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Franchise Blog

Residential Cleaning Franchise & Commercial Real Estate

  Frank Berger  |    Jul 1, 2010 6:42:32 AM  |    Founders Blog,  |    Franchise Opportunities

 

Location, location, location does not apply to the maid service industry. Let’s discuss commercial real estate and how it affects franchise profitability. My first franchise experience was with Domino’s Pizza. I remember as a new franchisee breaking down every cost to the number of pizza’s I had to make. Our rent in 1990 was $1800 a month ($18/SF/YR) for a 1200 sf commercial space. Fortunately, there were no CAM costs for this property. 

Back in 1990 food cost were lower, around 22%, as opposed to the 32% when I left franchised food in 2004. Back in 1990, if my average pizza cost $10, $2.20 would go to Food Cost, another $2.30 toward labor, leaving $5.50 to pay all my other bills. I calculated that if rent was $1800 a month, I had to make 328 large pizza’s to pay my landlord! If we sold roughly 600-700 pizza’s a week, we needed to work nonstop 3-4 days a month just to pay our monthly rent. 

We opened our first You’ve Got MAIDS® franchise in 2005 when rents where much higher than in 1990. Luckily, we did not need a triple A location for our office. Our rent was only $600 a month ($18/SF/YR) for a 400 square foot office, no CAM cost. WOW! 15 years later, in a seller/landlord market...rent for this franchise was $14,400 less a year!

At You’ve Got MAIDS® our pretax labor averages around 38%. For purposes of discussion, let’s tack on 4-5% for payroll related taxes & 1-2% more for gasoline used by our maid-mobiles to get to your clients home. Therefore if our average customer pays $112 a week for maid services, $42.56 would go to labor, $4.48 to payroll taxes, and $1.12 to gas, leaving roughly $63.84 to pay all our other bills. All we had to do was clean 11 average client homes to cover our rent!

If you are considering starting a business for yourself, call our Franchise Approval Department to discuss what our residential maid service franchise has to offer.

 

 

 

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