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

• Section I – Background information on the HouseMaster Home Inspections franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a HouseMaster Home Inspections franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a HouseMaster Home Inspections franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned HouseMaster Home Inspections outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of HouseMaster Home Inspections’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, median, highest, and lowest gross sales for the (i) 61 HouseMaster franchisees operating a single franchised business; (ii) 28 HouseMaster franchisees operating two franchised businesses; (iii) 10 HouseMaster franchisees operating three franchised businesses; (iv) 5 HouseMaster franchisees operating four franchised businesses; and (v) 10 HouseMaster franchisees operating five to eight franchised businesses (collectively, the “Reporting Franchisees”), operating a total of 243 franchised businesses

Section I – Background Information

21 Things You Need to Know About the HouseMaster Home Inspections Franchise

Named a 2021 Top Franchise by Franchise Business Review

1.  In late March 2021, HouseMaster Home Inspections was named a Top Franchise for 2021 by Franchise Business Review. This is the 16th annual ranking of the 200 best franchise opportunities as rated by franchise business owners. HouseMaster is known for its strong commitment to customer service. HouseMaster holds a Net Promoter Score of 92 (a customer satisfaction ranking higher than Apple and Ritz-Carlton). Franchise Business Review has named HouseMaster a top franchise brand in its franchise owner satisfaction category since 2009.

2.  HouseMaster’s guaranteed inspections enable potential homebuyers and sellers the opportunity to make educated real estate decisions. From interior systems such as plumbing and electrical to exterior components like the roof and siding, the HouseMaster Home Inspection includes the evaluation of the visible and accessible major elements of the home.

3.  Franchise Business Review, a franchise market research firm that performs independent surveys of franchisee satisfaction, provides the only rankings and awards for franchise companies based solely on actual franchisee satisfaction and performance. Franchise Business Review publishes its rankings of the top 200 franchises in its annual Guide to Today’s Top Franchises.

4.  HouseMaster was among more than 300 franchise brands, representing more than 28,000 franchise owners, that participated in Franchise Business Review’s research. HouseMaster’s franchise owners were surveyed on 33 benchmark questions about their experience and satisfaction regarding critical areas of their franchise systems, including training and support, operations, franchisor/franchise owner relations, and financial opportunity.

5.  HouseMaster scored well on their overall satisfaction by franchise owners. The categories they excelled in were Core Values, Franchisee Community, and Self-Evaluation, all three further emphasizing HouseMaster’s commitment to a deeper bond with their franchisees.

6.  Eric Stites, CEO of Franchise Business Review, said, “There are thousands of successful franchise companies operating in North America, but many of those companies do not offer a solid investment opportunity for the actual franchise owners. As an independent research firm, we rate the franchise companies in the marketplace today and identify those with the highest levels of satisfaction and performance among their franchisees in order to educate potential buyers and help them choose which franchise to invest in. The companies on this year’s list are the top performing brands in the key areas critical to their franchisees’ success.”

7.  Jeff Meyers, interim president of HouseMaster, said, “We were honored to receive this award from Franchise Business Review. We focus on the well-being of our franchise owners so that we can set them up for success. And by doing this, it also improves their community in a meaningful way.”

Franchisee Launches Comprehensive Book on Home Inspections

8.  Near the end of March 2021, Cesar Costa, the owner of a HouseMaster Home Inspections business in the Fort Lauderdale area, wrote a book sharing insights from his years of experience in home inspections. An educational tool for realtors, the book serves as an authoritative guide to what realtors should know about home inspections. It is now available for purchase on Amazon.

9.  Costa said, “This book covers what Realtors need to know to up their game. In my years of experience as a home inspection franchise owner, I’ve realized that too often realtors are unaware of the implications of an inspection or what it entails. This book is a way to inform and help them help their clients immersed in the home buying process.”

10.  The book offers details about what inspections include (and what they don’t include), helps realtors recognize common mistakes and avoid them, grasp report findings and negotiations, handle inspection issues, and lay out the next steps after an inspection. “We want to help realtors better set up customer expectations,” Costa added. “Realtors will learn more about mold and termite inspections and remediation strategies – two areas that are common concerns when they come up during an inspection.”

