In this FDD Talk 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 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Chem-Dry franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned Chem-Dry 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 Chem-Dry’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 number of owners, number of franchises, average and median revenue per owner, average and median revenue per franchise, average and median revenue per job, percentage of owners exceeding average revenue per owner, and solutions as a percentage of revenue for the top 5%, first quartile, second quartile, third quartile, fourth quartile, bottom 5%, and all 292 Chem-Dry franchise owners who submitted complete 2019 financial information to the franchisor, have owned their businesses at least 1 year, and operated those franchises throughout 2019

• 2019 number of owners, number of franchises, average and median revenue per owner, average and median revenue per franchise, average and median revenue per job, percentage of owners exceeding average revenue per owner, and solutions as a percentage of revenue for the 292 Chem-Dry franchise owners who submitted complete 2019 financial information to the franchisor, have owned their businesses at least 1 year, and operated those franchises throughout 2019, grouped by number of franchises owned (franchise owners with 1 franchise owned, franchise owners with 2 franchises owned, and franchise owners with 3 or more franchises owned)

Section I – Background Information

15 Things You Need to Know About the Chem-Dry Franchise

Continues to Grow Amid Ongoing COVID-19 Pandemic

1.  In late October 2020, Chem-Dry announced that it had signed agreements to expand its footprint with 64 new franchises nationwide thus far this year. One of the driving factors for this growth is that Chem-Dry has continued to innovate with new products and services since the start of the pandemic, including the launch of its new MicroPro Shield Service.

2.  This new service first disinfects hard surfaces and sanitizes soft surfaces using a hospital-grade disinfectant that is approved by the EPA for use against SARS-CoV-2 (the cause of COVID-19), and then applies a protective antimicrobial coating that kills bacteria and algae on contact for up to 90 days. System-wide sales of Chem-Dry’s overall sanitizing services are up over 300% thus far this year compared to last year.

3.  These franchise agreements will expand Chem-Dry’s presence and allow it to offer its wide array of services to more consumers in the following regions:

• 30 franchises across the central region in markets including Chicago, Cincinnati, Columbus, Dallas, and Austin;
• 18 franchises across the western region in markets including Salt Lake City, Oakland, Santa Barbara, San Jose, Tucson, and Spokane;
• 16 franchises across the eastern region in markets including Atlanta, Miami, and Boston.

4.  Ed Quinlan, president of Chem-Dry, said, “New franchisee prospects are telling us they’re inspired to join our mission of creating safer, healthier homes and businesses and providing peace of mind for families, business operators and employees. Another common theme among interested Chem-Dry franchisee candidates is innovation. They feel confident and excited about being part of a worldwide network that has a history of and ongoing commitment to developing new technologies and products that protect homes and businesses from harmful germs and bacteria, such as MicroPro Shield.”

Launches MicroPro Shield Service

5.  In early August 2020, Chem-Dry launched its new MicroPro Shield service for homes and businesses. Available in participating markets, this innovative service first disinfects hard surfaces and sanitizes soft surfaces using a hospital-grade disinfectant approved by the EPA for use against SARS-CoV-2 (the cause of COVID-19), and then applies a protective antimicrobial coating that kills microbes on contact for up to 90 days.

6.  Once the service is completed, home or business owners will receive a certificate to signify that they have been serviced following proper protocols to ensure a safer environment and provide peace-of-mind for families, employees, and customers.

7.  The two-stage service works as follows:

Step 1: Disinfect and Sanitize

• A hospital-grade disinfectant that kills bacteria and viruses and is approved by the EPA for use against SARS-CoV-2, the cause of COVID-19, is used on surfaces such as carpets, upholstery, rugs, tile and wood floors, and granite countertops;
• Kills 99.9% of bacteria from both hard and soft surfaces;
• Low toxicity, hypo-allergenic, non-corrosive, and contains no harsh chemicals;
• Fast-acting to minimize disruption at home or work;
• EPA and FDA approved for use on most surfaces, including food-contact surfaces.

Step 2: Antimicrobial Protection for Up to 90 Days

• Applied with an electrostatic sprayer, the patented antimicrobial coating acts as a protective armor to kill microbes including bacteria and algae on contact for up to 90 days, inhibiting the ability for superbugs to grow;
• Creates a layer of spikes that mechanically kill microbes by piercing the cell and rupturing their cell membrane, causing the microorganisms to die;
• Regular cleaning of treated surfaces will not impact extended protection effectiveness;
• Non-toxic and environmentally-friendly solution that can be applied to most surfaces;
• EPA and FDA approved for use on food contact surfaces.

