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

• Section I – Background information on the N-Hance Wood Refinishing franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an N-Hance Wood Refinishing franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an N-Hance Wood Refinishing franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned N-Hance Wood Refinishing 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 N-Hance Wood Refinishing’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average and median quarterly revenue per owner, average revenue per job, average Q1-Q4 revenue per owner, average solutions cost as a percentage of revenue, and average tech labor cost as a percentage of revenue for all active owners, top performer, top 5%, top 10%, 1st quartile, 2nd quartile, 3rd quartile, 4th quartile, bottom 10%, bottom 5%, and bottom performer of the 93 N-Hance franchise owners who operated their franchises for at least 13 months as of December 31, 2020 and submitted annual financial data to N-Hance for 2020 (“Active Franchise Owners”), who collectively own 273 N-Hance business franchises (the “Active Franchises”)

Section I – Background Information

15 Things You Need to Know About the N-Hance Wood Refinishing Franchise

Aims to Introduce 40 Territories Throughout Texas as Demand for Home Improvement Surges

1.  In mid-March 2021, as the pandemic has forced consumers to spend more time at home than ever before, demand for home improvement projects continues to surge with Entrepreneur magazine naming the industry as one of the hottest franchise categories in 2021. N-Hance Wood Refinishing has seen the demand first-hand with some franchise owners reporting double-digit increases in consumer leads year-over-year.

2.  With increased demand and record-breaking systemwide performance, the brand has announced plans to add over 40 new territories throughout Texas, secured through strategic partnerships, within the next five years. Leveraging a strong fourth quarter performance in 2020 where year-over-year systemwide sales grew 29%, the N-Hance franchise network is kick-starting development goals, ramping up franchise development in the Lone Star State.

3.  According to D’Wayne Tanner, senior vice president of franchise sales for N-Hance Wood Refinishing, “Over the last few years, we’ve brought in several exceptionally strong franchisees across the state who’ve collectively raised the bar and created a great culture and reputation for our services. We look forward to continuing this legacy as we create new opportunities for entrepreneurs throughout these target development markets. We are seeing interest from entrepreneurs who already own other types of home improvement businesses looking to diversify their portfolios, as well as from people seeking entry into the booming industry with a franchise that has a proven track record of success.”

4.  N-Hance’s ability to innovate and adapt throughout the pandemic has allowed the brand to remain steadfast and focused on growth. By quickly pivoting to support social distancing, the brand developed a process for virtual consultations that are easily executed via phone, computer, or tablet, leaving consumers with a complete proposal, along with warranty, payment options, and availability to complete the project. This has allowed N-Hance to continue meeting all-time high demand, reporting its best sales quarter in history in Q4 2020.

Gears Up for More Growth in 2022

5.  In mid-January 2022, N-Hance Wood Refinishing reported that demand for home improvement projects remains steadfast – especially as the pandemic-inflected increase in time spent around the house becomes the norm and home costs continue to rise across the country. The brand said that some franchisees reported double-digit increases in consumer leads year-over-year. Prospective franchisees are taking note as N-Hance closed out 2021 with more than 25 new franchise openings and projects to award 40 franchises this year.

6.  While homeowners turned to Do-It-Yourself projects throughout 2020 and 2021, there’s a trend in leaving projects such as big kitchen remodels, home office, and flooring to the professionals, according to the Leading Indicator of Remodeling Activity. N-Hance’s multi-service offerings model continues to drive revenue for franchisees, while providing customers with quality work.

7.  For example, cabinet door replacement has helped grow N-Hance’s average ticket price to nearly $5,000 over the past few years, while reducing labor. Around 53% of its franchisees are offering this service through N-Hance’s preferred vendor, with it generating around 27% of their revenue. All of N-Hance’s cabinet services offerings account for 79% of total revenue.

8.  D’Wayne Tanner, senior vice president of franchise sales for N-Hance Wood Refinishing, said, “With a strong consumer demand for large-scale home renovations, we have worked hard to equip our franchisees with the right tools and resources to deliver on every project and consumer need. Their success is our success. We had a great 2021 which has put us in a position to have an even better 2022. We look forward to raising the bar and accelerating our development strategy, leveraging the surge in the home services industry to continue to meet all of our growth and performance goals.”

9.  The brand’s achievements have not gone unnoticed as the franchise industry has honored N-Hance with several recent award wins including earning a spot on Franchise Times’ prestigious 2021 Top 400 ranking, which names the largest U.S.-based franchise systems by systemwide sales to better encompass the biggest brands in franchising along with promising concepts in growth mode.

