In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the PuroClean franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a PuroClean franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a PuroClean franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned PuroClean outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of PuroClean’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average, median, highest, and lowest gross sales for the 176 PuroClean franchisees in operation for the full 2018 Measurement Period (January 1, 2018 to December 31, 2018) that had been opened for one or more full years and reported their sales data for every month of the 2018 Measurement Period, grouped by years in operation (1 to 4, 5 to 8, 9 and greater, and all reporting franchisees)
- 2018 average, median, highest, and lowest gross sales for the bottom third, top third, bottom 10%, and top 10% of the 176 PuroClean franchisees in operation for the full 2018 Measurement Period that had been opened for one or more full years and reported their sales data for every month of the 2018 Measurement Period
- 2017 average, median, highest, and lowest gross profit margin, net profit margin, and owner’s discretionary profit margin for the 100 franchisees (the “Benchmark Reporting Franchisees”) that provided profit and loss information and balance sheet ratios for the period January 1, 2017 through December 31, 2017 (the “Benchmark Reporting Period”)
Section I – Background Information
24 Things You Need to Know About the PuroClean Franchise
Makes Key New Hires to Further Enhance Franchise Owner Training and Support Team
1. At the beginning of April 2019, PuroClean appointed Darren Hudema as its new director of training and technical services. The move will bolster the company’s already robust training efforts and expand its ongoing growth, affording new franchise owners access to the very best training programs. Hudema will lead the PuroClean Academy, training and mentoring franchise owners, technicians, support staff, and industry professionals in best industry practices.
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2. Steve White, president and chief operating officer of PuroClean, said, “We are dedicated to offering PuroClean franchise owners world-class support from the very beginning of their journey, starting with our state-of-the-art training facility and expert training team. As our new director of training and technical services, Darren will play a crucial role in establishing a structural foundation for new franchise owners and their team members that sets them up for success in every way imaginable. Darren brings a wealth of expertise and knowledge of the restoration industry to our team and we are proud to have him as part of the PuroClean family.”
3. Hudema has been involved in the restoration and cleaning industry for more than 40 years, handling residential, commercial, trauma, and large loss events. He holds a Water Loss Specialist certification from Restoration Industry Association, and is a Certified IICRC Master Textile Cleaner, Master Fire and Smoke Restorer, Master Water Restorer, and an approved IICRC instructor. He has published numerous articles in trade journals and has trained more than 4,500 water damage restoration professionals.
4. In his new role, he will further develop PuroClean’s training efforts, providing franchise owners, their team members, and industry professionals with real-life instruction in property damage restoration to achieve certification by the Institute of Inspection, Cleaning and Restoration Certification (IICRC). This includes education programs at the company’s premier Applied Structural Drying (ASD) facility, familiarly known as the “flood house,” which forms the foundation for franchise owners and technicians to perform high-quality property damage restoration services for their customers.
5. Joining Hudema at PuroClean are Joshua Flores and Gabriel Lugo, who have been hired as regional directors. As part of their new role, Flores and Lugo will help onboard new franchise owners and advise them on their business, as well as provide ongoing support in the field to ensure individual success for new and existing franchise owners in their assigned territories.
6. Based in Saint Petersburg, Florida, Flores has more than nine years of experience in the restoration and remediation industry, ranging from educating customers on emergency preparedness, to specializing in fire, water, mold, and biohazard mitigation and restoration projects throughout Florida. Most recently, he served as contents division manager at WrightWay Emergency Services, overseeing and managing the company’s day-to-day operations of the contents, fire, and biohazard mitigation division.
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7. With in-depth knowledge of business practices and a deep understanding of restoration franchises, Lugo joins PuroClean with extensive industry experience and expertise, most recently managing a territory of 90 franchisees and recruiting, selling, and training new franchise owners for Coverall, Inc. Lugo is based in Saugus, California.
8. According to White, “Our regional directors are a direct line of communication to PuroClean franchise owners for support and guidance along the way. They are an integral part of the PuroClean culture, and help ensure our franchise owners are set up to service their local communities with superior property restoration services. Both possessing valuable leadership and training experience, we are confident that Joshua and Gabriel will be great additions to the PuroClean team.”
Celebrates Record-Setting First Quarter, Signing 16 New Franchise Agreements
9. At the end of April 2019, PuroClean announced that it was enjoying a successful start to 2019, with 16 new franchise agreements signed. The company attributes the uptick – a 300% increase in signings over Q1 2018 – to its recently upgraded state-of-the-art training center, diversified training team, enhanced support services, and strong culture.
10. Steve White, president and COO of PuroClean, said, “We are thrilled to have a running start on the new year, welcoming so many wonderful new franchise owners to PuroClean and seeing several existing franchise owners expand their business into new territories.”
11. The newly-signed franchise owners underwent practical instruction at PuroClean’s state-of-the-art training facility and were set to open the doors of their new PuroClean offices in California, Colorado, Idaho, Indiana, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, New Jersey, New York, Oregon, and Washington.
12. According to Mark Davis, PuroClean’s chairman and CEO, “PuroClean continues to achieve tremendous growth and we attribute that to our servant leadership approach and focus on relentless customer service. We look forward to building the momentum and maintaining our upward trajectory into the next quarter.”
