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 2020 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 2020 FDD
- Section IV – Number of franchised and company-owned PuroClean 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 PuroClean’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average, median, highest, and lowest gross sales for the 205 PuroClean franchisees in operation for the full 2019 Measurement Period (January 1, 2019 to December 31, 2019) that had been opened for one or more full years and reported their sales data for every month of the 2019 Measurement Period, grouped by years in operation (less than 2, 3 to 6, 7 and greater, and all reporting franchisees)
- 2019 average, median, highest, and lowest gross sales for the bottom third, middle third, and top third of the 205 PuroClean franchisees in operation for the full 2019 Measurement Period that had been opened for one or more full years and reported their sales data for every month of the 2019 Measurement Period
Section I – Background Information
24 Things You Need to Know About the PuroClean Franchise
Majority Owners Announce Acquisition of the Entire Business
1. In early October 2019, PuroClean announced that CEO and Chairman Mark W. Davis and Vice Chairman Frank Torre – who have served as majority owners for the past four years – are now 100% owners of the PuroClean franchise system, finalizing their acquisition of the business. The announcement came as the duo celebrated a successful four-year transformation, revitalizing what is now the nation’s top-performing, fastest-growing restoration and remediation franchise.
2. Davis said, “When Frank and I joined the PuroClean family, we saw the potential for incredible growth – growth we are experiencing firsthand today. We knew that the synergies between our sister company, Signal Restoration Services, and the PuroClean franchise model would create a powerful, impactful partnership. We remain tirelessly devoted to maintaining the servant leadership culture we have demonstrated over the last four years and further developing PuroClean into a World Class brand.”
3. In September 2015, Davis and Torre acquired PuroClean, launching an aggressive brand overhaul, with the goal to improve company culture, create new programs, and expand the franchise’s footprint. Under their leadership, PuroClean has experienced tremendous growth, including doubling system-wide sales and signing 100+ new franchise agreements, expanding their presence into new communities throughout the US and Canada. Davis and Torre acquired the remaining 20% of the brand from the company’s prior owners, making them sole owners of the franchise system.
4. Steve White, president and COO of PuroClean, added, “As I look back on what we’ve accomplished under Mark and Frank’s ownership, one thing that is crystal clear to me is that, with the vision, leadership, and resources they provided, PuroClean has reemerged as a well-respected franchise brand and earned unparalleled satisfaction and loyalty from our franchise owners and our clients. Together as ONE TEAM, I know that we can achieve great things, and that we are well on our way to reaching 500 locations in the United States and Canada.”
Achieves Record Growth Amid Pandemic
5. In mid-September 2020, PuroClean announced record growth in 2020 amid the ongoing COVID-19 pandemic. Due to increased demand for service among residential and business property owners, the company has signed 31 new franchise agreements since May 1. Furthermore, PuroClean has opened 21 new franchise locations across the country since January.
6. Mark W. Davis, chairman and CEO of PuroClean, said, “During these unprecedented times, we are overwhelmed to receive this success and stand strongly behind our franchise owners and their families as they embark on new entrepreneurial journeys entering into our franchise system to help build their futures. We are fortunate now more than ever that our industry is able to offer essential business services to aid millions of property owners across the country and support their communities to ensure their safety.”
7. Many of PuroClean’s accomplishments last year were due to the brand’s servant leadership culture and world-class support provided by hundreds of franchise owners across the network, assisting businesses as they re-opened. In order to continue this success, PuroClean provided its franchise network with ongoing elevated support, including franchise network calls, marketing materials, and enhanced cleaning guidelines for COVID-19 biohazard cleanup procedures. The brand also updated its training program to comply with social distancing guidelines, introduced new online academy courses to educate franchise owners, and offered virtual in-field training to launch new offices.
8. Steve White, president and COO of PuroClean, added, “At PuroClean, we have never been prouder to stand together as ONE TEAM than we are today knowing the major impact we are having on people as we serve their communities. Our team continues to innovate and introduce new ways to educate our franchise owners and their teams so that they can provide relentless customer support to those who need it most.”
9. In order to reach affected communities, PuroClean’s corporate headquarters strengthened its reigns to launch new ways to introduce, train, educate, and grow the franchise system. To drive vast franchise growth, PuroClean quickly reimagined its connection with potential franchise candidates into a virtual platform setting, allowing them to experience an in-depth view of the franchise opportunity.
10. Through the virtual platform, potential owners were treated to a first-look into the corporate headquarters and received one-on-one sessions with the brand’s executive leadership team. Since shifting into a digital experience, more than 60 franchise candidates from coast to coast have entered the meetings eager to make a difference in people’s lives.
11. According to Tim Courtney, CFE, vice president of franchise development for PuroClean, “As the pandemic hit, we knew we needed to discover new ways to connect with potential candidates who had been recently furloughed, and we quickly sought out ways through virtual meetings, advertising, social media, and public relations to connect with entrepreneurs. These impactful changes have led to a record number of candidates in our pipeline which ultimately led the greatest franchise growth to date.”
Drives Growth as Emergency Services Leader
12. In mid-May 2020, PuroClean issued a press release discussing how the brand was built for these uncertain times as the COVID-19 pandemic continues. A leader in emergency restoration and remediation services, PuroClean continues to make its mark as a top franchise that delivers peace of mind. Franchise owners are empowered with the tools to help their local communities overcome everyday setbacks – a dishwasher overflows or a pipe bursts, the more severe devastation of fire, or storm-related property damage – and most recently, the large-scale need for COVID-19 cleanup services.
