FDD Talk: Molly Maid Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

• Section I – Background information on the Molly Maid franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Molly Maid 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 Molly Maid franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Molly Maid 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 Molly Maid’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average gross sales, labor costs, insurance, auto expenses, advertising, royalties, cleaning expenses, all other expenses, total expenses, and available to owner, by quartile, for the 109 Molly Maid Operators who submitted their year-end profit and loss statement by February 15, 2019

• 2018 average gross sales, by quartile, for the 87 Molly Maid Operators in business for at least two full calendar years as of December 31, 2018, and who operated a single franchise

• 2018 average gross sales, by quartile, for the 119 Molly Maid Operators in business for at least two full calendar years as of December 31, 2018, and who operated more than one franchise

• 2014, 2015, 2016, 2017, and 2018 average weekly gross sales, by quartile, for all established Molly Maid Operators (i.e. those that started operation on or before December 31, 2016)

• 2014, 2015, 2016, 2017, and 2018 average price per clean, by quartile, for all Molly Maid Operators open during each year
  

• percentage of cleans performed in 2018 that were performed for recurring customers versus the percentage of cleans performed for occasional customers

Section I – Background Information

15 Things You Need to Know About the Molly Maid Franchise

Refreshes Brand Image for First Time in 34 Years

1.  In mid-September 2018, Molly Maid revealed that it had dusted off its original old English bonnet logo to reveal a fresh, clean lotus. The new logo is the first of many pending brand updates for the established residential cleaning company.

2.  Synonymous with trusted service, cleaning quality, digital presence, and well-marked vehicles, Molly Maid is streamlining its look and overall market presence to meet the changing customer landscape and equal desire for quality and convenience. Molly Maid’s new, cleaner look will modernize the brand to define its future as the preferred company for maid service and quality home care that meets the lifestyle of today’s consumer.

3.  Jennifer Gregory, brand director of Molly Maid, said, “The bonnet is not representative of today’s modern age. We refreshed our original bonnet logo from 1979 to a lotus. We want the lotus to evoke the feeling one gets when they walk into a clean home – the scent of soft, natural fragrances, the attention to detail and tranquility of a tidy space.”

Offers Chance to Win Free Home Cleanings for Holiday Season

4.  At the end of November 2019, Molly Maid offered a chance to win a $500 gift certificate towards a home cleaning. Molly Maid hoped to ease the stress of the holidays by giving the gift of time through its annual “Holiday Clean Home Giveaway.”

5.  To enter the contest, participants needed to “Like” the Molly Maid Facebook page and complete the form for a chance to win. Entries for the “Holiday Clean Home Giveaway” were accepted from Monday, Nov. 25 through Sunday, Dec. 15. Molly Maid awarded a total of five lucky winners with a $500 Molly Maid gift card to celebrate the season.

6.  Mary Kay Liston, president of Molly Maid, said, “Molly Maid understands that the holidays can be stressful and we’re proud to help alleviate some of the workload by knocking cleaning the house off the to-do list. We want everyone to have a joyous holiday filled with happiness and time to enjoy all the things that matter most.”

Parent Company Appoints New Chief Development Officer

7.  In early October 2019, Neighborly, the parent company of Molly Maid and several other home and commercial maintenance brands, announced the appointment of Brad Stevenson as the company’s new chief development officer, effective immediately.

8.  In his new role, Stevenson will be responsible for developing and implementing the strategic direction of North American franchise development for 13 Neighborly franchise brands. These duties were previously overseen by Robert Tunmire, Neighborly’s executive vice president, who retired in October 2019 following 44 years of contributions to the company’s franchise growth and development.

9.  Mike Bidwell, president and CEO of Neighborly, said, “Finding the right leader to fill this role, renamed from Executive Vice President to Chief Development Officer, was critical as we continue to expand Neighborly brands worldwide. Armed with 23 years of experience as an accomplished executive, we are confident that Brad Stevenson is the perfect candidate to take the lead on development and communication of Neighborly’s franchise development vision to the organization. We look forward to watching him inspire the development team to reach new heights in the years to come.”