10.  In the midst of the booming home services industry, N-Hance franchisees have an advantage through access to one of the most comprehensive initial and ongoing training programs in the industry. N-Hance is also an affordable, highly scalable opportunity with strong profit potential. The initial investment to begin operations of a new N-Hance franchise ranges from $52,369 to $168,747, and the top quartile of franchisees average over $840,000.

Company History

11.  N-Hance Wood Refinishing was founded in 2001 by Harris Research Inc. (HRI), the company behind Chem-Dry Carpet Cleaning. A few years earlier, HRI began research into the wood refinishing industry after many Chem-Dry franchisees reported that clients had damaged wood floors.

12.  From 2001 to 2003, HRI launched beta-franchises for N-Hance in Salt Lake City, Utah. HRI realized that many companies can sand the finish right off the floors and refinish them, but very few offer the broad line of products that coincide with other finishes and cleaners.

13.  Following the success of the beta-franchises, HRI officially launched a national franchising program for N-Hance Wood Refinishing. Building on the success of Chem-Dry, HRI was able to quickly grow N-Hance and by 2018, there were 500 locations around the U.S.

14.  In addition to hardwood floor renewal, N-Hance Wood Refinishing now refinishes cabinetry, furniture, and trim work. Today, there are N-Hance Wood Refinishing locations across the United States and Canada.

Entrepreneur’s Franchise 500

15.  N-Hance Wood Refinishing did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of N-Hance Wood Refinishing 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 N-Hance Wood Refinishing’s 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:  470
• Outlets at the End of the Year:  511
• Net Change:  +41

2019

• Outlets at the Start of the Year:  511
• Outlets at the End of the Year:  505
• Net Change:  -6

2020

• Outlets at the Start of the Year:  505
• Outlets at the End of the Year:  428
• Net Change:  -77

Company-Owned

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

2020

• 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, 2021 FDD) and Analysis

• Every month, N-Hance requires all franchise owners to provide certain financial and other information relating to the operation of their N-Hance businesses during that month. N-Hance also requests that all franchisees who do not submit monthly reports submit an annual report.

• Most N-Hance franchise owners have purchased several franchises covering separate geographic areas. N-Hance believes that a franchisee is able to achieve overhead efficiencies by supporting multiple franchises from a single operating base that is conveniently located to the franchises. N-Hance has not independently verified that estimate.

• As of December 31, 2020, N-Hance had 166 U.S. franchise owners who operated 428 U.S N-Hance businesses.

• Of these franchise owners, 155 franchise owners (the “Mature Franchise Owners”), representing 93.4% of the total franchise owners, who operate 412 N-Hance businesses (the “Mature Franchises”) in discrete Franchise Areas, representing 96.3% of N-Hance franchises, operated those franchises for at least 13 months as of December 31, 2020.

• Of those Mature Franchise Owners, 93 franchise owners (the “Active Franchise Owners”), representing 56% of all franchise owners and 60% of Mature Franchise Owners, who collectively own 273 N-Hance business franchises (the “Active Franchises”), representing 63.8% of all franchises and 66.3% of mature franchises, submitted annual financial data to N-Hance for 2020 and actively operated their business.

• N-Hance derived the information presented below from the Active Franchise Owners about the Active Franchises. The information has been reported voluntarily by Active Franchise Owners and has not been audited, reviewed, or compiled by any independent accountant.

• An “Active Franchise Owner” is a franchisee in the U.S. that has operated an N-Hance business on a full-time basis for the full year of 2020 by (i) completing at least two jobs through its N-Hance business during each calendar month in 2020 and (ii) obtained at least one third-party starred Google review. Active Franchise Owners include both traditional licenses and small market licenses.

• The chart below shows a revenue performance grid for Active Franchise Owners and Active Franchises for the one-year period ending on December 31, 2020, presented by various performance groupings from the top performing to the bottom performing groups of Active Franchise Owners, with performance measured and grouped by average revenue per owner.

• Information from the franchisees and about the franchised businesses that did not report revenue information for all of 2020, who did not qualify as Mature Franchise Owners, or which did not qualify as a Mature Franchise is not included in the performance grid.

