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FDD Talk 2016: The Jan-Pro Master Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on December 22, 2016

in Commercial Cleaning Franchise, FDD Talk 2017: Service Franchises, Franchise Earnings

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In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Jan-Pro master franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Jan-Pro master franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Jan-Pro’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average, median, high, and low gross profit for the 71 Jan-Pro master franchisees that had been open and operating for all of 2014 and 2015 under the same ownership

Section I – Background Information

It was 1991 in Providence, Rhode Island, when Jacques Lapointe started Jan-Pro to meet the ever-growing demand for high-quality commercial cleaning services, and immediately began franchising the concept in 1992.

From 2006 to 2010 the number of locations grew steadily. The number of domestic locations more than doubled in that time from 5,066 to 10,266 while the number of international locations more than tripled from 306 to 982.

Then in 2011 the number of U.S. locations dropped all the way down to 6,001 while the number of international locations continued to grow. The steep decline in locations remains largely a mystery.

The number of U.S. locations has inched up steadily since the big drop and now stands at 6,715 while the number of international locations is at 1,134 in 13 countries, for a grand total of 7,849 locations.

It employs a two-tiered business model where master franchisees are in charge of a given territory and sell the individual unit franchises to those who lead the actual teams of cleaners. Here’s how Jan-Pro keeps all kinds of companies spic and span in the competitive commercial cleaning industry:

Commitment to Quality

Jan-Pro has the benefit of a well-known brand trusted for its quality cleaning services. This is especially important when servicing such companies as hospitals, schools, and churches.

Jan-Pro ensures the quality of its services with a strong guarantee as well as a 50-point checklist for onsite inspections that occur not only after an initial visit, but 30 days later and periodically after that as well.

Medical facilities enjoy an even higher standard called MedMatrix that meets or exceeds all regulatory requirements from OSHA, the CDC, AORN, and the Joint Commission.

Backed by a Strong Brand and Company

Jan-Pro is the undisputed leader in commercial cleaning franchises. The master franchisee is the one who finds the best unit franchisees, who in turn are the ones responsible for putting together quality cleaning teams. This two-tiered approach means the master franchise owners gain the benefits of owning a business without managing the details of hiring and supervising the cleaning crews.

Overcoming Legal Challenges

The two-tiered franchising model of Jan-Pro and many other commercial cleaning franchises is not without its critics. Lawsuits have been filed against many such companies, including Jan-Pro, claiming that because of how the system pans out in practice, the unit franchisees are essentially employees rather than business owners.

Companies such as CleanNet, Jani-King, Coverall, and Jan-Pro have so far avoided a definitive ruling on this issue in several different states, typically by settling with plaintiffs, and continue to operate the two-tiered franchising model that has made them successful.

The issue stems from unhappy unit franchisees who pay their franchise fee but then aren’t given enough work (controlled by the master franchisee) to make enough money to keep them afloat. If, however, they were classified as employees, they would at least be guaranteed minimum wage as workers providing cleaning services.

Section II – Estimated Costs

  • Please click here for detailed estimates of Jan-Pro Cleaning Systems (Master Franchise) franchise costs, based on Item 7 of the company’s 2016 FDD.

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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