This post was updated on December 10, 2015 to reflect information from Mr. Rooter’s 2015 FDD (Item 7).
Detailed Estimates of Mr. Rooter Franchise Costs Based on Item 7 (Estimated Initial Investment) of Mr. Rooter’s 2015 Franchise Disclosure Document
- If you are, with the franchisor’s approval, converting an existing business offering similar services to a franchised business or adding additional territory to a franchised business or purchasing a particularly large territory, the costs stated below may vary.
1. Initial Franchise Fee: $32,500 plus $325 per 1,000 additional population over minimum
- The minimum initial franchise fee is $32,500. You may qualify for a discount on the initial franchise fee.
- The franchisor may agree to finance a portion of the initial franchise fee, depending on your credit-worthiness, the collateral that you have available, and its then-current financing policies. The franchisor’s financing will typically require you to pay 20% to 30% down and it will charge an annual interest rate of 9% to 12%, depending on your credit score and other factors.
- A territory will generally contain a population ranging from 100,000 to 1,500,000. Territory is priced at $325 per 1,000 population. A larger territory may be allowed under certain exceptional circumstances (e.g. densely populated urban areas, or if a high percentage of the territory is impoverished).
2. Vehicle: $2,975 to $29,250
- You must purchase vehicles that meet the franchisor’s specifications as set forth in the Manuals. Each vehicle must have the Marks professionally applied before the vehicle is put into service.
- The franchisor does not sell or lease vehicles.
- An existing vehicle can be converted for use in the franchised business or you may choose to acquire a vehicle which meets the franchisor’s specifications.
- The estimated low cost reflects the cost of having the Marks applied to an existing vehicle which meets the franchisor’s standards. The estimated high cost reflects the purchase of a vehicle meeting the franchisor’s standards plus having the Marks applied.
3. Equipment, Supplies, and Inventory: $10,000 to $40,000
- The low estimate shown here assumes that you already own an existing business similar to the franchise. The high estimate shown here assumes you do not own an existing business, and includes office and field equipment, inventory, and supplies needed to equip your franchise in accordance with the franchisor’s standards.
- Both estimates include printed material (business cards, stationery, invoices, brochures, marketing materials, service agreements, etc.), initial costs for a software package.
4. Insurance: $1,400 to $2,700
- You must purchase the insurance coverage described in Item 8. If you do not, the franchisor can purchase it for you and bill you for its costs.
5. Advertising and Promotional and Local Marketing Spending for Marketing Start-Up Phase: $10,000 to $25,000
- You will need to advertise locally in the start-up phase of your franchise to help establish name recognition in your locality as well as generate customer leads.
- The franchisor requires you to spend an amount specified by it, on local marketing, direct advertising/marketing/sales during the marketing start-up phase of your business, which period is specified by it and should not exceed 180 days from opening of your business.
6. Training, Travel, Lodging, and Food: $2,250 to $4,850
- You should allow at least the minimum stated amount for travel, lodging, food, and other miscellaneous living expenses incurred during training. Your actual costs will vary depending on the distance to be traveled, your method of travel, your lodging, and your personal circumstances.
7. Deposits, Permits, and Licenses: $0 to $1,000
- The franchisor does not require any prepaid deposits, permits, or licenses before you begin the operation of your franchised business but your particular locality may require a permit or license to perform plumbing services or have other business licensing requirements.
8. Professional Fees: $0 to $5,000
- These are estimates for fees that will be charged by your attorney to review the franchise agreement and other documents, to advise you, and to incorporate a business entity on your behalf if desired. This estimate also includes fees charged by an accountant and/or financial advisor.
9. Additional Funds – 6 Months: $15,000 to $35,000
- The franchisor recommends that you have additional funds available during the start-up phase of your franchise. These amounts are the franchisor’s estimates of the amount needed to cover your expenses for a 6-month period from the date you open for business.
- Some of these expenses include registration fees for the annual Reunion, the cost to have at least one employee dedicated to ongoing daily marketing as required by your franchise agreement and the Manuals, and an estimated monthly support fee to be paid for required software. These fees may increase in the future.
10. Real Estate: $0 to $12,000
- If you already operate an existing business similar to the franchise, you may determine that you do not need to allocate any amounts for real estate or related costs. The franchise can be operated from your home, if local zoning allows you to operate from your home, or any existing business premises.
- If you choose to rent a place of business, you may expect additional investment requirements. The typical Mr. Rooter franchised business has 4,000 square feet. Rent for a suitable facility of that size is estimated to range between $11,000 and $24,000 per year.
- In the range of fees above, the franchisor has included an estimate of $12,000 for six months of rent for the high range estimate in the event you elect to rent space. This is only an estimate.
11. Totals: $74,125 (does not include real estate costs) to $187,300 (plus any additional franchise fee and/or real estate costs)
- The franchisor relied on its own experience to compile these estimates.