In this FDD Talk 2016 post, you’ll learn the following:
- Section I – Background information on the Chem-Dry franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Chem-Dry franchise, based on Item 7 of the company’s 2016 FDD
- Section III – Presentation and analysis of Chem-Dry’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
- 2015 number of owners, number of franchises, average job size, average franchises per owner, average years operating, average annual revenue per owner, average annual revenue per franchise, and average percent solution cost for the top 1/3, middle 1/3, bottom 1/3, and all 195 Chem-Dry franchise owners who submitted complete 2015 financial information to the franchisor, have owned their businesses at least 2 years, and operated those franchises throughout 2015
- 2015 number of owners, number of franchises, average job size, average annual revenue per owner, average annual revenue per franchise, and average percent solution cost for the 195 Chem-Dry franchise owners who submitted complete 2015 financial information to the franchisor, have owned their businesses at least 2 years, and operated those franchises throughout 2015, grouped according to number of franchises owned (1, 2, and 3 or more franchises owned)
Section I – Background Information
Searching for a Better Cleaning Method
Chem-Dry was founded in 1977 by Robert Harris in California.
While Harris attended college, he worked as a carpet cleaner. Dissatisfied with the carpet cleaning methods at the time, Harris felt that there was a better way to clean. He spent years researching and developing a better carpet cleaning option and eventually created a carbonated solution that was safe and non-toxic.
Harris’s new cleaning method soon grew popular and Chem-Dry quickly expanded. Just a year later, in 1978, the company began franchising.
In 2006, home improvement superstore chain The Home Depot acquired Chem-Dry. Today, the company has over 4,000 locations in several countries including the U.S., Canada, Thailand, the U.K., and Japan.
Chem-Dry Continues to Grow
In early 2016, Chem-Dry’s parent company Harris Research, Inc. (HRI) reported that Chem-Dry sold 117 franchise units in 2015, which was the best performance for the brand since 2007. Chem-Dry did even better in 2016. By late May, Chem-Dry had sold 63 units compared to 48 during the same period in 2015.
Chem-Dry’s continued success can be attributed to HRI’s significant investments toward research and development of new cleaning solutions. In addition to investing in additional support and key personnel for Chem-Dry, HRI has provided new solutions for franchisees including enhanced start-up training for new owners and new marketing tools.
Not only has Chem-Dry seen growth domestically, the company also continues to grow internationally. In 2015, Chem-Dry entered Trinidad and Tobago, its 50th international market. By the end of 2015, the company expanded into India and in early 2016 Chem-Dry opened in Turkey. Chem-Dry currently has 3,500 international locations.
The carpet cleaning company’s international success is due in part to its business model. Chem-Dry uses a Master Franchise model where a Master Franchisee owns the licensing rights within a territory and is responsible for developing the brand and selling sub-franchises. Through this method, Chem-Dry remains flexible and can easily accommodate cultural differences.
In addition, Chem-Dry’s Hot Carbonating Extraction (HCE) cleaning method, which is green clean certified, appeals to worldwide consumers’ growing concerns for the environment. The HCE method is non-toxic and uses 80% less water than other cleaning methods.
In the summer of 2016, Chem-Dry launched a campaign called Chem-Dry Cares to raise money for the Best Friends Animal Society. The Best Friends Animal Society is the only national animal welfare organization solely dedicated to ending the killing of animals in shelters. Since Chem-Dry often deals with pet stains, the company felt that giving back to animals through the Best Friends Animal Society was a natural fit.
Chem-Dry encouraged all of its franchisees to raise money for the cause by asking for add-on donations after service and offering local promotions with built-in donations. Customers were also welcome to donate to the Best Friends Animal Society through the Chem-Dry Cares page on the company’s website.
Leader in Its Category on Entrepreneur’s Annual Franchise 500 List
Chem-Dry earned the No. 42 spot on Entrepreneur Magazine’s Franchise 500 list for 2016. In addition to placing in the top 50 on the overall list, Chem-Dry ranked No. 1 in its category.
This year’s ranking is up from the carpet cleaning company’s No. 63 spot the year before. Through the years, Chem-Dry has maintained a spot among the top 100 franchises, with their highest rank of No. 27 achieved in 2006.
Section II – Estimated Costs
- Please click here for detailed estimates of Chem-Dry franchise costs, based on Item 7 of the company’s 2016 FDD (updated).