10.  Prior to joining the Neighborly team, Stevenson spent his entire professional career with MillerCoors and Miller Brewing Company after first joining the organization in 1996 as an on-premise Miller marketing representative for United Beverage in Houston, Texas. Throughout his career with the adult beverage industry leader, Stevenson held numerous sales and marketing positions with the company including vice president of grocery, director of business development and strategy, and regional chain director.

11.  According to Stevenson, “Neighborly is widely respected as an ideal example of franchising excellence, as the organization continues to grow while still maintaining high service standards across its many brands. Nonetheless, even with the title of world’s largest franchisor of home service brands under its belt, Neighborly has aggressive goals set for continued growth, and I’m excited to work with this organization’s skilled development team to achieve those goals through franchise development.”

Company History

12.  Molly Maid was founded in 1979 by Adrienne and Chris Stringer in Mississauga, Ontario, Canada. The Stringers wanted to offer a reliable cleaning service to busy families in the area. Drawing inspiration from the 1964 film, The Unsinkable Molly Brown, the Stringers named their new business after the titular character Molly Brown.

13.  Over the next few decades, Molly Maid continued to grow around Canada and in 1984, entrepreneur David McKinnon brought Molly Maid from Canada to Ann Arbor, Michigan. Since then, Molly Maid has not only grown around North America, it has also expanded to the United Kingdom, Japan, and Portugal.

14.  In 2015, Molly Maid was acquired by the Dwyer Group (now Neighborly), joining several other home maintenance brands including Mr. Rooter Plumbing, Mr. Electric, Mr. Appliance, Glass Doctor, Window Genie, and Five Star Painting.

Entrepreneur’s Franchise 500

15.  Molly Maid ranked No. 65 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Molly Maid 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 Molly Maid’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

Franchised

2016

• Outlets at the Start of the Year:  474
• Outlets at the End of the Year:  475
• Net Change:  +1

2017

• Outlets at the Start of the Year:  475
• Outlets at the End of the Year:  475
• Net Change:  0

2018

• Outlets at the Start of the Year:  475
• Outlets at the End of the Year:  485
• Net Change:  +10

Company-Owned

2016

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• As of December 31, 2018, there were 485 Molly Maid franchises in the United States. These franchises were owned and operated by 245 franchise owners (collectively, “Operators”) who consolidated their sales for the purpose of reporting.

• Of these 245 Operators, 67 Operators operated 2 units, 42 Operators operated 3 units, 16 Operators operated 4 units, 5 Operators operated 5 units, 4 Operators operated 6 units, and 1 Operator operated 7 units.

• Neither Molly Maid nor its independent certified public accountants have audited or verified any of the sales figures reported to it. Operators are not required to use generally accepted accounting principles when reporting these figures.

• Unless otherwise noted, all charts exclude Operators that ceased operation on or before December 31, 2018.

• Two of the excluded franchised businesses closed during the 2018 fiscal year. Of the 2 businesses that closed during the fiscal year 2018, 0 businesses closed after being open for less than 12 months.

• The representations below consist of both single and multiple unit Operators. The representations below also consist of Operators who have operated for several years. The number of units and the length of time in business may materially differ from a new franchise operation.

Part 1 – Profit and Loss Statement for Operators 2018

• The following four charts show the average profit and loss achieved by Operators in 2018 for those who submitted their year-end profit and loss statement by February 15, 2019; 109 Molly Maid Operators are represented and divided into quartiles based on Gross Sales.

• All charts are shown in U.S. dollars.

• Quartile 1 represents 28 Operators, 14 of which operated multiple units. Quartile 2 represents 27 Operators, 20 of which operated multiple units. Quartile 3 represents 27 Operators, 24 of which operated multiple units. Quartile 4 contains 27 Operators, 27 of which operated multiple units.

Quartile 1