13. At the brand’s core is a servant leadership approach that resonates throughout its franchise system of over 300 locations in the U.S. and Canada. “It’s really meaningful to help people during their time of need that did not anticipate the loss they have experienced,” said Rick Gutridge, franchise owner of the Columbus, Ohio location and a PuroClean owner since 2007.
14. As the COVID-19 pandemic spreads across the world, PuroClean’s franchise owners across North America have jumped in as an essential business, providing an array of clean-up services and helping limit the survival of the virus, as well as its future spread. Complementing each franchisee’s regular business offerings, many PuroClean franchise owners have stepped up to extend a helping hand, exemplifying PuroClean’s servant heart mentality and brand culture, as well as the company’s dedication to relentless customer service.
15. Alex Ho, who opened his Keego Harbor, Michigan location in November 2019, said, “PuroClean is in a recession-proof, timeless industry. The brand is always going to be relevant and necessary, and the margins and ROI make a lot of sense. It’s also a skilled labor trade, which creates barriers to entry from a competitive standpoint.”
16. Franchise owners can rely on comprehensive support from the PuroClean corporate office when they hit the ground running, including training and resources for continued education as they grow and scale the business. World-class, state-of-the-art training covers every facet of home and business restoration related to water, fire, smoke damage, mold removal, reconstruction, and biohazard cleanup.
17. Gutridge added, “Everything a franchise owner learns, including training on marketing and how to run a business, sets them up for success. Once an owner is up and running, regional directors make sure that the right processes are in place and provide ongoing marketing support.”
18. Gutridge, who previously managed software development at AOL, knows how to spot an opportunity. The veteran entrepreneur and Franchise of the Year recipient says PuroClean is laser-focused on innovation, constantly working to expand services and introduce new career programs. Franchise owners are encouraged to share information and provide support and guidance to each other on everything from job tips to financials, he says.
19. The franchise world has taken note of PuroClean’s path to excellence. The brand consistently earns accolades for ongoing growth and franchise owner satisfaction. Most recently, PuroClean was named a Top Franchise in 2020 by Franchise Business Review (FBR) and ranked among Entrepreneur Magazine’s 2020 Franchise 500.
20. Steve White, president and COO of PuroClean, said, “Our Franchise 500 ranking this year is the result of true collaboration, with our franchise owners and our corporate office working together as one team to provide relentless customer service. I’m proud to support our franchise owners as they serve their communities and make the most of the endless opportunities here at PuroClean.”
21. For franchisees like Ho, PuroClean’s strong leadership, multiple revenue streams, and vibrant franchise systems provide an unmatched way to diversify a portfolio. “If a prospect wants to execute their business by a playbook, PuroClean is an absolute home run,” adds Ho, a multi-brand operator. “If they want an established brand that people know – this is the brand.”
22. PuroClean was founded in 1990 by Dick Spohn and Rory O’Dwyer to offer water, fire, smoke damage remediation, mold removal, biohazard cleanup, and reconstruction services. Over the next decade, PuroClean grew slowly and in 2001, PuroSystems, LLC was established to franchise the PuroClean concept. PuroClean grew quickly over the next few years and reached 100 locations by 2006.
23. In 2007, PuroClean co-founder Dick Spohn stepped down from active company duty and sold his interest in PuroClean to a partner group headed up by well known entrepreneur and franchisor David McKinnon. In 2015, PuroClean was acquired by Mark Davis and his business partner, Frank Torre. That same year, the Canadian branch of PuroClean was sold to Gordon Gamble, who had served as the director of franchise development in Canada. Today, there are PuroClean locations across the United States and Canada.
Entrepreneur’s Franchise 500
24. PuroClean ranked No. 121 on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of PuroClean 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 PuroClean’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
- Outlets at the Start of the Year: 188
- Outlets at the End of the Year: 208
- Net Change: +20
- Outlets at the Start of the Year: 208
- Outlets at the End of the Year: 228
- Net Change: +20
- Outlets at the Start of the Year: 228
- Outlets at the End of the Year: 251
- Net Change: +23
- 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
- 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
- This Item 19 contains certain historical data submitted to PuroClean by its franchisees for the period January 1, 2019 to December 31, 2019 (the “2019 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 212 PuroClean Franchisees in operation for the full 2019 Measurement Period that had been opened for one or more full years.
- Of the 212 Franchisees, 205 Franchisees reported their sales data for every month of the 2019 Measurement Period and are included as part of a sub-set in this Item 19 (the “Reporting Franchisees”).
- Included in this Item 19 is information regarding the Average and Median Annual Gross Sales for the Reporting Franchisees, based on (1) the number of years of operation and (2) the top, middle, and bottom third gross sales for the 2019 Measurement Period.
- The 7 Franchisees not included in this Item 19 did not report their sales data for every month of the 2019 Measurement Period (none of those 7 opened and closed within a 12-month period).
- The following tables present the Average and Median Annual Gross Sales for the Reporting Franchisees, broken down by (1) the number of years of operation, and (2) the top, middle, and bottom third gross sales.
A. By Years in Operation
Years in Operation: Less Than 2