Many people believe that cleaning franchises operate on the same principles as fast-food outlets. No, they do not!
A food franchise sells a pre-made business model that is then licensed to a franchisee to operate within the specific rules and regulations of the franchise. Consistency and repeatability are the goals. Many fast-food and retail establishments successfully attain these goals because of franchising.
But janitorial franchises differ. With cleaning franchises, there is no real training program. They sell franchises to unsuspecting buyers and then promise them they will make as much as $20,000 per month.
For example, one major janitorial franchise charges its franchisees 21 percent for royalty fees, insurance, accounting, and advertising fees. Then the franchisee needs to add to this amount the following fees: finder’s fees, which are three times the monthly value of the customer’s invoice.
They can pay the three months finder’s fee upfront or clean the account for three months for free. They may also need to lease cleaning equipment, adding to their expenses. Ultimately, as much as 40 percent of the income generated by the account goes to the franchise and not the franchisee. With so much going in the franchisor’s pocket and so little going in the franchisee’s pocket, it should be no surprise if the service is not satisfactory.
Tales of Two Unfortunate Janitorial Franchises
João Padilha had been saving money from his work as a restaurant deliveryman when he heard of a tantalizing offer to buy into a cleaning franchise. Marcos Martins, just like Mr. Padilha, was also looking to go into business.
Both men put thousands of dollars into cleaning franchises, but now believe they were short-changed.
As Mr. Padilha retells it, the representative of the company he bought into said he could make $3,000 a month cleaning buildings if he paid $12,880 to the franchise. Further, Mr. Padilha says he was told he could easily parlay his investment into a large cleaning business.
So, Mr. Padilha paid the money and was assigned two health clinics in his community to clean and maintain. He was told it would take about two and a half hours a day to clean the clinics, but it took six hours. In time, the franchise gave Mr. Padilha two more clinics, and soon he was shuttling among four clinics that were taking far longer to clean than he was told. He estimated that he was working more than 65 hours a week.
But the franchise, which handled payments, paid him only $1,262 a month, less than half what he had been promised. Further, this means he was only making about $4.50 per hour.
” I was doing all this work, but the check was for very little money,” Mr. Padilha said. So he went to the director of his local franchises’ office to complain. “When I came in, they said I had no more work,” Mr. Padilha said. He said the supervisor of one clinic no longer wanted him and they took all of the accounts away in one fell swoop. “I asked for my franchise money back, but they said no.”
Mr. Padilha recouped none of his investment and soon learned that the franchise gave the accounts to another franchisee.
This brings in Mr. Martins. He asked the franchise why the person before him stopped cleaning the locations. He was told that person left the country.
So How Janitorial Franchises Affect You – The Customer?
Let’s consider a hypothetical situation: There are two companies, an independently owned business and a janitorial franchise. Both are bidding on a five day a week job that should take 2.25 hour per day to clean.
The independently owned company places a bid of $902.00 per month for the account. The franchiser submits a much lower bid, just $650.00 per month. The customer, not aware of what is going on, likes the attractive low price and decides to sign with the franchise.
Now, after signing, that contract will be sold to one of the franchisees who will end up paying all those charges and fees discussed earlier. Of that $650.00 per month, the franchise will be locking if she sees more than $460 per month.
The franchise does not care. They make their money on quantity and the re-selling of accounts. Quality never comes into the picture.
The Inevitable Result
What happens next is all too common. The franchisee cuts back on materials, supplies, dilutes the cleaning chemicals to stretch them out, and cuts back on the necessary cleaning time. Now, not only is the cleaning worker a victim of the franchise, so is the customer. The customer must put up with shoddy service and it can be very difficult to break the contract with a janitorial franchise.
When the customer complains the sales representative just promises they will get another franchisor and the whole merry-go-round starts all over again.
The Janitorial Franchise Solution?
Be wary of low-bid janitorial franchises. Their charge may be low, but it’s not worth becoming one of their victims.
The Secure Clean blog is designed to help building managers keep their facilities cleaner, healthier, greener, and safer, in the most cost-effective ways possible. To learn more about us, please take a few minutes to explore our website at www.securecleanbsi.com, contact us here, or at 888-609-1410.
This is based on a true story. “Lawsuits Charge Fraud in Cleaning Business,” by Steven Greenhouse, The New York Times, July 13, 2005