Home Clean Heroes Franchise: Average Sales ($248K) vs. Cost ($85K-$105K)

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

Section I – Estimated initial investment (franchise costs) for a Home Clean Heroes franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Home Clean Heroes franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Home Clean Heroes outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the Home Clean Heroes franchise opportunity

Section V – Presentation and analysis of Home Clean Heroes’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 total revenue, technician labor, materials costs, gross profit, royalty and service fee, marketing fee, advertising, automobile expense, fuel, credit card fees, insurance expense, charitable contribution, field supplies and safety gear, repairs and maintenance, office supplies, computer and internet expense, integrated business system fees, call center costs, and operating cash flow before non-disclosed expenses for the one affiliate-owned Home Clean Heroes business operated by the franchisor’s affiliate, HCH Local Operations

• 2022 average total revenue, recurring revenue only, total customers served, recurring customers served, total service performed, recurring services performed (per territory performance) for the two territories operated by HCH Local Operations

• key sales and operational metrics for the two territories operated by HCH Local Operations

• 2022 and 2021 total revenue, recurring revenue only, total customers served, recurring customers served, total services performed, recurring services performed for the 10 franchised Home Clean Heroes locations that were open and operating for at least 6 months in calendar year 2022, grouped by year opened

• key sales and operational metrics for the 10 franchised Home Clean Heroes locations that were open and operating for at least 6 months in calendar year 2022

Section VI – Key ratios, comparables, computations, and analyses for the Home Clean Heroes franchise opportunity (exclusive content for Platinum subscribers)

Section I – Home Clean Heroes Franchise Costs

• Home Clean Heroes franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $35,000
• Set-Up Fee:  $1,000
• Mailing List Fee:  $500 to $750
• Postcard Fees:  $15,050
• SEO Fees:  $3,600
• Digital Marketing Fees (first 3 months):  $5,400
• Start-Up Package (equipment, uniforms, marketing supplies, and office supplies):  $7,500
• National Call Center Set-up Fee:  $300
• National Call Center Fees:  $1,725 to $2,625
• Vehicle and Decals:  $1,230 to $1,710
• Initial Training:  $500 to $2,000
• Insurances:  $1,800 to $3,600
• Professional Fees:  $0 to $1,000
• Licenses and Certifications:  $300 to $1,500
• Integrated Business Management Fee:  $395 to $1,185
• Computer, Internet Devices, Phones, Software Setup:  $0 to $1,800
• Heroes First Charitable Contribution Program:  $25 to $30
• Additional Funds for 3 Months:  $10,000 to $20,000
• Total Estimated Home Clean Heroes Franchise Costs:  $85,510 to $105,235

Section II – Home Clean Heroes’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Home Clean Heroes’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  $35,000
• Royalty and Service Fee:  6% of Total Revenue
• Marketing Fee:  2% of Total Revenue
• Mailer Program Fees, Consisting of Setup Fee, Mailing List Fee, and Postcard Fee:  Setup Fee: currently, $1,000; Postcard Fee: currently, $0.43 per postcard, $15,050 (35,000 postcards) per year; Mailing List Fee: currently, $0.05 per Targeted Household on the mailing list obtained, $500 to $750 (10,000 to 15,000 Targeted Households) per year
• Digital Advertising Program Fees, Consisting of SEO Fees and Digital Marketing Fees:  SEO Fee: currently, $300 per month ($3,600 per year); Digital Marketing Fee: currently, $1,800 per month ($21,600 per year)

Section III – Number of Franchised and Company-Owned Home Clean Heroes Outlets

Franchised

2020

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  3
• Net Change:  +2

2021

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  8
• Net Change:  +5

2022

• Outlets at the Start of the Year:  8
• Outlets at the End of the Year:  12
• Net Change:  +4

Company-Owned

2020

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2021

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2022

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

Section IV – News Updates on the Home Clean Heroes Franchise

• Home Clean Heroes Reports Remarkable Growth in 2023

• Netsertive Names Home Clean Heroes, Signarama, and Authority Brands 2022 Season Of Giving: Franchisee Recognition Award Winners

• Home Clean Heroes 2022 Year in Review

• Home Clean Heroes Offers a Recession-Resistant Business Model

• Home Clean Heroes Continues Expansion with Texas Location

• Home Clean Heroes Did Not Rank on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Home Clean Heroes Franchise (Item 19, 2023 FDD)

• Home Clean Heroes provides two types of residential cleaning services, recurring and one-time.