All Active Owners

• Number of Owners:  93
• Number of Franchised Areas:  273
• Average Quarterly Revenue/Owner:  $99,868
• Median Quarterly Revenue/Owner:  $74,264
• Average Revenue/Job:  $4,370
• Average Q1 Revenue/Owner:  $89,181
• Average Q2 Revenue/Owner:  $83,896
• Average Q3 Revenue/Owner:  $110,799
• Average Q4 Revenue/Owner:  $115,596
• Solutions as a Percentage of Revenue:  5.7%
• Tech Labor as a Percentage of Revenue:  27.2%

Top Performer

• Number of Owners:  1
• Number of Franchised Areas:  6
• Average Quarterly Revenue/Owner:  $600,472
• Median Quarterly Revenue/Owner:  $603,926
• Average Revenue/Job:  $6,159
• Average Q1 Revenue/Owner:  $536,664
• Average Q2 Revenue/Owner:  $517,801
• Average Q3 Revenue/Owner:  $671,187
• Average Q4 Revenue/Owner:  $676,236
• Solutions as a Percentage of Revenue:  3.5%
• Tech Labor as a Percentage of Revenue:  24.7%

Top 5%

• Number of Owners:  4
• Number of Franchised Areas:  24
• Average Quarterly Revenue/Owner:  $412,619
• Median Quarterly Revenue/Owner:  $412,192
• Average Revenue/Job:  $5,647
• Average Q1 Revenue/Owner:  $341,054
• Average Q2 Revenue/Owner:  $325,700
• Average Q3 Revenue/Owner:  $493,332
• Average Q4 Revenue/Owner:  $490,390
• Solutions as a Percentage of Revenue:  5.0%
• Tech Labor as a Percentage of Revenue:  26.7%

Top 10%

• Number of Owners:  7
• Number of Franchised Areas:  35
• Average Quarterly Revenue/Owner:  $343,326
• Median Quarterly Revenue/Owner:  $296,340
• Average Revenue/Job:  $5,586
• Average Q1 Revenue/Owner:  $299,236
• Average Q2 Revenue/Owner:  $286,887
• Average Q3 Revenue/Owner:  $389,529
• Average Q4 Revenue/Owner:  $397,653
• Solutions as a Percentage of Revenue:  5.0%
• Tech Labor as a Percentage of Revenue:  27.8%

1st Quartile

• Number of Owners:  18
• Number of Franchised Areas:  87
• Average Quarterly Revenue/Owner:  $237,557
• Median Quarterly Revenue/Owner:  $206,742
• Average Revenue/Job:  $5,081
• Average Q1 Revenue/Owner:  $217,861
• Average Q2 Revenue/Owner:  $201,623
• Average Q3 Revenue/Owner:  $263,504
• Average Q4 Revenue/Owner:  $267,241
• Solutions as a Percentage of Revenue:  4.7%
• Tech Labor as a Percentage of Revenue:  27.1%

2nd Quartile

• Number of Owners:  18
• Number of Franchised Areas:  61
• Average Quarterly Revenue/Owner:  $120,182
• Median Quarterly Revenue/Owner:  $115,229
• Average Revenue/Job:  $4,395
• Average Q1 Revenue/Owner:  $105,719
• Average Q2 Revenue/Owner:  $101,373
• Average Q3 Revenue/Owner:  $121,129
• Average Q4 Revenue/Owner:  $152,505
• Solutions as a Percentage of Revenue:  5.3%
• Tech Labor as a Percentage of Revenue:  26.4%

3rd Quartile

• Number of Owners:  19
• Number of Franchised Areas:  51
• Average Quarterly Revenue/Owner:  $70,221
• Median Quarterly Revenue/Owner:  $71,890
• Average Revenue/Job:  $3,701
• Average Q1 Revenue/Owner:  $69,252
• Average Q2 Revenue/Owner:  $57,269
• Average Q3 Revenue/Owner:  $72,230
• Average Q4 Revenue/Owner:  $82,131
• Solutions as a Percentage of Revenue:  5.3%
• Tech Labor as a Percentage of Revenue:  29.7%

4th Quartile

• Number of Owners:  19
• Number of Franchised Areas:  32
• Average Quarterly Revenue/Owner:  $39,465
• Median Quarterly Revenue/Owner:  $37,568
• Average Revenue/Job:  $3,401
• Average Q1 Revenue/Owner:  $31,023
• Average Q2 Revenue/Owner:  $35,921
• Average Q3 Revenue/Owner:  $48,444
• Average Q4 Revenue/Owner:  $42,472
• Solutions as a Percentage of Revenue:  7.6%
• Tech Labor as a Percentage of Revenue:  25.8%

