FDD Talk 2017: What You Need to Know About the Martinizing Dry Cleaning Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk 2017 post, you’ll learn the following:

• Section I – Background information on the Martinizing Dry Cleaning franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Martinizing Dry Cleaning franchise, based on Item 7 of the company’s 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Martinizing Dry Cleaning franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Martinizing Dry Cleaning’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average, high, and low number of plant stores, number of drop stores, gross sales, annual labor cost, and annual rent cost for the 19 Martinizing Dry Cleaning franchisees that supplied information in a survey

• 2016 average, high, and low net profit for the 15 Martinizing Dry Cleaning franchisees that supplied information in a survey

• 2016 average number of drop stores per respondent, gross revenue per drop store, annual labor cost per drop store, and annual rent cost per drop store for the 6 Martinizing Dry Cleaning franchisees that had drop stores and supplied information in a survey

• 2016 average, high, and low gross sales, net profit, annual labor cost, and annual rent cost for the 10 single-store Martinizing Dry Cleaning franchisees that supplied information in a survey

• 2016 average, high, and low gross sales, net profit, annual labor cost, and annual rent cost for the 9 multi-store Martinizing Dry Cleaning franchisees that supplied information in a survey

• 2016 average, high, and low Route Gross Sales for the 13 Martinizing Dry Cleaning franchisees that performed Route Services and supplied information in a survey

• 2015 and 2016 average monthly and annual gross sales related to Locker Services for Huntington, due to its affiliation with Martinizing and its performance of Locker Services through Martinizing’s affiliate Bizzie

Section I – Background Information

11 Things You Need to Know About the Martinizing Dry Cleaning Franchise

New Locations

1.  In the past decade, Martinizing Dry Cleaning has closed over 100 locations across the United States, but a few new stores have opened in 2017. One of its newest locations opened at the end of October in Noblesville, Indiana. The location is owned and operated by father and son Kent and Keith Brown.

2.  Kent Brown said, “We want to provide a cleaner, more professional, and more responsive service to all of our customers. Martinizing’s strong commitment to the community and family-like atmosphere will guide everything that we do.” Keith Brown added that customers will appreciate the variety of services that Martinizing offers compared to other dry cleaners.

3.  Earlier in the year, a Martinizing Dry Cleaning store was opened in the Charlottte, North Carolina area by Kyle Panther. The store had its grand opening on March 31 and April 1 and to celebrate the occasion, customers were able to enter to win $500 in dry cleaning services.

On-Demand Services

4.  In order to stay relevant and stand out from the competition, Martinizing Dry Cleaning has integrated modern technology into its services. In the past few years, the company has added on-demand services, allowing customers to have their clothes delivered almost anywhere.

5.  To use the on-demand service, customers need to download the Martinizing Delivers App and set up an account. With the app, customers are able to indicate where and when they want their clothes picked up and delivered. If customers don’t want to use the app, they can still have their clothes picked up and delivered from their home or office by going to their local store’s webpage and requesting this service.

6.  In addition to pick-up and delivery services, customers can use the Martinizing Delivers App to have their clothes picked up and dropped off in secure lockers that are accessible 24/7. When customers select the locker option, they put their clothes in a locker and secure it with a four digit code of their choosing; then they will be notified by text or email when their local Martinizing Dry Cleaning store picks up and drops off their order.

Company History

7.  Martinizing Dry Cleaning was founded in 1949 by Henry Martin, a chemist, in New York. The company was originally called One Hour Martinizing because Martin guaranteed that customers could have their garments cleaned in as little time as an hour.

8.  The company was also one of the first to offer “on-site” dry cleaning at retail locations. Martin was able to clean garments on site in a short time because he developed a less flammable solvent to clean clothes, making it possible to open dry cleaning stores in more convenient locations.

9.  Franchising started the same year that Martin established the company and numerous stores were opened throughout the 1950s and 1960s. As the company grew, the Martin Equipment Company was created in order to produce the special equipment needed for the Martinizing process. The Martin Equipment Company was later acquired by American Laundry Machinery.

10.  In 2014, The Huntington Company purchased Martinizing Dry Cleaning and today, there are over 379 locations in the United States, Canada, Peru, and Ecuador.

Entrepreneur’s Franchise 500

11.  Martinizing Dry Cleaning has ranked on Entrepreneur’s annual Franchise 500 list every year in the last decade. The company’s highest rank was No. 207 in 2007, while its lowest rank was No. 413 in 2016.

Section II – Estimated Costs

• Please click here for detailed estimates of Martinizing Dry Cleaning franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Martinizing Dry Cleaning’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

• As of December 31, 2016, there were 96 Martinizing franchisees operating 199 Martinizing franchises in the United States, and 6 Martinizing franchisees operating 11 Martinizing franchises in Canada.

• These numbers include Martinizing franchisees operating under franchise agreements obligating them to pay either a percentage of gross sales (each a “Royalty Franchisee” and collectively, “Royalty Franchisees”) or a predetermined annual fee (each a “Fixed Fee Franchisee” and collectively, “Fixed Fee Franchisees”) to the franchisor.

• In the United States, Royalty Franchisees account for 51 while Fixed Fee Franchisees account for 45 of the total 96 Martinizing franchisees.

• In Canada, Royalty Franchisees account for only 1 while Fixed Fee Franchisees account for 10 of the 11 Martinizing franchisees.

• All of the Martinizing franchisees in the United States and Canada were provided a survey regarding their gross sales/revenue and various details related to their operations for the period of January 1, 2016 to December 31, 2016 (the “Measured Period”). The survey was sent on February 16, 2017 and was closed on March 20, 2017.

• Findings of the survey are provided in a series of charts below. There were 19 respondents to the survey (each a “Respondent” and collectively, the “Respondents”); however, the number of Respondents for each question varied, as further explained in connection with each chart below.

• Of the Respondents, 12 were Royalty Franchisees and 7 were Fixed Fee Franchisees.

• The Respondents were from the following states and/or provinces:  Florida, California (5), Utah, Texas, Michigan, Ohio (3), Colorado, Minnesota, Wisconsin, Arizona, Illinois, Pennsylvania, and British Columbia.

• Unless otherwise noted, the information depicted in the charts below is provided on a per-franchisee basis, not a per-location basis.

• Please note that the gross sales figures below are solely derived from Respondents’ performance of Retail Services and, in some cases, Route Services. Specifically, 13 of the 19 Respondents perform Route Services including 9 Royalty Franchisees and 4 Fixed Fee Franchisees.

• No Respondents were authorized to perform Locker Services or On-Demand Services during the period in which the data below was calculated.

• For purposes of the survey, “Plant Stores” were defined as locations where clothing is cleaned and where customers can drop off and pick up clothing.

• “Drop Stores” were defined as stores where clothing can be dropped off and picked up but where no clothing is cleaned.

• “Gross Sales” was defined as gross sales excluding taxes and fees.

• “Net Profit” was defined as net the profit on Franchisees’ Profit and Loss Statement.

Part 1 – Plant Stores, Drop Stores, Gross Sales, Annual Labor Cost, and Annual Rent Cost

• All 19 Respondents supplied information regarding number of Plant Stores, Drop Stores, Gross Sales, Annual Labor Cost, and Annual Rent Cost as set forth below.

Number of Plant Stores