• “Recurring Cleans” are performed for customers requesting ongoing service on a weekly, biweekly, or monthly basis. The first service of a recurring service plan is called the “Initial Clean.”

• “One-time Cleans” are performed upon request by customers who are moving in or out of a home, or who just desire an individual service with no recurrence.

• Home Clean Heroes’ cleaning teams most often work in teams of two cleaning specialists, with one of those being designated the “Lead” for that team.

• Daily routes consist of a varying number of homes determined by the amount of time it will take to clean each home. Prices are established on a per-home basis and are determined by each franchisee at the point of sale. No contract is required for recurring service plans.

HCH Local Operations

• HCH Local Operations began providing services in the cities of Chesapeake, Norfolk, and Virginia Beach, Virginia, in May 2017.

• Since it began operations, the Home Clean Heroes model has been adjusted periodically to respond and adapt to market challenges and opportunities. Although HCH Local Operations serviced the cities of Chesapeake, Norfolk, and Virginia Beach, its focus in its first year was largely on Virginia Beach, the territory known as VA-001, which consists of 40,957 targeted households across 7 zip codes.

• In 2018, HCH Local Operations fully expanded its efforts in Chesapeake and Norfolk, the territory known as VA-002, which consists of 34,899 targeted households in 19 zip codes.

• Calendar year 2022 represents the fifth full year of operation for HCH Local Operations.

Part 1 – Income Statement for January 1 Through December 31, 2022

• The Income Statement below illustrates the revenue, cost of goods sold, and disclosed expenses associated with HCH Local Operations for Calendar Year 2022.

Total Revenue:  $1,253,340 (100.0%)

Cost of Goods Sold

• Technician Labor:  $560,685 (44.7%)
• Materials Costs:  $3,529 (0.3%)
• Total Cost of Goods Sold:  $564,214 (45.0%)

Gross Profit:  $689,126 (55.0%)

Operating Expenses

• Royalty and Service Fee:  $75,200 (6.0%)
• Marketing Fee:  $25,067 (2.0%)
• Advertising – Consumer:  $105,041 (8.4%)
• Automobile Expense:  $79,276 (6.3%)
• Fuel:  $20,593 (1.6%)
• Credit Card Fees:  $26,414 (2.1%)
• Insurance Expense:  $34,707 (2.8%)
• Charitable Contributions:  $4,400 (0.4%)
• Field Supplies and Safety Gear:  $27,922 (2.2%)
• Repairs and Maintenance:  $732 (0.1%)
• Office Supplies:  $1,600 (0.1%)
• Computer and Internet Expense:  $4,051 (0.3%)
• Integrated Business System Fees:  $3,800 (0.3%)
• Call Center Costs:  $9,393 (0.7%)
• Total Itemized Expenses:  $418,196 (33.4%)

Operating Cash Flow Before Non-Disclosed Expenses:  $270,930 (21.6%)

• The information set forth in the income statement summarizes combined financial performance for HCH Local Operations’ two territories, VA-001 and VA-002, based on itemized expenses from January 1, 2022 through December 31, 2022.

• “Total Revenue” means the revenue invoiced for initial cleaning services, recurring cleaning services, and one-time cleans.

• “Technician Labor” includes all costs (wages, taxes, etc.) for the cleaning specialists that performed the services. For 2022, these employees were paid a wage between $12.50 and $18.50 per hour, with an average wage paid equal to $15.34 per hour. The median wage paid was $15.00 per hour.

