FDD Talk 2020: Ace Handyman Services 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 Ace Handyman Services franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an Ace Handyman Services franchise, based on Item 7 of the company’s 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Ace Handyman Services franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned Ace Handyman Services outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Ace Handyman Services’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 combined actual gross revenue, cost of goods sold, gross profit, and net profit for the 7 affiliate-owned Ace Handyman Services businesses in operation as of December 31, 2019

• 2019 average gross revenue, cost of goods sold, and gross profit, by quartile, for the 40 Ace Handyman Services franchise operators who operated the entire 2019 calendar year and filed reliable financial reports with the franchisor

• 2019 average gross revenue, cost of goods sold, and gross profit for the 40 Ace Handyman Services franchise operators who operated the entire 2019 calendar year and filed reliable financial reports with the franchisor

• 2019 average, median, high, and low number of customers serviced per Ace Handyman Services franchise operator and percentage of repeat business per Ace Handyman Services franchise operator

• 2019 average, median, high, and low average gross revenue generated per craftsman per Ace Handyman Services franchise operator and average rate billed per job per Ace Handyman Services franchise operator

Section I – Background Information

15 Things You Need to Know About the Ace Handyman Services Franchise

Acquired by Ace Hardware Corporation

1.  In early September 2019, Ace Hardware Corporation announced that it had completed the acquisition of Handyman Matters. Handyman Matters became Ace Handyman Services and operates as a new stand-alone subsidiary of Ace Hardware Corporation.

2.  The formerly named Handyman Matters is a franchise organization comprised of locally owned and operated and company-owned locations that offer professional and multi-skilled craftsmen and women trained to handle a homeowner’s to-do list in addition to larger projects. On-site services to consumers and small businesses include carpentry, plumbing, electrical, drywall, painting, flooring, and much more.

3.  John Venhuizen, president and CEO of Ace Hardware Corporation, said, “The introduction of Ace Handyman Services provides a platform from which Ace can further deliver on our helpful promise to consumers while expanding our presence in the growing do-it-for-me segment. This acquisition combines a proven home repair and maintenance franchise system with Ace’s trusted brand and renowned helpful service. Providing increased support to existing franchisees while aggressively recruiting more is part of a compelling evolution in our plan for strategic growth and our retailers’ continued success.”

4.  Andy Bell, founder and CEO of Handyman Matters, will continue to lead the day-to-day business operations for Ace Handyman Services from its headquarters in Denver. Integration and re-branding initiatives are currently underway with a target completion in the first quarter of 2020.

5.  Bell said, “We are thrilled to be a part of the Ace family. In addition to supporting locally owned and operated businesses, Ace and Handyman Matters also share a commitment to quality and outstanding service. As part of the new Ace Handyman Services, our franchisees have a tremendous opportunity to grow their businesses in collaboration with Ace and its trusted retailers.”

Named One of America’s Best Customer Service Companies by Newsweek for Second Consecutive Year

6.  In early November 2019, Ace Handyman Services (under the former Handyman Matters branding) was recognized as a top brand as part of Newsweek’s list of America’s Best Companies for Customer Service for 2020. Similar to 2018 (for the 2019 list), an independent study used data from a survey of more than 20,000 US customers and focused solely on customer service.

7.  Statista conducted the study for Newsweek and considered a number of criteria, which included, but was not limited to, communication processes, range of services offered, technical abilities, and recommendation likelihood.

8.  Chris Bue, president of Ace Handyman Services, said, “This recognition is continued validation of our Service Path process and a true focus on the customer experience. Our owners continue to exceed the customer’s expectation and it shows with this recognition two years in a row.”

9.  Kim Hobden, general manager of the North Metro Denver location, added, “I’m so proud of our team and how hard they have worked for this accomplishment for the second year in a row. It was an honor to be recognized last year, and we’re delighted to be recognized once again as it shows the commitment we are making to our customers.”

Company History

10.  Ace Handyman Services was founded as Handyman Matters in 1998 by Andy Bell and Mark Douglass in Denver, Colorado. Bell had spent many years in the corporate world, followed by the food and beverage industry. When he wanted to start a family, he returned to his home state of Colorado and decided to start his own small business repairing swamp coolers, a skill that had been necessary to learn because the coolers atop many of the restaurants he’d managed broke down regularly.

11.  Bell’s business was a success from the start and clients asked him to take a look at the other problems they were having around their homes. This convinced Bell that there was a vastly underserved market in the home repair field, and he began researching the idea of expanding the business.

12.  Over the next few years, Bell, with help from Douglass, expanded the Handyman Matters business. Franchising started in 2001 and new locations opened around the U.S.

13.  In the Fall of 2019, Ace Hardware Corporation acquired Handyman Matters and changed the brand’s name to Ace Handyman Services. Under the acquisition, Ace Handyman Services will continue to operate as a stand-alone subsidiary of Ace Hardware Corporation and Bell continues to serve as the company’s CEO.

14.  Today, there are Ace Handyman Services locations in more than 23 states.

Entrepreneur’s Franchise 500

15.  Ace Handyman Services did not rank on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Ace Handyman Services franchise costs, based on Item 7 of the company’s 2020 FDD.

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

• Please click here for detailed information on Ace Handyman Services’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  129
• Outlets at the End of the Year:  128
• Net Change:  -1

2018

• Outlets at the Start of the Year:  128
• Outlets at the End of the Year:  115
• Net Change:  -13

2019

• Outlets at the Start of the Year:  115
• Outlets at the End of the Year:  115
• Net Change:  0

Company-Owned

2017

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

2018

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  7
• Net Change:  +3

2019

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  7
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

• As of December 31, 2019, there were 115 franchised Ace Handyman Services Businesses and seven affiliated Ace Handyman Services Businesses in operation, which are referred to as “Units” in this Item 19.

• “Gross Revenue” means all revenue derived from the affiliate’s or the Reporting Operators’ Ace Handyman Services Businesses, excluding sales tax and discounts.

• “Gross Profit” was computed using the actual “Gross Revenue” less the actual mileage expenses, costs for personnel, and material expenses (which expenses collectively represent the “Cost of Goods Sold” in these tables), in calendar year 2019. The “Gross Profit %” refers to the percentage of Gross Revenue represented by the Gross Profit number.

• “Net Profit” in Part 1 was computed using the Gross Profit less the other additional expenses identified in that table, including the Royalty Fees and National Brand Fees paid by the affiliate to the franchisor. The “Net Profit %” refers to the percentage of Gross Revenue represented by the Net Profit number.

Part 1 – Affiliated Ace Handyman Services Businesses Combined – Actual Gross Revenue, Cost of Goods Sold, Gross Profit, and Net Profit

• The seven affiliated Units are operated by the franchisor’s affiliate, AHO. These Units are all located in the Denver, Colorado market and are similar to the franchise locations offered under this Disclosure Document. No affiliated Units closed during the year 2019.

Gross Revenue