13. The announcement follows several momentous achievements for PuroClean, including the 100th flooding of its Applied Structural Drying facility (more commonly known as the “flood house”) and key new hires, including new director of training and technical services, Darren Hudema, WLS, and regional directors, Joshua Flores and Gabriel Lugo.
14. PuroClean also received several industry accolades this year, including:
- Franchise Business Review (FBR) ranking PuroClean at number 22 in the Top 50: Large category for companies with 130-300 units in the annual Franchisee Satisfaction Awards;
- FBR naming PuroClean one of only 97 companies on its list of Top Low-Cost Franchises;
- Entrepreneur magazine ranking PuroClean at number 35 on its list of Top Low-Cost Franchises;
- Franchise Times naming PuroClean a best buy in their third annual consumer-focused Zor Awards program; and
- Franchise Direct ranking PuroClean number 62 in its annual Top 100 Global Franchises.
Announces Company-wide Adoption of Xactware’s Restoration Manager
15. At the beginning of July 2019, PuroClean announced its company-wide implementation of Xactware’s Restoration Manager solution. Across the United States and Canada, the PuroClean network will now have access to the Restoration Manager enhanced suite of third-party administrator (TPA) compliance and project-planning tools.
16. Restoration Manager is a job management application that helps restoration professionals coordinate tasks and streamline work. PuroClean executives are excited about the many new features in Restoration Manager. Among the most significant are Google Maps functionality and two-way integration with Xactimate.
17. Steve White, president and COO of PuroClean, said, “Our goal is to provide world-class service to our local and national accounts alike. I’m happy to say that our adoption of Restoration Manager and its transparent, company-wide project portal represents absolute progress toward that goal and assists us in further providing relentless customer service.”
18. Bud Summers, executive vice president of operations and training for PuroClean, said that Restoration Manager will vastly improve the services that PuroClean offices provide to their customers. “The implementation of the Restoration Manager software is a great step forward for us. It will increase our franchises’ efficiency in the office and in the field.”
19. PuroClean’s network spans more than 280 franchises throughout the United States and Canada. Using Restoration Manager, these franchises will now have a more efficient system for documenting, tracking, managing, and improving both TPA and non-TPA jobs.
20. According to Mike Fulton, president of Xactware, “We’re excited for the opportunity to support PuroClean. It’s a company dedicated to providing a high level of customer service, and we hope to continue to be a part of PuroClean’s success for many years to come.”
21. PuroClean was founded in 1990 by Dick Spohn and Rory O’Dwyer to offer water, fire, and smoke damage remediation, mold removal, biohazard cleanup, and reconstruction services. Initially, PuroClean’s growth was fairly slow. In 2001, the company established PuroSystems, LLC to aid PuroClean’s expansion in the United States and Canada. Within five years, PuroClean grew to 100 franchised locations.
22. The following year, in 2007, Spohn stepped down from active company duty and sold his interest in PuroClean to a partner group headed up by well-known and respected entrepreneur and franchisor David McKinnon.
23. Over the next few years, PuroClean continued to grow in North America and in 2015, the company was acquired by Mark Davis and his business partner, Frank Torre. Today, Davis serves as PuroClean’s chairman and CEO, while Torre is the company’s vice chairman.
Entrepreneur’s Franchise 500
24. PuroClean ranked No. 179 on Entrepreneur’s 2019 Franchise 500 list. It also ranked No. 35 on Entrepreneur’s list of Top Low-Cost Franchises of 2019.
Section II – Estimated Costs
- Please click here for detailed estimates of PuroClean franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on PuroClean’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 190
- Outlets at the End of the Year: 188
- Net Change: -2
- Outlets at the Start of the Year: 188
- Outlets at the End of the Year: 207
- Net Change: +19
- Outlets at the Start of the Year: 207
- Outlets at the End of the Year: 227
- Net Change: +20
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 2
- Net Change: +2
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 2
- Net Change: 0
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 0
- Net Change: -2
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- This Item 19 contains certain historical data submitted to PuroClean by its franchisees for the period January 1, 2018 to December 31, 2018 (the “2018 Measurement Period”).
- The information contained in this Item 19 includes data that was submitted to PuroClean by its franchisees through the royalty reporting tool PuroFAB Financial Analysis & Benchmarking. PuroClean has not audited this information, nor independently verified this information.
- The franchisees included in this Item 19 operate businesses substantially similar to the business being offered in the Disclosure Document.
Part 1 – Average and Median Annual Gross Sales
- There were 189 PuroClean franchisees in operation for the full 2018 Measurement Period that had been opened for one or more full years.
- Of the 189 Franchisees, 176 Franchisees reported their sales data for every month of the 2018 Measurement Period and are included as part of Part 1 of this Item 19 (the “Reporting Franchisees”). The 13 Franchisees not included in Part 1 of Item 19 did not report their sales data for every month of the 2018 Measurement Period. None of the franchisees that are not included in this Item 19 opened and closed during 2018.
- The following tables present the Average and Median Annual Gross Sales for the Reporting Franchisees, together with the highest and lowest performing franchisee and how many franchisees exceeded the average, broken down by (1) the number of years of operation, (2) the top and bottom third gross sales regardless of years in operation, and (3) the top and bottom 10% gross sales regardless of years in operation.
A. By Years in Operation
Years in Operation: 1 to 4