• “Materials Costs” includes the actual cost of cleaning products and consumables required to complete the total services for the year.

• HCH Local Operations did not pay Home Clean Heroes any royalty fees during 2022. Home Clean Heroes supplemented HCH Local Operations’ income statement by including entries for a “Royalty and Service Fee” of 6% that you will have to pay.

• You will be required to pay to Home Clean Heroes, its affiliates, or its designated suppliers all of the fees described in the disclosure document.

• Other than the Royalty and Service Fee, HCH Local Operations incurs the same costs for these items as Home Clean Heroes franchisees will incur.

• As part of Home Clean Heroes’ “Heroes First” Charitable Contribution initiative, you will be required to contribute $0.50 from each recurring and one-time clean to Home Clean Heroes. It will match your contribution and remit the total donation monthly to its national partner, First Responders Children’s Foundation.

• The above information is stated as Operating Cash Flow Before Non-Itemized Disclosed Expenses. Non-itemized expenses may include but are not limited to (a) rent and utilities should you decide to operate the business from a commercial location, (b) professional expenses such as accounting services should you decide to outsource this function, and (c) discretionary expenses such as office supplies, meals and entertainment, professional dues/subscriptions, or charitable contributions to such organizations as Cleaning For A Reason.

Part 2 – 2022 HCH Local Operations Revenue, Customer, and Service Metrics (Per Territory Performance)

• This data represents the combined performance of the two territories operated by HCH Local Operations.

2022 Average

• Total Revenue:  $620,365
• Recurring Revenue Only:  $583,051
• Total Customers Served:  435
• Recurring Customers Served:  345
• Total Service Performed:  3,599
• Recurring Services Performed:  3,477

Part 3 – Key Sales Metrics

• This data represents the combined performance of the two territories operated by HCH Local Operations.

• Leads are requests for service proposals received from prospective customers between January 1, 2022 and December 31, 2022.

• New customers served are any new customer served and invoiced during the same period.

• Recurring customers are those customers who receive regular weekly, bi-weekly, or monthly services during the measured period. All recurring customers receive an in-home estimate for service price.

• Leads received requesting proposal for new service:  1,270
• New customers served for the first time:  479
• Cost Per Lead Acquired:  $94
• Percentage of leads that became customers:  38%
• Number of in-home estimates completed for prospective recurring customers:  457
• Prospects receiving in-home estimates that became recurring customers:  293
• Percentage of recurring prospects that became recurring customers:  64%

Part 4 – Key Operational Metrics

• This data represents the combined performance of the two territories operated by HCH Local Operations.

• Total services completed:  7,198
• Total services completed for recurring customers:  6,954
• Percent of total services completed that were recurring services:  97%
• Number of unique recurring customers served:  631
• Average number of services per month provided to each recurring customer:  1.6
• Average revenue per one-time service provided:  $313
• Average revenue per recurring service provided:  $166
• Percent of total revenue from recurring services:  92%
• Average daily revenue generated by each team:  $696

Home Clean Heroes Franchising, LLC

• As of December 31, 2022, Home Clean Heroes had recruited 13 unique franchise locations that have signed franchise agreements for a total of 32 territories.

• Ten of those franchise locations were open and operating for at least 6 months in calendar year 2022, and Parts 5, 6, and 7 contain information for those franchisees. Franchisees not in operation for at least 6 months have been excluded.

Part 5 – Systemwide Revenue, Customer, and Service Metrics

• The growth rate represents the change in location performance in revenue, customers, and services, respectively, for calendar years 2021 and 2022.

• Revenue, customers, and services from out of territory zip codes are included in the table for all franchise locations.

• A “class” is comprised of the franchisees that opened during the stated year and that were operating for at least 6 months.

• A “territory” is a single territory operated by a franchisee.