11.  Costa knows a thing or two about customer service. His franchise has serviced tens of thousands of customers in the Fort Lauderdale area and holds a 4.7 out of 5 star rating after more than 1,350 customer reviews. Costa added, “This is the most complete guide to home inspection for agents available. No other publication includes mold, termites, insurance reports, and other services that are important but frequently neglected or misunderstood by agents, buyers, and sellers. This is the ideal text for both aspiring and veteran real estate agents.”

Expands in New York State

12.  At the beginning of May 2021, HouseMaster Home Inspections announced the opening of a new location in the Hudson Valley area north of New York City. JP McGahan, a seasoned business owner, is the local entrepreneur expanding HouseMaster to the Hudson Valley alongside his wife, Tracey. This new HouseMaster location will serve parts of Putnam, Dutchess, and Ulster counties, including the towns of Mahopac, Putnam Valley, Hopewell Junction, Beacon, New Paltz, Fishkill, and the surrounding areas.

13.  McGahan and his wife will also be assisted by their friend, Dino Kaoukakis. McGahan plans to join local business organizations in the area to better his skillset to help the community. In his free time, he enjoys spending time with family and coaching Little League.

14.  McGahan said, “I have run several small businesses since 2010. The experiences I gained from being an entrepreneur and managing a business have prepared me to begin my journey of becoming a leader in home inspections for the Hudson Valley area.”

15.  Jeff Meyers, interim president of HouseMaster, added, “JP originally worked on the HouseMaster corporate team, so we knew he was a hard-working and determined individual. I’m confident that he will have tremendous success running his business and serving the people in his community.”

Company History

16.  HouseMaster Home Inspections was founded in 1971 by Ken Austin in Northern New Jersey as the first home inspection franchise in the United States. Austin decided to become an independent home inspector after he saw an ad for a company attempting to launch a home inspection franchise system nationwide. Home inspection services were a pretty novel idea at the time, but Austin felt that the industry would eventually take off.

17.  Austin established AMC Property Evaluations, Inc. in Central New Jersey and grew the business to a large multi-inspector firm serving the tri-state area. This was the first iteration of HouseMaster Home Inspections.

18.  After working as a home inspector for several years, Austin realized that the home inspection industry needed to create unifying standards and a clear scope of services. Austin met with other home inspection companies and suggested that they form an association. In 1976, Austin became a founding member of the American Society of Home Inspectors (ASHI), the first industry organization to set standards for home inspections.

19.  Austin’s business continued to grow and in 1979, he changed the company’s name to HouseMaster Home Inspections and began franchising. Over the next few decades, HouseMaster continued to grow. The company as well as Austin continued to lead the home inspection industry, and implemented what are now standard practices, including: formalizing training procedures for home inspectors; starting The National Institute of Building Inspectors school; and introducing the concept of pre-inspections before home owners put their homes on the market or accept an offer.

20.  Today, HouseMaster Home Inspections has locations all across North America. The company was acquired by Neighborly in 2020.

Entrepreneur’s Franchise 500

21.  HouseMaster Home Inspections ranked No. 275 on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of HouseMaster Home Inspections franchise costs, based on Item 7 of the company’s 2021 FDD.

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

• Detailed information on HouseMaster Home Inspections’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  260
• Outlets at the End of the Year:  265
• Net Change:  +5

2019

• Outlets at the Start of the Year:  265
• Outlets at the End of the Year:  272
• Net Change:  +7

2020

• Outlets at the Start of the Year:  272
• Outlets at the End of the Year:  277
• Net Change:  +5

Company-Owned

2018

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:  0

2019

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:  0

2020

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• The sales figures listed below are average and median data derived from historical operating results of the HouseMaster franchised businesses indicated for the time period covered.

• HouseMaster obtained these sales figures from information provided to it by its franchisees for the period from January 1, 2020 through December 31, 2020 (the “2020 Reporting Period”).

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

• All of the businesses for which sales results are reported below were operated by franchisees. All of the franchised businesses are comparable to the franchised businesses offered by the disclosure document and offered substantially the same services to the public.

• As of December 31, 2020, there were 277 HouseMaster franchised businesses in operation in the United States. This Item 19 includes data from 243 businesses (operated by a total of 114 franchisees) which were all in operation and reporting sales for the entire 2020 Reporting Period (the “2020 Reporting Businesses”).

• The information does not include data from 12 franchised businesses (operated by a total of 12 franchisees) that opened during the year 2020 and therefore were not in operation for the entire 2020 Reporting Period. In addition, 22 franchised businesses are excluded from this Item 19 because they did not report data to HouseMaster for the entire 2020 Reporting Period.

