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!
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