Total Revenue

Class of 2020

• Number of Territories:  1
• 2022 Average:  $561,684
• 2021 Average:  $438,654
• Year-Over-Year Growth:  28%

Class of 2021

• Number of Territories:  5
• 2022 Average:  $185,541
• 2021 Average:  $86,198
• Year-Over-Year Growth:  115%

Class of 2022

• Number of Territories:  4
• 2022 Average:  $122,824
• 2021 Average:  N/A
• Year-Over-Year Growth:  N/A

Recurring Revenue Only

Class of 2020

• Number of Territories:  1
• 2022 Average:  $489,954
• 2021 Average:  $356,129
• Year-Over-Year Growth:  38%

Class of 2021

• Number of Territories:  5
• 2022 Average:  $163,097
• 2021 Average:  $53,436
• Year-Over-Year Growth:  120%

Class of 2022

• Number of Territories:  4
• 2022 Average:  $108,441
• 2021 Average:  N/A
• Year-Over-Year Growth:  N/A

Total Customers Served

Class of 2020

• Number of Territories:  1
• 2022 Average:  517
• 2021 Average:  582
• Year-Over-Year Growth:  -11%

Class of 2021

• Number of Territories:  5
• 2022 Average:  203
• 2021 Average:  120
• Year-Over-Year Growth:  60%

Class of 2022

• Number of Territories:  4
• 2022 Average:  138
• 2021 Average:  N/A
• Year-Over-Year Growth:  N/A

Recurring Customers Served

Class of 2020

• Number of Territories:  1
• 2022 Average:  336
• 2021 Average:  345
• Year-Over-Year Growth:  -3%

Class of 2021

• Number of Territories:  5
• 2022 Average:  122
• 2021 Average:  64
• Year-Over-Year Growth:  61%

Class of 2022

• Number of Territories:  4
• 2022 Average:  104
• 2021 Average:  N/A
• Year-Over-Year Growth:  N/A

Total Services Performed

Class of 2020

• Number of Territories:  1
• 2022 Average:  3,193
• 2021 Average:  2,485
• Year-Over-Year Growth:  28%

Class of 2021

• Number of Territories:  5
• 2022 Average:  1,104
• 2021 Average:  492
• Year-Over-Year Growth:  99%

Class of 2022

• Number of Territories:  4
• 2022 Average:  648
• 2021 Average:  N/A
• Year-Over-Year Growth:  N/A

Recurring Services Performed

Class of 2020

• Number of Territories:  1
• 2022 Average:  2,937
• 2021 Average:  2,202
• Year-Over-Year Growth:  33%

Class of 2021

• Number of Territories:  5
• 2022 Average:  1,024
• 2021 Average:  368
• Year-Over-Year Growth:  103%

Class of 2022

• Number of Territories:  4
• 2022 Average:  603
• 2021 Average:  N/A
• Year-Over-Year Growth:  N/A

Part 6 – Systemwide Key Sales Metrics

• Leads received requesting proposal for new service:  4,948
• New customers served for the first time:  1,708
• Cost Per Lead Acquired:  $117
• Percentage of leads that became customers:  35%
• Number of in-home estimates completed for prospective recurring customers:  1,719
• Prospects receiving in-home estimates that became recurring customers:  929
• Percentage of recurring prospects that became recurring customers:  54%

Part 7 – Systemwide Key Operational Metrics

• Services include recurring services and one-time services.

• Total services completed:  11,365
• Total services completed for recurring customers:  10,539
• Percent of total services completed that were recurring services:  93%
• Number of unique recurring customers served:  1,257
• Average number of services per month provided to each recurring customer:  1.6
• Average revenue per one-time service provided:  $290
• Average revenue per recurring service provided:  $165
• Percent of total revenue from recurring services:  83%
• Average daily revenue generated by each team:  $592

• The information set forth in this Item 19 summarizes financial information of historic operations of HCH Local Operations and 10 franchise locations that were open and operating for at least 6 months of calendar year 2022, as obtained from HCH field management software program, payroll data, and Home Clean Heroes’ National Call Center provider. Except where modified as indicated above, data is based on actual results for that period.

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

Section VI – Home Clean Heroes Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️