8.  According to Ed Quinlan, president of Chem-Dry, “As the COVID-19 pandemic continues, homeowners and business owners now understand that cleanliness and sanitization are no longer a short-term solution, but rather an ongoing, preventative necessity to keep families, employees and customers safe. The significant added benefit of extended antimicrobial protection that comes with our new MicroPro Shield service gives families, business owners and workers the confidence and security of having safer homes and workspaces – just when they need it most. We feel this new service will allow our franchise owners all across the country to make an even bigger impact in the communities they serve by helping make homes and businesses healthier and safer for longer.”

9.  Based on independent lab testing, the disinfectant used by Chem-Dry eliminates 99.9% of bacteria from soft surfaces like carpets and upholstery and hard, non-porous surfaces including tile, stone, wood, laminates, and vinyl. When cleaning homes and businesses, Chem-Dry technicians are trained to follow strict safety guidelines recommended by the CDC, including:

• Wearing medical gloves, shoe covers, and facial coverings (when appropriate);
• Cleaning and applying hospital-grade sanitizer to equipment between jobs;
• Observing safe physical distancing;
• Implementing contactless transactions whenever possible.

10.  Chem-Dry creates cleaner, healthier indoor environments with its proprietary equipment and solutions for carpet, upholstery, granite countertops, and hard floor surfaces, such as wood, tile, and laminates. In further testing of its processes, a study by a leading independent laboratory concluded that the Chem-Dry Hot Carbonating Extraction cleaning method removes an average of 98% of common household allergens from carpets and upholstery and 89% of airborne bacteria when combined with a sanitizer, helping to improve indoor air quality.

11.  Chem-Dry has a national partnership with the Indoor Air Quality Association (IAQA), working to raise awareness and provide education on the importance of indoor air quality in maintaining the health and safety of homes and businesses.

Company History

12.  Chem-Dry was founded in 1977 by Robert Harris in California. Before starting Chem-Dry, Harris had worked for other carpet cleaning companies and was deeply unsatisfied with the performance of the cleaning products then available. Harris began to look for better solutions and spent years researching and studying the chemical properties of cleaning formulas. After conducting countless experiments, Harris developed a revolutionary carbonated solution that not only cleaned beautifully, but was also safe and non-toxic.

13.  Harris’s cleaning solution was such a success that demand for his services grew quickly. Just a year later, in 1978, Harris began franchising Chem-Dry. Over the next few decades, Chem-Dry continued to grow around the United States as well as internationally. In 2011, Chem-Dry was sold to Baird Capital Partners which is located in Chicago.

14.  More recently, in 2019, Chem-Dry became part of the BELFOR Franchise Group. Today, there are Chem-Dry franchises across the United States, Canada, Japan, Australia, New Zealand, Denmark, Ireland, The Netherlands, Serbia, Slovenia, Portugal, Thailand, Malaysia, Kuwait, India, Kazakhstan, Cambodia, and the United Kingdom.

Entrepreneur’s Franchise 500

15.  Chem-Dry ranked No. 74 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Chem-Dry 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 Chem-Dry’s 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:  2,103
• Outlets at the End of the Year:  2,050
• Net Change:  -53

2018

• Outlets at the Start of the Year:  2,050
• Outlets at the End of the Year:  2,080
• Net Change:  +30

2019

• Outlets at the Start of the Year:  2,081
• Outlets at the End of the Year:  2,000
• Net Change:  -81

Company-Owned

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

2019

• 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, 2020 FDD) and Analysis

• The franchisor does not currently require all Chem-Dry business franchise owners to provide periodic revenue and other financial reports concerning their franchises.

• In January 2020, the franchisor conducted a system-wide survey requesting that all franchise owners provide certain financial and other information relating to the operation of their Chem-Dry business franchises during 2019.

• The franchisor received 2019 financial information from 292 franchise owners (the “Responding Franchise Owners”), who collectively own 876 Chem-Dry business franchises (the “Responding Franchises”), who have owned their businesses at least 2 years, and operated those franchises throughout all of 2019.

• Chem-Dry believes that the Responding Franchise Owners offer the same products and services that it authorizes new Chem-Dry business franchises to sell. Responding Franchisees have been in business for an average of 17 years in their markets.

• The Responding Franchises operate in a mix of urban, suburban, and rural areas, and they are disbursed geographically throughout the U.S.

• Listed below are the Number of Owners, Number of Franchises, Average Revenue per Owner, Median Revenue per Owner, Average Revenue per Franchise, Median Revenue per Franchise, Average Revenue per Job, Median Revenue per Job, Owners Exceeding Average Revenue per Owner, and the Cost of Cleaning Solution as a percent of Revenue per Franchise as those terms are defined in the notes below, for the Responding Franchise Owners and Responding Franchises during the period from January 1, 2019 until December 31, 2019.

A. 2019 Franchise Data, Groups Ranked by Average Revenue

Top 5%