Local Operations, which has been in operation since May 2017. The information includes the following key financial metrics:
  • Part 1 – Detailed Income Statement
  • Part 2 – 2019 Service Category Breakdown
  • Part 3 – Key Sales and Performance Metrics
  • This financial performance representation does not include information from franchisee operations, because as of December 31, 2019, Home Clean Heroes’ sole franchisee had only been in operation for two months.
  • HCH Local Operations began providing services in the cities of Chesapeake, Norfolk, and Virginia Beach, Virginia, in May 2017. Since it began operations, the Home Clean Heroes model has been adjusted periodically to respond and adapt to market challenges and opportunities.
  • Although HCH Local Operations serviced the cities of Chesapeake, Norfolk, and Virginia Beach, its focus in its first year was largely on Virginia Beach, the territory known as VA-001, which consists of 40,957 targeted households across 7 zip codes. In 2018, HCH Local Operations fully expanded its efforts in Chesapeake and Norfolk, the territory known as VA-002, which consists of 34,899 targeted households in 19 zip codes.
  • The financial performance representations included below show HCH Local Operations’ results in calendar year 2019, which is the second full year of operation since it began operations.
  • The income statement in Part 1 shows the financial performance for HCH Local Operations. Part 2 provides a high-level view of unit metrics for three main revenue categories, and Part 3 details key sales, performance, and labor rate metrics.

Part 1 – Income Statement for Calendar Year 2019

  • The income statement below illustrates the revenue, cost of goods sold, and disclosed expenses associated with HCH Local Operations for calendar year 2019.

To Access the Rest of This Article and Other Premium, Income-Enhancing Content, Subscribe Now or Log In.

Gain the Insider Information (and Actual Earnings Data) You Need to Make a Safe and Smart Franchise Investment. Click Here to Learn More.

Gain
the Insider Information (and Actual Earnings Data) You Need to Make a
Safe and Smart Franchise Investment – See more at:
https://www.franchisechatter.com/register/#sthash.le7wKJKM.dpuf

Franchise Matching Quiz

Published at Tue, 15 Sep 2020 05:00:36 +0000

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.