Three franchise brands run an HVAC business. Here they are beside the independent version of the same business, with each brand’s fees as it publishes them and worked out in dollars. A brand can bring customers an independent has to earn one by one. The question is whether it brings in more than it costs.
Typical for an HVAC business: $500k to $5M in sales, and the owner keeps 8% to 18% after paying for its own marketing. Change either to your own numbers.
Work each brand out at
How the two sides are counted
Sales. A brand’s name brings customers an independent wins one at a time, so each brand is worked out at the sales it reports where we have them, and at yours where we don’t.
Marketing. On your own you pay for all of it, about 5.5% of sales here. The ad fund does part of that job, so it is counted once, not twice.
Survival. New franchised businesses were about 5 to 6 points more likely to make it through their first two years in Census data, and about half of all new businesses close within five years. It is not in the dollars; each brand’s details give the sources.
The independent version
Your own HVAC business
Built and run under your own name
Cost to open
$59k to $195k
Annual sales
$1.6Mtypical
Franchise fee
None
Royalty + ad fund
Noneall marketing is yours
$205,400
The owner keeps in a year, after about $87k of marketing
Taking new owners
Aire Serv
HVAC
Total investment
$114k to $272k
Avg. annual sales
$1.1M to $1.6M
Franchise fee
$45k
Royalty + ad fund
5% to 7% of sales
$82k to $109k
The owner keeps in a year at $1.4M in sales (what it reports), after $68k to $95k to the brand
$97k to $124k less a year than on your own
Taking new owners
One Hour Heating & Air Conditioning
HVAC service and installation
Total investment
$143k to $287k
Avg. annual sales
$791k to $919k
Franchise fee
$43k
Royalty + ad fund
6% + 1.5% of sales
$60k
The owner keeps in a year at $855k in sales (what it reports), after $64k to the brand
$146k less a year than on your own
Taking new owners
1-800-Plumber +Air
Plumbing, HVAC and drain service
Total investment
$154k to $327k
Avg. annual sales
Ask the brand
Franchise fee
$55k
Royalty + ad fund
4% to 6% + 1.5% to 2% of sales
$111k to $142k
The owner keeps in a year at $1.6M in sales (your sales), after $87k to $126k to the brand
$63k to $95k less a year than on your own
Before you sign: what to read in the disclosure document
Every franchisor must give you its Franchise Disclosure Document at least 14 days before you sign or pay. These are the parts that answer the questions above.
Items 5 to 7, the fees and the investment. The franchise fee, every other fee (technology, training, transfer, renewal), and the full opening budget, including working capital.
Item 19, what owners earn. Whether the brand states owner sales or earnings at all, and for which units. Put its figures in the boxes above in place of the typical ones.
Item 20, units opened, closed and sold. How many owners left in each of the last three years, and a list of current and former owners you can call.
Item 12, the territory. Whether you get a protected area, and what the brand can open or sell inside it.
Item 21, the franchisor’s own finances. Whether the company behind the brand is in good health.
smbnest is a self-assessment tool, not individualized advice. Fees are as each brand publishes them on its franchising page and in its disclosure document, reviewed in the month shown, and change; the figures in dollars are worked out at the sales you enter and are not a forecast. We never take a cut of your deal or a fee from a franchisor. Before you sign, speak with a franchise attorney and a qualified financial adviser, and call owners from the disclosure document.
Your guidesmbnest
The guide is an automated assistant. Answers come from this business’s model, its sources and your plan; they are general information, not legal, tax or financial advice. Talk to a person