• Seven franchised businesses closed in 2020 and therefore their data is also excluded from this Item 19. Of the seven businesses that closed during the year 2020, zero businesses closed after being open for less than 12 months.

• Excluded from this Item 19 is data reported by 11 franchised businesses (operated by a total of 7 franchisees) that were granted exclusive territory rights (referred to as either a Limited Area Franchise Territory or a Reciprocal Opportunity Franchise Territory). HouseMaster no longer grants any exclusive territory rights.

• Because HouseMaster franchisees have historically reported data to HouseMaster aggregated by franchisee (rather than by a franchised business) and a number of HouseMaster franchisees operate multiple HouseMaster franchised businesses, HouseMaster has separated the data reported in this Item 19 by the number of franchised businesses that the franchisees own – i.e., separately showing average and median data for franchisees that own one franchised business/unit, franchisees that own two franchised businesses/units, franchisees that own three franchised businesses/units, franchisees that own four franchised businesses/units, and franchisees that own five to eight franchised businesses.

• No adjustments, including adjustments for geographic location, have been made to these reported sales. This report does not include information about previous periods or any future periods.

• Also, because these are Gross Sales results only, no costs or expenses are taken into account.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance you will earn as much.

• “Gross Sales” means the total revenues and receipts from whatever source (whether in the form of cash, credit, agreement to pay, barter, trade, or other consideration) that arise, directly or indirectly, from the operation of – or in connection with – a HouseMaster Business whether under any of the Marks or otherwise.

• Gross Sales exclude sales taxes collected from customers and paid to the appropriate taxing authority and any other bona fide refunds, rebates, or discounts that HouseMaster authorizes in writing.

• Gross Sales also exclude sales from any Excluded Services (as defined in a mutually executed Excluded Services Addendum).

Average and Median Gross Sales for Franchised Businesses for the Period January 1, 2020 to December 31, 2020 (2020 Reporting Period)

• This table shows separately the average and median annual Gross Sales data for the 2020 Reporting Period for (i) 61 franchisees operating a single franchised business; (ii) 28 franchisees operating two franchised businesses; (iii) 10 franchisees operating three franchised businesses; (iv) 5 franchisees operating four franchised businesses; and (v) 10 franchisees operating five to eight franchised businesses (collectively, the “Reporting Franchisees”), operating a total of 243 franchised businesses.

Single-Unit Franchisees Group

• Number of Reporting Franchisees:  61
• Average Gross Sales:  $221,891
• Number and Percentage of Franchisees That Achieved at Least the Average:  19/31%
• Actual Highest Gross Sales:  $921,184
• Actual Lowest Gross Sales:  $26,300
• Median Gross Sales:  $168,492

2-Unit Franchisees Group

• Number of Reporting Franchisees:  28
• Average Gross Sales:  $305,737
• Number and Percentage of Franchisees That Achieved at Least the Average:  9/32%
• Actual Highest Gross Sales:  $1,298,439
• Actual Lowest Gross Sales:  $41,925
• Median Gross Sales:  $237,813

3-Unit Franchisees Group

• Number of Reporting Franchisees:  10
• Average Gross Sales:  $592,409
• Number and Percentage of Franchisees That Achieved at Least the Average:  4/40%
• Actual Highest Gross Sales:  $1,663,964
• Actual Lowest Gross Sales:  $119,365
• Median Gross Sales:  $423,918

4-Unit Franchisees Group

• Number of Reporting Franchisees:  5
• Average Gross Sales:  $571,175
• Number and Percentage of Franchisees That Achieved at Least the Average:  3/60%
• Actual Highest Gross Sales:  $920,397
• Actual Lowest Gross Sales:  $77,875
• Median Gross Sales:  $665,557

5 to 8-Unit Franchisees Group

• Number of Reporting Franchisees:  10
• Average Gross Sales:  $657,430
• Number and Percentage of Franchisees That Achieved at Least the Average:  4/40%
• Actual Highest Gross Sales:  $1,818,415
• Actual Lowest Gross Sales:  $108,032
• Median Gross Sales:  $538,164

All

• Number of Reporting Franchisees:  114
• Average Gross Sales:  $328,511
• Number and Percentage of Franchisees That Achieved at Least the Average:  34/30%
• Actual Highest Gross Sales:  $1,818,415
• Actual Lowest Gross Sales:  $26,300
• Median Gross Sales:  $210,750

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