Bottom 10%

• Number of Owners:  7
• Number of Franchised Areas:  14
• Average Quarterly Revenue/Owner:  $28,855
• Median Quarterly Revenue/Owner:  $25,923
• Average Revenue/Job:  $2,886
• Average Q1 Revenue/Owner:  $23,804
• Average Q2 Revenue/Owner:  $31,754
• Average Q3 Revenue/Owner:  $33,971
• Average Q4 Revenue/Owner:  $25,892
• Solutions as a Percentage of Revenue:  7.4%
• Tech Labor as a Percentage of Revenue:  20.1%

Bottom 5%

• Number of Owners:  4
• Number of Franchised Areas:  8
• Average Quarterly Revenue/Owner:  $26,038
• Median Quarterly Revenue/Owner:  $23,198
• Average Revenue/Job:  $2,436
• Average Q1 Revenue/Owner:  $21,614
• Average Q2 Revenue/Owner:  $36,686
• Average Q3 Revenue/Owner:  $26,163
• Average Q4 Revenue/Owner:  $19,690
• Solutions as a Percentage of Revenue:  6.3%
• Tech Labor as a Percentage of Revenue:  15.8%

Bottom Performer

• Number of Owners:  1
• Number of Franchised Areas:  1
• Average Quarterly Revenue/Owner:  $18,744
• Median Quarterly Revenue/Owner:  $18,581
• Average Revenue/Job:  $1,922
• Average Q1 Revenue/Owner:  $15,192
• Average Q2 Revenue/Owner:  $17,215
• Average Q3 Revenue/Owner:  $22,622
• Average Q4 Revenue/Owner:  $19,946
• Solutions as a Percentage of Revenue:  5.8%
• Tech Labor as a Percentage of Revenue:  15.3%

• The charts are based on the results of Active Franchise Owners in the N-Hance system.

• A number of factors impact a franchise owner’s revenue, such as the operational capability of the franchise owner, the price that the franchise owner decides to charge for services, the competition in the market, and the franchise owner’s ability to sell ancillary products and higher-margin services. The price you charge and your ability to sell may differ from the Active Franchise Owners.

• “Number of Owners” reflects the number of individual franchise owners in each measured category out of the total 93 Active Franchise Owners.

• “Number of Franchised Units” reflects the total number of franchised units (licenses) owned by the owners in each given row. The number of “Units” is based on the franchises owned at the end of each calendar year.

• “Average Revenue Per Owner” reflects the average revenue reported by the Active Franchise Owners for the calendar year ending December 31, 2020.

• “Median Revenue Per Owner” reflects the median revenue reported by the Active Franchise Owners for the calendar year ending December 31, 2020.

• “Average Revenue Per Job” reflects the price data that Active Franchise Owners voluntarily report to N-Hance for transactions during the calendar year ending December 31, 2020.

• In these financial performance representations, N-Hance considers each Franchise Agreement to be one “franchise” or “unit” for purposes of counting the number of Active Franchises.

• In the N-Hance business franchise network, there sometimes is one individual, group of individuals, or an entity who has management responsibility for a number of different franchises operating under different Franchise Agreements.

• For example, that individual, group, or entity may be the franchisee under each of the Franchise Agreements, or an owner (whether of a majority or minority of the ownership interests) of those franchisees, or have management responsibility (for example, as a managing member or partner) of those franchisees.

• The N-Hance brand is established in many of the markets in which the Active Franchises operate. If you operate your N-Hance business franchise in a new region or market where the N-Hance brand is not yet developed, your franchise may not benefit as much from an established trade identity in the market or from marketing activities that other N-Hance business franchise owners historically conducted.

• This financial performance representation does not reflect variable or fixed operating expenses, or other costs or expenses that must be deducted from the revenue figures to obtain your net income or profit.

• You should conduct an independent investigation of the costs and expenses you will incur in operating your N-Hance business. Franchisees or former franchisees, listed in the Disclosure Document, may be one source of this information.

• “Tech Labor as a % of Revenue” refers to the reported cost of technician labor used in the performance of the jobs by the Reporting Owners, as a percentage of the revenues of the Reporting Owner. It is a portion of the costs of performance, but does not include any other costs for other materials, supplies, or other categories of expenses you would incur to operate your N-Hance Business.

• “Solutions as a % of Revenue” refers to the reported cost of N-Hance-supplied treatment products used in the performance of the jobs by the Reporting Owners, as a percentage of the revenues of the Reporting Owner. It is a portion of the costs of performance but does not include any other costs for labor, other materials, supplies, or other categories of expenses you would incur to operate your N-Hance Business.

• Some businesses have sold this amount. Your individual results may differ. There is no assurance that you will sell as much.

Key Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️