Servpro Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

1.  Initial Franchise Fee:  $70,000, plus $778 per 1,000 population over maximum

• The minimum initial franchise fee is $70,000.

• Servpro may agree to finance a portion of the initial franchise fee depending upon your creditworthiness, the collateral which you have available to secure the loan, and Servpro’s then-current lending policies. Other financing may be available.

• A territory will contain a population ranging from 50,000 to 80,000. A larger territory may be allowed under certain exceptional circumstances (e.g., densely-populated urban areas or a high percentage of the prospective territory is impoverished). Additional territory, if available, is priced at $778 per 1,000 population. Otherwise, if you want a larger territory, you must purchase an additional license.

2.  Vehicle:  $2,000 to $35,000

• You need at least 1 vehicle for the franchise. You may, but are not required to, purchase your vehicles from Servpro’s affiliate.

• Each vehicle must be of the type that meets Servpro’s standards, be in good condition, be painted according to Servpro’s color and design specifications, and have the Marks professionally applied before the vehicle is put into service.

• The decals for 1 vehicle are included in the Equipment and Products Package.

• An existing vehicle can be converted for use in the franchise, or you may purchase or lease a new or used vehicle, in both cases meeting Servpro’s specifications.

• The “low” estimate reflects the cost of painting and applying the Marks to an existing vehicle which otherwise meets Servpro’s standards and is estimated to be $2,000 to $3,300. The “high” estimate reflects the purchase of a new vehicle meeting Servpro’s standards plus painting and having the Marks applied.

3.  Equipment and Products Package:  $78,500

• You must purchase the Servpro Equipment and Products Package from one of Servpro’s affiliates; it includes the initial equipment, cleaning products, and some of the office supplies needed to begin operation of the franchise.

• Servpro encourages you to maintain at least 1 month’s supply of cleaning products. The products in the Equipment and Products Package will last from as little as 1 month to as long as 2 years depending upon the product and the type of work you perform.

4.  Supplies:  $3,850 to $8,500

• You must equip a small office. At a minimum, you need a desk, chairs, filing cabinets, bookshelves, telephone and telephone service, the latest available iPad with a minimum of 32GB, the latest version of iOS, and the latest version of Safari or Google Chrome, with updates as available. Wi-fi and cellular service is required.

• You also must purchase appropriate OSHA and governmental wage and hour notices, various tools and utility supplies, such as ladders, small tools, first aid kits, safety equipment, including safety supplies, and personal protection equipment.

5.  Insurance:  $4,000 to $5,750

• Servpro’s estimate is for the first 3 months of general liability insurance, pollution liability insurance, property casualty insurance, bailee insurance, data/cyber security liability insurance, and Limited Service and Repair Liability.

• Franchisees usually pay a full year premium in advance through a premium finance company and make monthly payments.

• The estimate does not include vehicle insurance coverage or workers’ compensation insurance. If you have employees, you will also incur expenses for workers’ compensation insurance. Servpro is unable to estimate amounts for vehicle coverage and workers’ compensation insurance because the requirements and rates vary widely from place to place.

6.  Advertising and Promotional:  $250 to $1,500

• You will receive a Basic Website at no additional charge along with a Franchise Locator listing from servpro.com. You may choose to upgrade to Servpro’s Professional Website or Multi-License Website Programs.

• A fee of $35 per year will apply for domain name registration and management for subscribers to Servpro’s Basic Website. If you elect to upgrade to Servpro’s Professional Website or Multi-License Website Program, one domain name is included at no additional charge. Additional domain names are available for registration.

7.  Training, Travel, Lodging, and Food:  $550 to $1,900

• These estimates are calculated after application of the Training Allowance.

• The “low” estimate includes meals and one double occupancy hotel room. The “high” estimate reflects payment of additional training expenses, which only apply if you require 2 hotel rooms or send more than 2 owners to the Mold Remediation Course and New Franchise Training Program (NFTP). The “high” estimate also includes an additional amount if the Training Allowance is not sufficient for your circumstances.

• Your actual cost may vary, depending on the distance to be traveled, your method of travel, and your personal circumstances.

8.  Deposits, Permits, and Licenses:  $700 to $2,550

• Servpro does not require any prepaid deposits, permits, or licenses before you begin operation of your franchise, but your particular state or locality may have licensing requirements. You must obtain any permits or licenses required in your state and/or locality for performing the services of the franchise, which may include mold remediator licenses and/or contractors licenses.

• The Environmental Protection Agency (“EPA”) has issued a rule concerning lead paint that applies to work performed on pre-1978 homes where lead paint can be disturbed by restoration and other businesses, known as the Renovation, Repair and Painting (“RRP”) program, with mandatory training requirements for certification and work practices. You must attend this training and obtain certification. This training is not provided by Servpro. Servpro believes the cost of the one-day training course is approximately $250, while certification is approximately $300.

• You should consult your attorney or local city, county, and state authorities about the specific legal requirements for payment of sales and use tax and business licenses and related types of expenses in your area.

9.  Legal and Professional Fees, Accounting Services, On-Line Tax Table Service, and QuickBooks Online Training:  $975

• You must hire an accountant to set up your initial financial statements in QuickBooks Online, and subscribe to Intuit’s On-Line Tax Tables, prior to attending NFTP. You must also complete a QuickBooks Online seminar during your New Franchise Business Consultation Meetings.

10.  Xactimate and/or Other Third-Party Estimating and Pricing Software and Training:  $1,000 to $2,500

11.  Additional Funds – 3 Months:  $30,000 to $35,000

• Servpro recommends that you have additional funds available during the start-up phase of your franchise. These amounts are Servpro’s estimates of the amount needed to cover your expenses for a 3-month period from the date you open for business based on an owner-operated business.

• The estimate does not include any wages or salaries or benefits for employees or any allowance for an owner’s draw. These figures are only estimates. Servpro cannot assure you that you will not have additional expenses starting your franchise.

• The estimated initial investment and other estimates in the disclosure document do not take into account your personal living expenses, any personal debt service, ongoing working capital requirements, accounts receivable financing, or other costs.

• Servpro estimates that you can expect to put additional cash into the business during the first 3 to 7 months, and sometimes longer, but it cannot estimate or promise when, or whether, you will achieve positive cash flow or profits.

12.  Real Estate:  $0 to $3,000

• The purchase of real property is not necessary. When you rent a place of business, you may expect additional investment requirements. Operators entering into leases or purchasing business locations must have that business location within their Operating Territory unless they receive advance approval in writing from Servpro of another business location.

13.  Total:  $191,825 to $245,700 + $778 per 1,000 over maximum population, plus any real estate costs

• Servpro relied on its experience to compile these estimates of the range of initial start-up expenses you may incur.